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STOCK PURCHASE AGREEMENT

Stock Purchase Agreement

STOCK PURCHASE AGREEMENT | Document Parties: GREENFIELD ONLINE INC | RAPIDATA.NET, INC. You are currently viewing:
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GREENFIELD ONLINE INC | RAPIDATA.NET, INC.

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Title: STOCK PURCHASE AGREEMENT
Governing Law: Delaware     Date: 1/26/2005
Law Firm: Preston Gates Ellis LLP; Daniels Daniels Verdonik, P.A.    

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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

 

<PAGE>

 

                                TABLE OF CONTENTS

 

<TABLE>

<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

</TABLE>

 

                                        i

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<TABLE>

<S>                                                                                               <C>

         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

</TABLE>

 

                                       ii

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<TABLE>

<S>                                                                                      <C>

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

</TABLE>

 

<TABLE>

<CAPTION>

EXHIBITS                          DESCRIPTION

--------                          -----------

<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

</TABLE>

 

<TABLE>

<CAPTION>

SCHEDULE

  NUMBER                           DESCRIPTION

--------                          -----------

<S>            <C>

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

</TABLE>

 

                                       iii

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INDEX OF DEFINED TERMS

 

<TABLE>

<CAPTION>

                                                   PAGE

                                                 ------

<S>                                               <C>

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>

 

                                       iv

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<TABLE>

<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

</TABLE>

 

                                        v

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                            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

<PAGE>

 

                  (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.

 

                                        4

<PAGE>

 

                  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

<PAGE>

 

            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.

 

                                        15

<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.

 

                                       18

<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 to the payment of premiums or the giving of notices), and no event has

occurred which, with notice or the lapse of time, would constitute such a breach

or default, o


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