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EXECUTION COPY
STOCK PURCHASE AGREEMENT
BY AND AMONG
GREENFIELD ONLINE, INC.
RAPIDATA.NET, INC.
AND
THE SELLING SHAREHOLDERS
Dated as of January 25, 2005
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TABLE OF CONTENTS
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<S> <C>
Article I : SALE AND PURCHASE OF
SHARES...................................................... 1
1.1. Sale and Purchase of the
Shares............................................ 1
1.2. Purchase Price, Payment and
Adjustments.................................... 1
1.3. Deliveries at Closing; Stock Transfer
Books................................ 4
Article II : CLOSING; CLOSING
DATE...........................................................
4
Article III : REPRESENTATIONS AND WARRANTIES CONCERNING THE
COMPANY.......................... 5
3.1. Organization and
Qualification............................................. 5
3.2. Articles of Incorporation and
Bylaws....................................... 5
3.3.
Capitalization.............................................................
5
3.4.
Authority..................................................................
6
3.5. No Conflict; Required Filings and
Consents................................. 6
3.6. Permits;
Compliance........................................................
6
3.7. Financial
Statements.......................................................
7
3.8. No Undisclosed
Liabilities................................................. 7
3.9. Absence of Certain Changes or
Events....................................... 8
3.10. Absence of
Litigation......................................................
9
3.11.
Brokers....................................................................
10
3.12. Tax
Matters................................................................
10
3.13. Real
Property..............................................................
12
3.14. Intellectual
Property......................................................
13
3.15. Tangible
Assets............................................................
16
3.16.
Inventory..................................................................
16
3.17. Contracts and
Policies.....................................................
16
3.18. Electronic Records; Powers of
Attorney..................................... 18
3.19.
Insurance..................................................................
18
3.20.
Employees..................................................................
19
3.21. Employee
Benefits..........................................................
20
3.22.
Guaranties.................................................................
21
3.23. Environment, Health and
Safety............................................. 21
3.24. Certain Business Relationships with the
Company............................ 21
3.25. Customers and
Payors.......................................................
21
3.26. Product, Information and Service
Warranties................................ 22
3.27. Product, Information and Service
Liability................................. 22
3.28. Privacy, Security and Identity Theft
Etc................................... 22
3.29.
Panel......................................................................
24
3.30.
Disclosure.................................................................
25
Article IV : REPRESENTATIONS AND WARRANTIES OF
SHAREHOLDERS.................................. 26
4.1. Authorization of
Transaction............................................... 26
4.2.
Non-contravention..........................................................
26
4.3. Brokers'
Fees..............................................................
26
4.4. Company
Shares.............................................................
26
4.5. Delivery of
Information....................................................
27
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4.6.
Spouse.....................................................................
27
Article V : REPRESENTATIONS AND WARRANTIES OF
BUYER.......................................... 27
5.1. Organization and
Qualification............................................. 27
5.2.
Authority..................................................................
27
5.3. No Conflict; Required Filings and
Consents................................. 27
5.4. Absence of Certain Changes or
Events....................................... 28
5.5.
Disclosure.................................................................
28
Article VI :
COVENANTS.......................................................................
28
6.1. Affirmative Covenants of the Company and the
Shareholders.................. 28
6.2. Negative Covenants of the Company and the
Shareholders..................... 29
6.3. Negative Covenants of
Buyer................................................ 31
6.4. Access and
Information.....................................................
31
Article VII : ADDITIONAL
AGREEMENTS..........................................................
31
7.1. Appropriate Action; Consents;
Filings...................................... 31
7.2. Transfer and Disposal of Transferred Items Prior to the
Closing Date....... 32
7.3. Preparation of Audited 2004 Financial
Statements........................... 32
7.4. Retention of
Employees.....................................................
32
7.5. Best
Efforts...............................................................
32
7.6. Confidentiality; Public
Announcements...................................... 32
7.7. Exclusivity; Acquisition
Proposals......................................... 33
7.8. Breakup
Fee................................................................
33
7.9. Additional Tax
Matters..................................................... 33
7.10. Trade and Domain
Names..................................................... 35
7.11. Section 338(h)(10)
Election................................................ 36
Article VIII : CLOSING
CONDITIONS............................................................
37
8.1. Conditions to Obligations of Each Party Under This
Agreement............... 37
8.2. Additional Conditions to Obligations of
Buyer.............................. 37
8.3. Additional Conditions to Obligations of the Company and the
Shareholders... 39
Article IX : TERMINATION, AMENDMENT, WAIVER AND
INDEMNIFICATION.............................. 40
9.1.
Termination................................................................
40
9.2.
Amendment..................................................................
40
9.3.
Waiver.....................................................................
40
9.4. Fees, Expenses and Other
Payments.......................................... 40
9.5.
Indemnification............................................................
40
9.6. Shareholder
Representative.................................................
43
Article X : GENERAL
PROVISIONS...............................................................
44
10.1. Effectiveness of Representations, Warranties and
Agreements................ 44
10.2.
Notices....................................................................
44
10.3. Certain
Definitions........................................................
45
10.4.
Construction...............................................................
49
10.5.
Severability...............................................................
49
10.6. Reliance by
Buyer..........................................................
49
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10.7. Entire Agreement and
Modification.......................................... 49
10.8.
Assignment.................................................................
49
10.9. Parties in
Interest........................................................
49
10.10. Waiver; Remedies
Cumulative................................................ 50
10.11. Further
Assurances.........................................................
50
10.12. Governing
Law..............................................................
50
10.13. Venue; Service of
Process.................................................. 50
10.14.
Counterparts...............................................................
