Exhibit 16
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
NETRATINGS, INC.
ESTANCIA ACQUISITION CORPORATION,
ACNIELSEN XXXXXXXX.XXX
AND
ACNIELSEN CORPORATION
May 7, 2002
TABLE OF CONTENTS
Page
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1. Definitions ......................................................... 1
1.1 Certain Defined Terms ........................................ 1
1.2 Other Terms Used in this Agreement ........................... 6
2. The Merger .......................................................... 6
2.1 The Merger ................................................... 6
2.2 Closing; Effective Time ...................................... 6
2.3 Effect of the Merger ......................................... 6
2.4 Certificate of Incorporation; Bylaws ......................... 7
2.5 Directors and Officers ....................................... 7
2.6 Effect on Capital Stock ...................................... 7
2.7 Exchange Procedures .......................................... 8
2.8 No Further Ownership Rights in Company Capital Stock ......... 9
2.9 Lost, Stolen or Destroyed Certificates ....................... 9
2.10 Tax Consequences ............................................. 9
2.11 Taking of Necessary Action; Further Action ................... 9
3. Representations and Warranties of the Company and ACN ............... 9
3.1 Organization, Standing and Power ............................. 10
3.2 Authority .................................................... 10
3.3 Governmental Authorization ................................... 11
3.4 Financial Statements ......................................... 11
3.5 Capital Structure ............................................ 11
3.6 Absence of Certain Changes ................................... 12
3.7 Absence of Undisclosed Liabilities ........................... 13
3.8 Litigation ................................................... 13
3.9 Restrictions on Business Activities .......................... 13
3.10 Intellectual Property ........................................ 14
3.11 Interested Party Transactions ................................ 18
3.12 Minute Books ................................................. 18
3.13 Material Contracts ........................................... 18
3.14 Accounts Receivable .......................................... 19
3.15 Customers and Suppliers ...................................... 19
3.16 Employees and Consultants .................................... 20
3.17 Title to Property .............................................20
3.18 Environmental Matters ........................................ 20
3.19 Taxes ........................................................ 20
3.20 Employee Benefit Plans ....................................... 22
3.21 Employee Matters ............................................. 25
3.22 Insurance .................................................... 25
3.23 Compliance with Laws ......................................... 26
3.24 Brokers' and Finders' Fees ................................... 26
3.25 Privacy Policy................................................ 26
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TABLE OF CONTENTS
(continued)
Page
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4. Representations and Warranties of NetRatings and Merger Sub ......... 27
4.1 Organization, Standing and Power ............................. 27
4.2 Authority .................................................... 28
4.3 SEC Documents: Financial Statements .......................... 29
4.4 Capital Structure ............................................ 29
4.5 Issuance of Shares ........................................... 30
4.6 Interim Operations of Merger Sub ............................. 30
5. Additional Agreements. .............................................. 30
5.1 Conduct of Business of the Company Prior to the
Effective Time. ........................................... 30
5.2 Sale of Shares Pursuant to Regulation D ...................... 33
5.3 Access to Information ........................................ 33
5.4 Confidentiality .............................................. 33
5.5 Public Disclosure ............................................ 34
5.6 Regulatory Approval; Further Assurances ...................... 34
5.7 Company Options .............................................. 35
5.8 Blue Sky Laws ................................................ 36
5.9 Listing of Additional Shares ................................. 36
5.10 Employees .................................................... 36
5.11 Reorganization ............................................... 37
5.12 Expenses ..................................................... 37
5.13 Indemnification and Insurance ................................ 37
5.14 Termination of Existing Agreements ........................... 38
5.15 Services Agreement and Post-Closing Agreement ................ 38
5.16 Modification of International Operations;
Transition Matters ........................................ 39
5.17 Repayments ................................................... 39
6. Conditions to the Merger ............................................ 41
6.1 Conditions to Obligations of Each Party to
Effect the Merger ......................................... 41
6.2 Additional Conditions to the Obligations of
NetRatings and Merger Sub ................................. 41
6.3 Additional Conditions to Obligations of the
Company and ACN ........................................... 43
7. Termination; Amendment .............................................. 44
7.1 Termination .................................................. 44
7.2 Effect of Termination ........................................ 45
7.3 Amendment .................................................... 45
8. Indemnification ..................................................... 45
8.1 Survival of Representations and Warranties ................... 45
8.2 Indemnification by ACN ....................................... 45
8.3 Indemnification by NetRatings and Merger Sub ................. 46
8.4 Time Limitations ............................................. 46
8.5 Limitations on Amount ........................................ 47
8.6 Third Party Claims ........................................... 47
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TABLE OF CONTENTS
(continued)
Page
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9. General Provisions .................................................. 48
9.1 Notices ...................................................... 48
9.2 Counterparts ................................................. 49
9.3 Entire Agreement ............................................. 50
9.4 Assignment ................................................... 50
9.5 No Third Party Beneficiary ................................... 50
9.6 Severability ................................................. 50
9.7 Remedies Cumulative .......................................... 50
9.8 Governing Law ................................................ 50
9.9 Rules of Construction ........................................ 50
9.10 Enforcement .................................................. 51
9.11 Waiver ....................................................... 51
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LIST OF EXHIBITS AND ANNEXES
Annex A Amended and Restated Paragraph 4 of the Company's Certificate
of Incorporation
Annex B-1 Form of Services Agreement
Annex B-2 Form of Post-Closing Agreement
Annex C Form of NMR Commissions Agreement
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (as amended from time to time,
the "Agreement") is made and entered into as of May 7, 2002 by and among
NetRatings, Inc., a Delaware corporation ("NetRatings"), Estancia Acquisition
Corporation, a Delaware corporation ("Merger Sub") and wholly owned subsidiary
of NetRatings, ACNielsen xXxxxxxx.xxx, a Delaware corporation (the "Company"),
and ACNielsen Corporation, the principal stockholder of the Company ("ACN").