50
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<CAPTION>
EXHIBITS DESCRIPTION
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<S> <C>
Exhibit A Form of Escrow Agreement
Exhibit B Legal Opinion of Counsel to the Company
Exhibit C Form of Employment Agreement for Mebane, Feldman
Exhibit D Form of Restricted Stock Agreement for Mebane,
Feldman
Exhibit E Form of Non-Competition Agreement for Shareholders
Exhibit F Legal Opinion of Counsel to Buyer
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<CAPTION>
SCHEDULE
NUMBER DESCRIPTION
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1.2(a) Allocation of Purchase Price
1.2(b) Pre-Closing Transfers
1.2(c) Calculation of Adjusted Working Capital
3.3 Capitalization
3.5 Filings and Consents
3.6 Permits, Compliance
3.7 Financial Statements
3.9 Absence of Certain Changes or Events
3.12 Tax Matters
3.13(a) Real Property
3.14(c) Intellectual Property
3.15 Tangible Assets
3.16 Inventory
3.17 Contracts
3.19 Insurance Policies
3.20 Employees
3.21 Employee Benefit Plans
3.24 Certain Business Relationships with the Company
3.25 Customers and Payors
3.26 Product, Information and Service Warranties
3.27 Product, Information and Service Liability
3.28 Privacy, Security and Identity Theft
3.29 Panel
4.2 Non-Contravention
4.4 Company Shares
6.2 Negative Covenants
8.2(c) Contracts or Agreements Requiring Consents or Waivers
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INDEX OF DEFINED TERMS
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PAGE
------
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338(h)(10) Income.............................. 37
Affiliate...................................... 45
Agreement...................................... 1
Assets......................................... 45
Audited 2004 Financial Statements.............. 3
Audited Financial Statements................... 3
Authority...................................... 14
Base Consideration............................. 1
Baseline Data.................................. 25
Basis.......................................... 45
Buyer Material Adverse Effect.................. 45
Buyer Notice................................... 42
Buyer Representatives.......................... 31
Closing........................................ 4
Closing Date................................... 4
Closing Date Balance Sheet..................... 2
Closing Payment................................ 1
COBRA Coverage................................. 21
Code........................................... 46
Company........................................ 1
Company Common Stock........................... 1
Company Disclosure Schedule.................... 5
Company Employee Benefit Plans................. 20
Company Material Adverse Effect................ 46
Company Permits................................ 6
Contract....................................... 46
Control........................................ 46
Current Accounts Receivable.................... 2
EBITDA......................................... 3
EBITDA Adjustment.............................. 3
EBITDA Escrow.................................. 3
Employee Benefit Plan.......................... 46
Employee Pension Benefit Plan.................. 46
Employee Welfare Benefit Plan.................. 46
Employment Agreements.......................... 38
Encumbrances................................... 46
Environmental, Health and Safety Laws.......... 46
ERISA.......................................... 47
ERISA Affiliate................................ 47
Escrow Agreement............................... 3
Excepted Claims................................ 42
Exchange Act................................... 47
Executed Form 8023............................. 39
Executed State Election Forms.................. 39
Extremely Hazardous Substance.................. 47
GAAP........................................... 47
GLBA........................................... 22
Governmental Entities.......................... 6
Handling....................................... 23
HIPAA.......................................... 22
Incremental Tax Cost........................... 36
Incremental Tax Cost Amount.................... 37
Information.................................... 45
Information Assets............................. 45
Intellectual Property.......................... 47
IRS............................................ 10
know........................................... 48
knowledge...................................... 48
known.......................................... 48
Laws........................................... 6
Liabilities.................................... 7
Liability...................................... 7
Lien........................................... 48
Loss........................................... 41
Multiemployer Plan............................. 48
Ordinary Course of Business.................... 48
Panel.......................................... 24, 48
Panel Member................................... 25
Person......................................... 48
PII............................................ 23
Preliminary 2004 Balance Sheet................. 7
Preliminary 2004 Financial Statements.......... 7
Price Allocation............................... 36
Primary Escrow................................. 3
Proceeding Notice.............................. 42
Purchase....................................... 1
Purchase Price................................. 1
Purchase Price Adjustments..................... 1
PwC............................................ 3
Rapidata....................................... 1
Rejected Address(es)........................... 25
Restricted Stock Agreements.................... 38
Restricted Transaction......................... 33
Return Periods................................. 10
Returns........................................ 10
S Corporation.................................. 11
S Corporation Taxable Periods.................. 48
SEC............................................ 48
</TABLE>
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<S> <C>
Section 338(h)(10) Election........................ 36
Securities Act..................................... 48
Security Interest.................................. 48
Shareholder........................................ 1
Shareholder Disclosure Schedule.................... 26
Shareholder Representative......................... 43
Shareholders....................................... 1
Shares............................................. 1
Straddle Period.................................... 34
Sub................................................ 1
Sub-Panel(s)....................................... 24
Subsidiaries....................................... 48
Subsidiary......................................... 48
Surviving Obligations.............................. 42
Tax................................................ 11
Taxes.............................................. 11
Test Period........................................ 25
Third Party Claim.................................. 41
Transaction........................................ 49
Transaction Cost Adjustment........................ 3
Transaction Costs.................................. 3
Transfer Taxes..................................... 35
Transferred Items.................................. 2
Transgressed....................................... 13
Unaudited Historical Financial Statements.......... 7
Valid.............................................. 25
Validity Threshold................................. 25
Working Capital.................................... 2
Working Capital Adjustment......................... 2
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<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, is made and entered into on and
as of
January 25, 2005 (this "AGREEMENT"), by and among Greenfield
Online, Inc., a
Delaware corporation ("BUYER"), and Rapidata.net, Inc., a North
Carolina
corporation ("RAPIDATA" or the "COMPANY"), and John Gilmer
Mebane, III, Benjamin
Douglas Feldman, Jesse Lipson, and Jennifer Lipson Towns, the
shareholders of
the Company (collectively, the "SHAREHOLDERS", and each, a
"SHAREHOLDER").
RECITALS:
1. The Shareholders are the sole owners of all the issued
and
outstanding shares (the "SHARES") of the common stock, no par
value per share,
of the Company (the "COMPANY COMMON STOCK"), and Buyer desires
to purchase the
Shares from the Shareholders, all upon the terms and subject to
the conditions
of this Agreement;
2. The Shareholders are willing to sell the Shares to Buyer upon
the
terms and subject to the conditions of this Agreement; and
3. Certain capitalized terms used in this Agreement are defined
in
Section 10.3.
NOW, THEREFORE, in consideration of the foregoing and the
respective
representations, warranties, covenants and agreements set forth
in this
Agreement, the parties, intending to be legally bound, do hereby
agree as
follows:
ARTICLE I : SALE AND PURCHASE OF SHARES
1.1. Sale and Purchase of the Shares. On the Closing Date,
the
Shareholders agree to sell the Shares to Buyer and Buyer agrees
to purchase the
Shares from the Shareholders (the "PURCHASE") for the Purchase
Price set forth
in Section 1.2(a), subject to the terms and conditions and based
upon the
representations and warranties contained herein.
1.2. Purchase Price, Payment and Adjustments.
(a)Purchase Price and Payment. The "PURCHASE PRICE" payable
to
Shareholders consists of $5,500,000 cash (the "BASE
CONSIDERATION"), as
adjusted by the Working Capital Adjustment, Transaction Cost
Adjustment
and EBITDA Adjustment, each as defined and set forth in Section
1.2(c)
(and which together are referred to as "PURCHASE PRICE
ADJUSTMENTS"). At
the Closing, the Shareholders will be paid in aggregate an
amount equal to
the Base Consideration adjusted by the Working Capital
Adjustment and the
Transaction Cost Adjustment, less the amounts withheld in escrow
as set
forth at Section 1.2(d) (the "CLOSING Payment"). The Closing
Payment will
be paid by Buyer by company check payable to each Shareholder
according to
the allocation table set forth in Schedule 1.2(a). The balance
of the
Purchase Price (if any becomes due) will be payable according to
the terms
of the Working Capital Adjustment, EBITDA Adjustment and escrow
provisions
set forth below. The portion of the Purchase Price allocated to
the
covenants not to compete set forth in the Non-
1
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Competition Agreements deliverable pursuant to Section 8.2(j)
will equal
one percent of the Closing Payment paid at Closing.
(b)Pre-Closing Transfers. Prior to the Closing Date in
accordance with Section 7.2, the Company will transfer,
distribute,
settle, pay and/or dispose of all of the items listed below
(the
"TRANSFERRED ITEMS"); with the effect that Transferred Items
will not be
owned by or be a liability of the Company, nor assumed by Buyer,
at the
Closing Date: (i) any notes or accounts receivable due to the
Company from
its officers, directors or the Shareholders, or due from the
Company to
its officers, directors or the Shareholders; (ii) any
automobiles or
vehicles leased or owned by the Company that are used for
personal
purposes by the Shareholders or any employee of the Company, and
any
leases or indebtedness on or relating to such automobiles or
vehicles for
which the Company is liable in any manner whatsoever; (iii) all
life
insurance policies owned by the Company or paid for by the
Company; (iv)
all Company debt (including any notes, accounts payable or other
debt that
the Company has been notified under 15 USC Section 1681c-2 has
resulted
from identity theft), other than Transaction Costs that are to
paid in
connection with the Closing pursuant to Section 1.2(c)(ii); (v)
pension
plan and profit sharing obligations of the Company; (vi) the
Right of
First Refusal Agreement dated as of February 2, 2004 by and
between Durham
Historic Properties and the Company; and (vii) $100,000
Promissory Note of
the Company to Wachovia Bank, N.A. dated June 7 2004. Schedule
1.2(b)
contains a complete and accurate list of all Transferred Items.
Any Taxes
or other costs and expenses incurred or generated in connection
with such
transfers, distributions, terminations or disposals will be
deemed to be
Transferred Items borne solely by the Shareholders. To the
extent the
Company or Buyer incurs any cost or expense relating to the
Transferred
Items after Closing, Buyer will be reimbursed by such amount
from the
Primary Escrow.
(c) Purchase Price Adjustments.
(i)Working Capital Adjustment. The Base Consideration
will (1) be reduced by the amount, if any, by which Working
Capital of the
Company as of the date of the Closing is less than $150,000 and
(2) be increased
by the amount, if any, by which Working Capital of the Company
as of the date of
Closing exceeds $150,000 (such amount, the "WORKING CAPITAL
ADJUSTMENT"). For
purposes of this Agreement, "WORKING CAPITAL" of the Company is
defined as the
amount by which the Company's cash and Current Accounts
Receivable exceed the
sum of its total liabilities on and as of the Closing Date.
"CURRENT ACCOUNTS
RECEIVABLE" are only those accounts receivable that are fewer
than 60 days old
and excluding those that the Company and the Shareholders, in
good faith,
believe are unlikely to be collected within 180 days of Closing.
The Working
Capital Adjustment will be based upon an unaudited balance sheet
(the "CLOSING
DATE BALANCE SHEET") that the parties will cause to be prepared
in accordance
with GAAP (except that footnotes may be omitted) consistent with
the past
practices of the Company. Buyer may choose to have the Closing
Date Balance
Sheet prepared by a nationally-recognized, independent certified
public
accounting firm selected by Buyer. The calculation and
determination of the
Working Capital Adjustment will be made by Buyer and the Company
at Closing and
will be deemed conclusive and binding on the parties. To the
extent any amount
reflected as a Current Account Receivable on the Closing Date
Balance Sheet is
not actually collected by the Company on or prior to 180 days
after the Closing
Date, Buyer shall be entitled to be reimbursed for the full
amount of such
account receivable plus any costs incurred in the attempt to
collect it from the
Primary Escrow. To the extent the Company receives
2
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payment within 180 days of the Closing on any Company accounts
receivable that
existed prior to the Closing, but that were not included as
Current Accounts
Receivable, such amount shall be deposited in the Primary Escrow
and distributed
to the Shareholders in the same percentages as set forth on
Schedule 1.2(a) at
the end of such 180 day period. Nothing herein shall require the
Company or
Buyer to take any action to collect any accounts receivable
other than those
actions taken in their Ordinary Course of Business.
(ii) Transaction Cost Adjustment. At the Closing, Buyer
agrees to pay (or cause the Company to pay) all of the costs and
expenses
incurred by the Company in connection with the transactions
contemplated
hereunder including all fees and expenses related to legal,
accounting,
investment banking and financial advisory fees and expenses, and
including the
fees and costs associated with auditing of any financials
required hereunder
(the "TRANSACTION COSTS"). The Base Consideration will be
reduced by the amount
of such reimbursed costs (the "TRANSACTION COST ADJUSTMENT").
Any Transaction
Costs that are presented to the Company or Buyer after Closing
shall be paid by
Buyer and Buyer shall be entitled to be reimbursed for any such
amounts from the
Primary Escrow.
(iii) EBITDA Adjustment. After Closing, Buyer will cause
to be prepared an audited balance sheet of the Company at and
for the year ended
December 31, 2004, and the related statements of operations,
statements of cash
flows and statements of stockholder equity for the period then
ended, and the
notes and schedules thereto (the "AUDITED 2004 FINANCIAL
STATEMENTS"), together
with the report thereon, of PricewaterhouseCoopers, LLP ("PWC").
For every
dollar that 2004 earnings before income taxes, depreciation and
amortization
("EBITDA" reflected on the Audited 2004 Financial Statements is
below $600,000,
the Purchase Price will be reduced by $9.16 (the "EBITDA
ADJUSTMENT"). Buyer
shall be entitled to be reimbursed for the EBITDA Adjustment
from the EBITDA
Escrow first, and to the extent it is depleted, the Primary
Escrow. Upon receipt
of Audited 2004 Financial Statements that do not require an
EBITDA Adjustment,
Buyer will promptly notify the Custodian under the Escrow
Agreement defined in
the next section to release the EBITDA Escrow to the
Shareholders.
(d)Escrows. The parties will enter into an escrow agreement
substantially in the form attached as EXHIBIT A (the "ESCROW
AGREEMENT").
The Escrow Agreement will provide for (1) a "PRIMARY ESCROW"
initially
consisting of $550,000 withheld from the Purchase Price at
Closing, and
(2) an "EBITDA ESCROW" initially consisting of $500,000 withheld
from the
Purchase Price at Closing. The amounts in escrow will be
released
according to the terms and procedures in the Escrow
Agreement.
(e)Preparation of Audited Financial Statements. As soon as
reasonably practicable, but in any event, on or before February
18, 2005,
the Company will deliver to Buyer an audited balance sheet of
the Company
as of December 31, 2004, and the related statements of
operations,
statements of cash flows and statements of stockholders equity
for the
twelve month period then ended, and the notes and schedules
thereto (the
"AUDITED 2004 FINANCIAL STATEMENTS"), together with the
unqualified report
of PwC thereon. The Audited Financial Statements shall be in all
respects
reasonably acceptable to Buyer in form and substance.
3
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(f)Cancellation of Options, Warrants, Convertible Securities
and Treasury Stock. Each share of Company Common Stock held in
the
treasury of the Company, if any, will, immediately prior to the
Closing
Date, be canceled and extinguished and no payment will be made
with
respect thereto. Any outstanding option, warrant, right or other
security
convertible into or exercisable for any equity securities of the
Company
not exercised or converted prior to the Closing will expire
and/or be
cancelled.
1.3. Deliveries at Closing; Stock Transfer Books.
(a)At the Closing, (i) the Shareholders will deliver to
Buyer
the various certificates, instruments, and documents referred to
in
Sections 8.1 and 8.2 hereof, (ii) Buyer will deliver to the
Shareholders
the various certificates, instruments, and documents referred to
in
Sections 8.1 and 8.3 hereof, (iii) the Shareholders will deliver
to Buyer
stock certificates representing all of the outstanding shares of
the
Company, endorsed in blank or accompanied by duly executed
assignment
documents, and (iv) Buyer will deliver to Shareholders the
Closing
Payment.
(b)On the date of this Agreement, the stock transfer books
of
the Company will be closed and there will be no further
registration of
transfers of shares of Company Common Stock thereafter on the
records of
the Company. On and after the Closing Date, any certificates
representing
shares of Company Common Stock will thereafter only represent
the right to
receive a pro rata portion of the Purchase Price and such
certificates,
upon presentation to Buyer, will be converted into the Purchase
Price
consideration.
1.4 Withholding. Buyer shall be entitled to deduct and withhold
from
the consideration otherwise payable to any Person pursuant to
this Agreement
such amounts as it is required to deduct and withhold with
respect to the making
of such payment under any provision of federal, state, local or
foreign Tax law.
If Buyer so deducts and withholds amounts, such amounts shall be
treated for all
purposes of this Agreement as having been paid to the holder of
Company Shares
in respect of which Buyer made such deduction and
withholding.
ARTICLE II : CLOSING; CLOSING DATE
The closing of the transactions contemplated by this Agreement
(the
"CLOSING") will take place through the delivery of executed
documents and
schedules at the offices of Buyer's attorneys, Preston Gates
& Ellis LLP, 925
Fourth Avenue, Suite 2900, Seattle, Washington 98104-1158, on
January 21, 2005,
or at such other location and on such other date as Buyer and
the Shareholders
may mutually agree in writing (the "CLOSING DATE"). There will
not be any
requirement for any party to attend the Closing in Seattle.
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ARTICLE III : REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY
Except as disclosed in a document referring specifically to
the
representations and warranties in this Agreement which
identifies by section
number the section and subsection to which such disclosure
relates and is
delivered by Company to Buyer prior to or simultaneous with the
execution of
this Agreement (the "COMPANY DISCLOSURE SCHEDULE"), the Company
and the
Shareholders hereby represent and warrant, jointly and
severally, to Buyer as
follows as of the date of this Agreement and as of the Closing
Date:
3.1. Organization and Qualification. The Company is a
corporation
duly organized, validly existing and in good standing under the
laws of the
State of North Carolina, has all requisite corporate or other
power and
authority to own, lease and operate its Assets and to carry on
its business as
it is now being conducted, electronically or non-electronically,
and is duly
qualified and in good standing to do business in each
jurisdiction in which the
nature or level of the business conducted by it or the ownership
or leasing or
its activities regarding its Assets or business makes such
qualification
necessary. The Company has no Subsidiaries, and does not,
directly or
indirectly, own or control any investment or interest (whether
in the form of
debt or equity) in any other Person.
3.2. Articles of Incorporation and Bylaws. The Company has
provided
to Buyer complete and correct copies of (i) the Company's
Articles of
Incorporation and Bylaws or equivalent organizational documents,
in each case as
amended or restated, as in effect as of the Closing Date, (ii)
the minute books
relating to all meetings of stockholders, board of directors and
committees of
the Company, (iii) stock certificate books of the Company, (iv)
stock transfer
books of the Company, and (v) a list of the officers and
directors of the
Company. The Company is not in violation of any of the
provisions of its
Articles of Incorporation or Bylaws or equivalent organizational
documents, in
each case as amended or restated. In addition, the minute books
(containing the
record of meetings of the stockholders, the board of directors
and any
committees of the board of directors), the stock certificate
books and the stock
transfer books of the Company are correct and complete.
3.3. Capitalization. The authorized capital stock of the
Company
consists of 10,000,000 shares of Company Common Stock, of which
100,000 shares
are issued and outstanding as of the date of this Agreement, and
(i) all of
which Shares are duly authorized, validly issued, fully paid and
non-assessable
and not subject to preemptive rights created by statute, the
Company's Articles
of Incorporation or Bylaws or any agreement to which the Company
is a party or
bound, and (ii) all of the issued and outstanding shares of
Company Common Stock
are owned by and held of record and beneficially by the
Shareholders. There are
no bonds, debentures, notes or other indebtedness, issued or
outstanding having
the right to vote on any matters on which the Company's
stockholders may vote.
There are no options, warrants, calls or other rights (including
subscription
rights or registration rights), agreements, proxies, voting
rights agreements,
voting trusts, arrangements or commitments of any character,
presently
outstanding, which (i) obligate the Company to issue, deliver or
sell shares of
its capital stock or debt securities, (ii) obligate the Company
to grant, extend
or enter into any such option, warrant, call or other such
right, agreement,
arrangement or commitment, (iii) obligate the Company to
repurchase, redeem or
otherwise acquire any shares of Company Common Stock, or (iv)
relate to the
issued or unissued capital stock of, or other equity interests
in, the Company.
5
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3.4. Authority. The Company has all requisite corporate power
and
authority to execute and deliver this Agreement, to perform its
obligations
hereunder and to consummate the transactions contemplated
hereby. The execution
and delivery of this Agreement and the consummation of the
transactions
contemplated hereby have been duly authorized by all necessary
corporate action
and no other corporate proceeding on the part of the Company
non-electronically
is necessary to authorize this Agreement or to consummate the
transactions
contemplated hereby. This Agreement has been duly executed and
delivered by the
Company and, assuming the due authorization, non-electronic
execution and
delivery thereof by the Shareholders and Buyer, constitutes the
legal, valid and
binding obligation of the Company enforceable in accordance with
its terms.
3.5. No Conflict; Required Filings and Consents.
(a)Except as set forth in Schedule 3.5, the execution and
delivery of this Agreement by the Company does not, and the
performance of
this Agreement by the Company will not (i) conflict with or
violate the
Company's Articles of Incorporation or Bylaws or equivalent
organizational
documents, in each case as amended or restated, (ii) to the
knowledge of
the Company and the Shareholders, conflict with or violate any
federal,
state, foreign or local law, statute, ordinance, rule,
regulation, order,
guidance, policy, judgment or decree (collectively, "LAWS") and
applicable
to the Company or by which any of its properties is bound or
subject to,
or (iii) result in any violation of or breach of or constitute a
default
(or an event that with notice or lapse of time or both would
become a
default) under, or give to others any rights of termination,
amendment,
acceleration, suspension or cancellation of, or require payment
under, or
result in the loss or impairment of, or result in the creation
of an
Encumbrance on, any of the properties or Assets of the Company
under or
pursuant to, any note, bond, mortgage, security agreement,
indenture,
contract, agreement, lease, license, right, permit, franchise or
other
instrument or obligation to which the Company is a party or by
which the
Company or any of its Assets is bound or subject.
(b)The execution and delivery of this Agreement by the
Company
does not, and the performance of this Agreement by the Company
will not,
require the Company to obtain any consent, approval,
authorization or
permit of, or to make any filing with or notification to,
any
governmental, regulatory or quasi-governmental authority,
domestic or
foreign ("GOVERNMENTAL ENTITIES") based on Laws and other
requirements of
Governmental Entities.
3.6. Permits; Compliance.
(a)The Company is in possession of all franchises, grants,
authorizations, licenses, permits and permissions, easements,
variances,
exemptions, consents, certificates, approvals, orders and other
rights and
authorities necessary to own, lease, operate, use, access,
disclose, and
exercise intellectual property or other rights in its Assets and
to carry
on its business as it is now being conducted electronically
or
non-electronically (collectively, the "COMPANY PERMITS"), and
there is no
notice, claim, action, proceeding or investigation pending or,
to the
knowledge of the Company and the Shareholders, threatened
regarding
modification, suspension or cancellation of any of the Company
Permits or
any lack of rights or authority (or exceeding rights or
authorities) under
any of them. The Company is not in conflict with, or in default
or
violation of (a) to the knowledge of the Company and its
6
<PAGE>
Shareholders, any Law applicable to the Company or which any of
its Assets
is bound by or subject to or (b) any of the Company Permits. The
Company
has not received from any Governmental Entity or any other
Person any
notification in a record with respect to possible conflicts,
defaults or
violations of Laws.
(b)The Company is in compliance with (a) all applicable Laws
that apply to or are for the protection of consumers or
individuals; (b)
if applicable, licensing of money services business and the Bank
Secrecy
Act (31 U.S.C. Section 5311 et. seq.) and all applicable laws
relating to
the licensing of money services businesses, and (c) all
applicable laws
regarding sweepstakes, incentives for Panel members or survey
takers or
the like.
3.7. Financial Statements.
(a) Schedule 3.7 contains (i) true, correct and complete
copies of an unaudited balance sheet (the "PRELIMINARY 2004
BALANCE
SHEET") and income statement of the Company at and for the year
ended
December 31, 2004 (together with the Preliminary 2004 Balance
Sheet, the
"PRELIMINARY 2004 FINANCIAL STATEMENTS") and (ii) true, correct
and
complete copies of the unaudited balance sheets of the Company
as of
December 31, 2002 and 2003, and the related statements of
operations,
statements of cash flows and statements of stockholders equity
for the
twelve month periods then ended, and the notes and schedules
thereto
(together with the Preliminary 2004 Financial Statements, the
"UNAUDITED
HISTORICAL FINANCIAL STATEMENTS"). The Unaudited Historical
Financial
Statements (i) are accurate and complete in all material
respects, in
accordance with the assumptions and methodology set forth
therein, (ii)
will have been prepared based on the books and records of the
Company, and
present fairly the financial condition and results of operations
of the
Company for the dates and periods indicated, and (iii) contain
and reflect
all necessary adjustments, accruals, provisions and allowances
for a fair
presentation of its financial condition and the results of its
operations
for the periods covered. When delivered pursuant to Section
1.2(f), the
Audited 2004 Financial Statements (i) will be accurate and
complete in all
material respects, in accordance with the assumptions and
methodology set
forth therein, (ii) will have been prepared based on the books
and records
of the Company in accordance with GAAP, and will present fairly
the
financial condition and results of operations of the Company for
the dates
and periods indicated and (iii) contain and reflect all
necessary
adjustments, accruals, provisions and allowances for a fair
presentation
of its financial condition and the results of its operations for
the
periods covered.
(b)To the knowledge of the Company and the Shareholders, the
Current Accounts Receivable reflected on the Closing Date
Balance Sheet
are valid receivables subject to no setoffs or counterclaims,
have been
outstanding receivables on the Company's books and records for
fewer than
60 days, and are likely to be collected at their full recorded
amounts on
or prior to 180 days following the Closing Date. On the Closing
Date,
there are no receivables due from the Shareholders or any of the
Company's
officers or directors or anyone claiming that they have been the
victim of
identity theft.
3.8. No Undisclosed Liabilities. The Company has no liabilities
or
other obligations of any kind whatsoever, whether accrued,
contingent, absolute,
determined, determinable or otherwise including liabilities for
Taxes
("LIABILITY" or "LIABILITIES"), and there is no existing
condition, situation or
set of circumstances which could reasonably be expected to
7
<PAGE>
result in such a Liability, other than Liabilities fully
reflected or reserved
against on the face of the Preliminary 2004 Balance Sheet as
adjusted for
Liabilities incurred in the Ordinary Course of Business since
December 31, 2004
through the Closing Date and which will be reflected on the
Closing Date Balance
Sheet.
3.9. Absence of Certain Changes or Events. Since December 31,
2004,
there has not been any adverse change in the business, financial
condition,
operations, results of operations or future prospects of the
Company. Without
limiting the generality of the foregoing, since that date:
(a)the Company has not entered in to any Transactions with
respect to its Assets or with its customers, other than for
fair
consideration in the Ordinary Course of Business;
(b)the Company has not entered into any Transaction or any
agreement, contract, lease or license relating to same outside
the
Ordinary Course of Business;
(c)no party (including the Company) has accelerated,
terminated, modified or canceled any agreement, contract, lease
or license
(or series of related agreements, contracts, leases and
licenses) to which
the Company is a party or by which the Company is bound;
(d)the Company has not imposed, granted, allowed or
consented
to any Security Interest upon any of its Assets;
(e)the Company has not made any capital expenditure (or
series
of related capital expenditures) either involving more than an
aggregate
of $5,000 outside the Ordinary Course of Business, unless
otherwise
approved in writing by Buyer;
(f)the Company has not made any capital investment in, any
loan to, or any acquisition of the securities or Assets of, any
other
Person (or series of related capital investments, loans, and
acquisitions);
(g)the Company has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any
indebtedness for
borrowed money or capitalized lease obligation;
(h)the Company has not delayed or postponed the payment of
Accounts Payable, Accrued Expenses or other Liabilities outside
the
Ordinary Course of Business;
(i)the Company has not canceled, lost, compromised, waived,
or
released any right or claim (or series of related rights and
claims);
(j)the Company has not granted any license or sublicense of
any rights under or with respect to any Asset or Intellectual
Property;
(k)there has been no change made or authorized in the
Company's Articles of Incorporation or Bylaws or equivalent
organizational
documents, in each case as amended or restated and in effect as
of
December 31, 2004;
8
<PAGE>
(l)the Company has not issued, sold or otherwise disposed of
any of its capital stock, or granted any options, warrants, or
other
rights to purchase or obtain (including upon conversion,
exchange, or
exercise) any of its capital stock;
(m)the Company has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital
stock
(whether in cash or in kind) or redeemed, purchased, or
otherwise acquired
any of its capital stock;
(n)the Company has not experienced any damage, destruction,
or
loss (whether or not covered by insurance and whether tangible
or
intangible) to its Assets;
(o)the Company has not made any loan to, or entered into any
other transaction with, any of its directors, officers and
employees;
(p)the Company has not entered into any employment contract
or
collective bargaining agreement, written or oral, or modified
the terms of
any existing such contract or agreement;
(q)the Company has not granted any increase in the
compensation of any of its directors, officers and
employees;
(r)the Company has not adopted, amended, modified or
terminated any bonus, profit-sharing, incentive, severance or
other plan,
contract or commitment for the benefit of any of its directors,
officers
and employees (or taken any such action with respect to any
other Employee
Benefit Plan) other than to comply with the terms of this
Agreement;
(s)the Company has not made any other change in employment
terms for any of its directors, officers and employees outside
the
Ordinary Course of Business;
(t)the Company has not made any political contribution or
pledged to make any charitable contribution;
(u)the Company has not done any act, or failed to do any act
which it had a duty or obligation to perform, which has or could
result in
a breach of any obligation of the Company;
(v)there has not been any other occurrence, event, incident,
action, failure to act or transaction outside the Ordinary
Course of
Business involving the Company; and
(w) the Company has not committed to any of the foregoing.
3.10. Absence of Litigation. There is no claim, action,
suit,
litigation, proceeding, arbitration or investigation of any
kind, at law, in rem
or in equity (including actions or proceedings seeking
injunctive relief),
pending or, to the knowledge of the Company and the
Shareholders, threatened
against the Company, any of its Assets or against any
Shareholder relating so
such Shareholder's interest in or employment by the Company. The
Company is not
subject to any continuing order of, consent decree, settlement
agreement or
other similar written agreement with or continuing investigation
by, any court
or Governmental Entity, or any judgment, order, writ,
injunction, decree or
award of any court, Governmental Entity or
9
<PAGE>
arbitrator. To the knowledge of the Company and the Shareholders
there is no
fact, event, condition, circumstance or other matter which
either has, or is
reasonably likely to have resulted in, an event or determination
having a
Company Material Adverse Effect.
3.11. Brokers. No broker, finder or investment banker is
entitled to
any brokerage, finder's or other fee or commission in connection
with the
transactions contemplated by this Agreement based upon
arrangements made by or
on behalf of the Company.
3.12. Tax Matters.
(a) The Company has timely filed (or caused to be filed) all
federal, state, local and foreign Tax returns, reports,
elections and
information statements ("RETURNS") required to be filed by it,
which
Returns are true, correct and complete in all respects. All
Taxes required
to be paid in respect of the periods covered by such Returns
("RETURN
PERIODS") have either been paid or fully accrued on the books of
the
Company. The Closing Date Balance Sheet contains adequate
accruals for all
unpaid Taxes, and all unpaid Taxes in respect of periods prior
to Closing
will be fully accrued on the books and records of the Company
prior to
Closing. The Company has no Liabilities for Taxes, other than
Liabilities
which will be reflected on the Closing Date Balance Sheet. The
Company has
not taken any position on any Tax Return or filing which is or
would be
subject to penalties under Section 6662 of the Code. The Company
has not
requested or been granted any extension of time to file any
Return that
has not yet been filed. There is no difference between the
amounts of the
book basis and the Tax basis of any asset of the Company that is
not
reflected in an appropriate accrual of deferred Tax liability on
the books
of the Company or fully reflected in the Closing Date Balance
Sheet. All
material elections with respect to Taxes made by or with respect
to the
Company are set forth on Schedule 3.12(a). The Company has
provided or
made available to Buyer true and correct copies of all Returns,
all
correspondence with any taxing authority, all tax work papers,
any Tax
planning memoranda and other Tax data for taxable periods ending
on or
after December 31, 2002.
(b) No deficiencies or adjustments for any Tax of the
Company
have been claimed, proposed or assessed or threatened. No claim
has ever
been made by an authority in a jurisdiction where the Company
does not
file Returns that the Company is or may be subject to taxation
by that
jurisdiction. Schedule 3.12(b) accurately sets forth the years
for which
the Company's federal and state income tax returns,
respectively, have
been audited and any years which are the subject of a pending
audit by the
Internal Revenue Service ("IRS") and the applicable state taxing
agencies.
The Company is not subject to any pending or, to the knowledge
of the
Company and the Shareholders, threatened Tax audit or
examination. The
Company has not entered into any agreements, waivers or other
arrangements
in respect of the statute of limitations in respect of its Taxes
or Tax
Returns. Schedule 3.12(b) sets forth as of the date hereof (i)
the Tax
basis of the Company in its assets, (ii) the current and
accumulated
earnings and profits of the Company, (iii) the amount of any net
operating
loss carryover, net capital loss carryover, unused investment
credit or
other credit carryover and charitable contribution carryover of
the
Company, (iv) the amount of any deferred gain or loss allocable
to the
Company or excess loss account of the Company, and (v) a list of
all joint
ventures, partnerships, limited liability companies or other
business
entities (within the meaning of Treasury Regulation Section
301.7701-3) in
which the Company has an interest.
10
<PAGE>
(c) For the purposes of this Agreement, the terms "TAX" and
"TAXES" shall include all federal, state, local and foreign
taxes,
assessments, duties, tariffs, registration fees, and other
governmental
charges including all income, franchise, property, production,
sales, use,
payroll, license, windfall profits, severance, withholding,
excise, gross
receipts and other taxes, as well as any interest, additions or
penalties
relating thereto and any interest in respect of such additions
or
penalties.
(d) There are no liens for Taxes upon the assets of the
Company except for Taxes that are not yet payable. The Company
has
withheld all Taxes required to be withheld in respect of wages,
salaries
and other payments to all employees, officers and directors and
any Taxes
required to be withheld from any other person and timely paid
all such
amounts withheld to the proper taxing authority.
(e) The Company has made a valid election under Section 1362
of the Code and a corresponding state or local Tax election in
all
applicable jurisdictions to be an S corporation effective as of
its date
of incorporation. The Company is, has been at all times
since
incorporation, and will be at all times through the Closing
Date, an S
corporation (within the meaning of Section 1361(a)(1) of the
Code) (an "S
CORPORATION") for purposes of the Code and for purposes of
all
corresponding provisions of applicable state and local law. The
Company
has no "net unrealized built-in gain" subject to the Tax imposed
on
certain built-in gains under in Section 1374 of the Code.
(f) No Tax will be imposed on the Company solely as a result
of consummating the transaction contemplated by this Agreement,
other than
Transfer Taxes (the economic burden of which will be borne as
set forth in
Section 7.9(d) and Taxes resulting from the election described
in Section
7.11 (the economic burden of which will be borne as set forth in
Section
7.11). The basis for the imposition of any state or local Taxes,
other
than Taxes based on income, will not be changed as a result of
the
transaction contemplated hereby.
(g) The Company is not liable for any payment that would
give
rise to the excise tax provided in Section 409A of the Code.
(h) The Shareholders are not subject to withholding under
Section 1445 of the Code with respect to any transaction
contemplated
hereby.
(i) The Company has not engaged in any "reportable
transaction" as defined in Treasury Regulation Section
1.6011-4.
(j) No consent or agreement has been made under Section
341(f)
of the Code, by or on behalf of the Company or any predecessor
thereof.
The Company is not and has not been a party to any Tax sharing
or tax
allocation agreement. No item of income or gain reported by the
Company
for financial accounting purposes in any pre-Closing period is
required to
be included in taxable income in any post-Closing period. The
Company has
never been a member of any affiliated group of corporations
within the
meaning of Section 1504 of the Code. The Company has not
participated in,
or cooperated with, an international boycott within the meaning
of Section
999 of the Code. The Company is not required to include in
income any
adjustment pursuant to Section 481(a) of the Code (or similar
provisions
of other law or regulations) in its current or in any future
taxable
period, by reason of a change in accounting method which has
11
<PAGE>
taken place prior to the Closing Date; nor does the Company have
any
knowledge that the IRS (or other taxing authority) has proposed,
or is
considering, any such change in accounting method. The Company
does not
have and has not had a "permanent establishment" (as defined in
any
applicable income tax treaty) in any country other than the
United States.
The Company has made no election under Section 13261(g)(2) of
P.L. 103-66,
relating to the application of Section 197 of the Code. There
are no
outstanding rulings or requests for rulings from any taxing
authority with
respect to the Company.
(k) The use of any net operating loss carryover, net capital
loss carryover, unused investment credit or other credit
carryover of the
Company is not subject to any limitation pursuant to Section 382
of the
Code or otherwise. The Company is not and has never been a real
property
holding corporation within the meaning of Section 897 of the
Code. None of
the assets of the Company is property that is required to be
treated as
owned by any other person pursuant to the "safe harbor lease"
provisions
of former Section 168(f)(8) of the Code and in effect
immediately prior to
the enactment of the Tax Reform Act of 1986 and none of the
assets of the
Company is "tax exempt use property" within the meaning of
Section 168(h)
of the Code. None of the assets of the Company secures any debt
the
interest on which is tax exempt under Section 103 of the Code.
The Company
is not liable for Taxes under the provisions of Treasury
Regulation
Section 1.1502-6(a).
(l) The Company has not constituted either a "distributing
corporation" or a "controlled corporation" in a distribution of
stock
qualifying for tax-free treatment under Section 355 of the Code
(i) in the
two (2) years prior to the date of this Agreement, or (ii) in
a
distribution which could otherwise constitute part of a "plan"
or "series
of related transactions" (within the meaning of Section 355(e)
of the
Code) in conjunction with the transactions contemplated
hereby.
3.13. Real Property.
(a) The Company has never owned any real property.
(b)Schedule 3.13(b) lists and describes briefly all real
property leased or subleased to the Company. The Company has
delivered to
Buyer correct and complete copies of the leases and subleases
listed in
Schedule 3.13(b). With respect to each lease and sublease listed
in
Schedule 3.13(b):
(i)the lease or sublease is legal, valid, binding,
enforceable and in full force and effect;
(ii) the consummation of the Purchase and the subsequent
merger of the Company with and into Buyer will not affect the
terms or
enforceability of the lease or sublease;
(iii) no party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or lapse
of time, would
constitute a breach or default or permit termination,
modification, or
acceleration thereunder;
12
<PAGE>
(iv) no party to the lease or sublease has repudiated
any provision thereof;
(v)there are no disputes, oral agreements or forbearance
programs in effect as to the lease or sublease;
(vi) the Company has not assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any interest
in the leasehold
or subleasehold;
(vii) to the knowledge of the Company and the
Shareholders, all facilities leased or subleased thereunder have
received all
approvals of Governmental Entities (including licenses and
permits) required in
connection with the operation thereof and have been operated and
maintained in
accordance with applicable laws, rules, and regulations; and
(viii) all facilities leased or subleased thereunder are
supplied with functional utilities and other services necessary
for the normal
and usual operation of said facilities.
3.14. Intellectual Property.
(a)The Company owns or has rights pursuant to license,
sublicense, agreement or permission, applicable law or
otherwise, to all
Intellectual Property and Information Assets necessary for the
operation
of the Company's business as presently conducted, proposed to
be
conducted, and as required to be conducted in accordance with
applicable
Law and Company obligations. Each Information Asset and each
item of
Intellectual Property owned, leased or used by the Company is
owned,
leased or available for use by the Company on identical terms
and
conditions immediately subsequent to the Closing Date. The
Company has
taken all reasonably necessary and desirable action to maintain
and
protect each Information Asset and each item of Intellectual
Property.
(b)The Company has not interfered with, infringed upon,
misappropriated, converted, violated, trespassed upon, exceeded
authority
or consent with respect to, disclosed without authority, or
otherwise come
into conflict with (collectively "TRANSGRESSED") any
Intellectual Property
rights or rights in Information Assets of any third party. None
of the
Shareholders, directors, officers, employees or agents of the
Company has
ever received any oral or written charge, complaint, claim,
demand or
notice alleging any such Transgression (including any claim that
the
Company must license or refrain from using any Intellectual
Property
rights of any third party). To the Company's knowledge, no third
party has
Transgressed any Intellectual Property rights or Information
Assets of the
Company.
(c)Schedule 3.14(c) identifies each patent or trademark,
domain name and copyright registration that has been issued to
the Company
or any Affiliate of the Company with respect to any of its
Intellectual
Property or Information Assets, identifies each pending
application or
application for registration that the Company or any Affiliate
of the
Company has made with respect to any of its Intellectual
Property or
Information Assets, identifies all domain names that are used
by,
registered to or held by the Company or any Affiliate of the
Company, and
identifies each license, agreement, or other permission which
the Company
or any Affiliate of the Company has granted to any third party
with
respect to any of its Intellectual Property or Information
Assets
(together with any exceptions). The Company has
13
<PAGE>
delivered to Buyer correct and complete copies of all the items
to be
listed on Schedule 3.14(c) (as such items are as amended to
date).
Schedule 3.14(c) also identifies each trade name or unregistered
trademark
used by the Company or any Affiliate of the Company in
connection with any
of its businesses. With respect to each item of Intellectual
Property or
Information Asset required to be identified in Schedule
3.14(c):
(i)the Company possesses all (x) right, title, and
interest in and to the item, or (y) possesses sufficient rights
in the item such
that no other Person holds a rightful claim to, or interest in,
the Intellectual
Property or Information Asset which could interfere with
Company's enjoyment of
Company's interest, and the interest described in (x) or (y) is
free and clear
of any Security Interest, license, or other restriction, and, if
such item was
developed by an independent contractor, the Company has provided
Buyer with an
agreement in a written record relating to such work, as
identified in Schedule
3.14(c);
(ii) no royalty or other remuneration of any type is
payable with respect to any such item of Intellectual Property
or Information
Asset;
(iii) such item is not subject to any outstanding
injunction, judgment, order, decree, ruling or charge;
(iv) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand is pending or
threatened which
challenges the legality, validity, enforceability, use or
ownership of or
license or right in or to such item;
(v)no consents are required for the exercise of any
rights in the item by Buyer as a result of the Purchase;
(vi) the Company is not, nor as a result of the
execution or delivery of this Agreement, or performance of the
Company's
obligations hereunder, will the Company be, in violation of any
Transaction
relating to the Company's Intellectual Property or Information
Assets to which
the Company is a party or otherwise bound; and
(vii) the Company has never agreed to indemnify any
Person for or against any interference, infringement,
misappropriation,
trespass, violation of law or other conflict with respect to
such item.
(d)Schedule 3.14(d) identifies each Information Asset and
each
item of Intellectual Property that any third party owns or that
the
Company or any Affiliate of the Company uses pursuant to
license,
sublicense, agreement, consent or permission, applicable Laws or
other
authority (collectively, "AUTHORITY"), other than shrink-wrap
licenses for
personal computer software. The Company has delivered to Buyer
correct and
complete copies of same (as amended to date). With respect to
each item of
Intellectual Property and Information Asset required to be
identified in
Schedule 3.14(d):
(i)the Authority covering such item is legal, valid,
binding, enforceable and in full force and effect;
(ii) the Authority will continue to be legal, valid,
binding, enforceable and in full force and effect on identical
terms following
the Closing Date;
14
<PAGE>
(iii) no party to the Authority or other Person is in
violation of it or in breach or default, and no event has
occurred which with
notice or lapse of time would constitute a violation, breach or
default or
permit cancellation, modification or acceleration
thereunder;
(iv) no party to the Authority or other Person has
repudiated any provision thereof;
(v)no royalty or other remuneration of any type is
payable with respect to any such item;
(vi) with respect to each sublicense, the
representations and warranties set forth in items (i) through
(v) above are true
and correct with respect to the underlying license;
(vii) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling or charge;
(viii) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand is pending or
threatened which
challenges the legality, validity or enforceability of the
item;
(ix) no consents are required for the continued
existence or exercise of any rights in the item by Buyer as a
result of the
Purchase; and
(x)the Company has not delegated any rights and has not
granted any sublicense or similar right with respect to the
Authority.
(e)Neither the Shareholders nor any of the directors and
officers (nor any employees with responsibility for matters
regarding
Intellectual Property or Information Assets) of the Company have
any
knowledge of any new products, inventions, Information
procedures or
methods that any competitors or other third parties have
developed which
reasonably could be expected to supersede or make obsolete any
service,
product, process, Information or aspect of the Company or its
business.
(f)None of the Company's products, websites, services or
Information Assets use, embed or incorporate any software that
(1) is
subject to any "open source," "copyleft," or other similar types
of
license terms (including any GNU General Public License, Library
GNU
General Public License, GNU Lesser General Public License,
Mozilla
license, Berkeley Software Distribution license, Open Source
Initiative
license, MIT, Apache, and Public Domain licenses, or similar
licenses); or
(b) utilizes peer-to-peer file sharing technology.
(g) The Company has no obligations to provide maintenance or
technical support.
(h) The Company has obtained legally binding agreements in
non-electronic records from all employees and third parties with
whom
Company has shared Information (i) of Company that is
confidential, or
(ii) received from others that Company is obligated to treat, or
has
stated it will treat, as confidential or as restricted under a
privacy or
similar policy, which agreements require such employees and
third parties
to keep such information confidential or to use it only in
accordance with
said restrictions.
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<PAGE>
(i) The Company is not a member of any standards
organization
(including any similar organizations, such as special interest
groups or
associations).
(j) Schedule 3.14(j) lists any obligations of exclusivity,
non-competition, non-solicitation, right of first refusal, or
right of
first negotiation or the like to which the Company is subject
under any
agreement.
(k) No parties other than the Company possess any current or
contingent rights to any source code that is part of the
Company's
Intellectual Property or Information Assets (including through
any escrow
account).
3.15. Tangible Assets. Schedule 3.15 lists all the tangible
Assets
of the Company. Except as set forth on Schedule 3.15, the
Company owns and has
good and marketable title to all the tangible property and
tangible Assets
necessary for the conduct of its business as presently conducted
and as proposed
to be conducted, and as required to be conducted in accordance
with applicable
Law and the Company's obligations, including, but not limited
to, those Assets
listed on Schedule 3.15. The Company has paid all Taxes due or
incurred upon the
purchase of such Assets. The Company has no knowledge of any
defects in any of
the tangible Assets in accordance with normal industry practice,
and the
tangible Assets are in good operating condition and repair.
There are no
Security Interests on any of the Assets of the Company.
3.16. Inventory. The Company has no inventory.
3.17. Contracts and Policies. Schedule 3.17 lists the
following
Contracts and other agreements to which the Company is a party
and policies that
the Company has adopted or otherwise made available to third
parties, including
the following:
(a)any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for
lease
payments of any amount or for a term of more than one year;
(b)any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies,
products or
other personal property, or for the furnishing or receipt of
services of
any amount or which has a term of any duration;
(c) any partnership or joint venture agreement;
(d)any agreement (or group of related agreements) under
which
it has created, incurred, assumed or guaranteed any indebtedness
for
borrowed money, or any capitalized lease obligation, in any
amount, or
under which it has imposed a Security Interest on any of its
Assets,
tangible or intangible;
(e)any agreement concerning confidentiality or
non-competition, exclusivity, non-solicitation, right of first
refusal, or
right of first negotiation;
(f)any agreement with any of the Shareholders or Affiliates
of
any of the Shareholders;
16
<PAGE>
(g)any agreement to supply goods or services or Information
to
any party, whether a related party or an unrelated third party,
or to
receive goods or services or Information from any party, whether
a related
party or an unrelated third party;
(h)any agreement concerning a change of control, including
any
agreement to provide consideration or accelerate options to
purchase
stock;
(i)any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance or other material
plan or
arrangement (including any Employee Benefit Plan) for the
benefit of its
current or former directors, officers and employees;
(j) any collective bargaining agreement;
(k)any agreement for the employment of any individual on a
full-time, part-time, consulting or other basis;
(l)any agreement under which the consequences of a default
or
termination could have a Company Material Adverse Effect;
(m)any agreement or policies regarding Company undertakings
or
statements relating to privacy or security of Information,
including
Information owned by third parties that is handled, controlled
or
possessed by Company;
(n)any agreements regarding telephonic or electronic
(including without limitation, by telephone or cellular phone,
email,
mobile services, Internet or otherwise) advertising, marketing
or
promotions, linking, use of search engines or metatags or the
like, or
insertion of any Information onto a device owned or operated by
third
parties such as customers of Company or survey takers or Panel
members;
(o)all agreements with and policies concerning current
members
of the Panel, including but not limited to those regarding:
online and
offline recruitment of Panel members and survey takers; Panel
membership;
compensation or other reward of or incentives for Panel members,
survey
takers or recruiters, including agreements with third parties
for the
processing, clearing and delivery of same and for the reporting
of
unclaimed property; all privacy and security policies, online
terms of
use, incentive policies, sweepstakes rules and any other terms
and
conditions used in connection with the Panel and the Company's
websites in
effect as of the date of the Closing and applicable to current
Panel
members; and all procedures (including online screens) relating
to
obtaining agreement or consent to any of the foregoing, or
(p)any other agreement (or group of related agreements) the
performance of which involves consideration in excess of
$10,000.
The Company has delivered to Buyer a correct and complete copy
of
each written agreement or policy listed in Schedule 3.17 and a
written summary
setting forth the terms and conditions of each oral agreement or
policy referred
to in Schedule 3.17. With respect to each such agreement or
policy: (i) such is
legal, valid, binding, enforceable and in full force and effect;
(ii) such will
continue to be legal, valid, binding, enforceable and in full
force and effect
17
<PAGE>
on identical terms following the consummation of the
transactions contemplated
hereby; (iii) no party or other Person is in noncompliance,
breach or default,
and no event has occurred which with notice or lapse of time
would constitute an
act of noncompliance, breach or default, or permit cancellation,
modification or
acceleration, under such agreement or policy; and (iv) no party
has repudiated
any provision of such agreement.
3.18. Electronic Records; Powers of Attorney.
(a)With respect to any Law requiring Company to retain a
contract or other record relating to a Transaction, and with
respect to
any Law requiring any contract or record to be in a writing, if
Company
meets that requirement by retaining an electronic record of
the
information in the contract or other record, then such
electronic record
(a) accurately reflects the information set forth in the
contract or other
record; and (b) remains accessible to all persons who are
entitled to
access (or to retain a copy) by Law, for the period required by
such Law
and in a form that is capable of being accurately reproduced for
later
reference, whether by transmission, printing, or otherwise.
(b)With respect to any contract or record formed
electronically by one or more electronic agents, Company can
legally
attribute the act of that agent to the person to be bound.
(c)With respect to information that is subject to the
consumer
disclosure rules of 15 U.S.C. Section 7001(c), Company has
provided all
disclosures and has obtained all consents, required by said
section, and
retains adequate records thereof.
(d)There are no outstanding powers of attorney executed on
behalf of the Company.
3.19. Insurance. Schedule 3.19 sets forth the following
information
with respect to each current insurance policy (including but not
limited to
policies providing property, casualty, liability and workers'
compensation
coverage, bond and surety arrangements and coverage for
Information Assets and
Intellectual Property) to which the Company has been a party, a
named insured,
or otherwise the beneficiary of coverage:
(a) the name, address, and telephone number of the agent;
(b)the name of the insurer, the name of the policyholder and
the name of each covered insured;
(c)the policy number, the period of coverage and the amount
of
the annual premiums payable;
(d)the scope (including an indication of whether the
coverage
is on a claims made, occurrence, or other basis) and amount
(including a
description of how deductibles and ceilings are calculated and
operate) of
coverage; and
(e)a description of any retroactive premium adjustments or
other loss-sharing arrangements.
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<PAGE>
With respect to each such insurance policy: (i) such policy
is
legal, valid, binding, enforceable and in full force and effect;
(ii) unless
changed by Buyer, such policy will continue to be legal, valid,
binding,
enforceable and in full force and effect on identical terms
following the
consummation of the transactions contemplated hereby; (iii)
neither the Company
nor any other party to the policy is in breach or default
(including with
respect
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