RECITALS:
A. The Boards of Directors of the Company, NetRatings and Merger Sub
believe it is in the best interests of their respective companies and the
stockholders of their respective companies that the Company and Merger Sub
combine into a single company through the merger of Merger Sub with and into the
Company (the "Merger") and, in furtherance thereof, have approved the Merger.
B. Pursuant to the Merger, among other things, the outstanding shares of
Company Capital Stock shall be converted into the right to receive the Merger
Consideration upon the terms and subject to the conditions set forth herein.
C. The Company, NetRatings and Merger Sub desire to make certain
representations and warranties and other agreements in connection with the
Merger.
D. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"), and to cause the Merger to qualify as a
reorganization under the provisions of Section 368(a) of the Code.
AGREEMENT:
NOW, THEREFORE, in consideration of the covenants and representations
set forth herein, and for other good and valuable consideration, the parties
agree as follows:
1. Definitions.
1.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Certificate" has the meaning set forth in Section 2.7.
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" has the meaning set forth in Section 2.2.
"COBRA" has the meaning set forth in Section 3.20(e).
"Code" has the meaning set forth in Recital D.
"Common Exchange Ratio" has the meaning set forth in
Section 2.6(c).
"Company Audited Financial Statements" has the meaning set
forth in Section 3.4.
"Company Balance Sheet" has the meaning set forth in
Section 3.4.
"Company Balance Sheet Date" has the meaning set forth in
Section 3.6.
"Company Capital Stock" means Company Common Stock,
Company Preferred Stock or any combination thereof.
"Company Class A Preferred Stock" means the Class A
Preferred Stock, par value $0.001 per share, of the Company.
"Company Common Stock" means the common stock, par value
$0.001 per share, of the Company.
"Company Disclosure Schedule" has the meaning set forth in
Section 3.
"Company Employee Plan" has the meaning set forth in
Section 3.20(a).
"Company Employees" has the meaning set forth in Section
5.5.
"Company Financial Statements" has the meaning set forth
in Section 3.4.
"Company Indemnified Person" and "Company Indemnified
Persons" have the meanings set forth in Section 7.3.
"Company Intellectual Property" has the meaning set forth
in Section 3.10(c).
"Company International Employee Plans" has the meaning set
forth in Section 3.20(a).
"Company Operating Agreement" means that certain Operating
Agreement, dated as of September 22, 1999, between the Company and NetRatings.
"Company Option Plan" means the ACNielsen xXxxxxxx.xxx
Stock Option Plan.
"Company Options" has the meaning set forth in Section
2.6(e).
"Company Preferred Stock" means the preferred stock, par
value $0.001 per share, of the Company.
"Company Rights Agreement" means that certain Rights
Agreement, dated as of September 22, 1999, among ACN, the Company and
NetRatings.
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"Company Side Letter" means that certain letter agreement,
dated as of September 22, 1999, between NetRatings and ACN.
"Company Stockholders Agreement" means that certain
Stockholders Agreement, dated as of September 22, 1999, among ACN, the Company
and NetRatings.
"Company Unaudited Financial Statements" has the meaning
set forth in Section 3.4.
"Confidentiality Agreement" has the meaning set forth in
Section 5.2.
"Copyrights" has the meaning set forth in Section 3.10(a).
"Damages" has the meaning set forth in Section 7.2.
"Delaware Law" has the meaning set forth in Section 2.1.
"Effective Time" has the meaning set forth in Section 2.2.
"ERISA" has the meaning set forth in Section 3.20(a).
"ERISA Affiliate" has the meaning set forth in Section
3.20(a).
"Exchange Act" means the United States Securities Exchange
Act of 1934, as amended.
"Foreign Antitrust Laws" means any foreign antitrust or
competition laws or regulations that require advance notification or clearance
as a condition to the consummation of a business combination.
"Governmental Entity" means a court, administrative agency
or commission or other governmental authority or instrumentality.
"HIPAA" has the meaning set forth in Section 3.20(e).
"Independent Directors" means the directors of NetRatings
that are not (i) affiliated with ACN or any other entity (other than NetRatings)
that controls, is controlled by or is under common control with ACN or (ii)
employees of NetRatings.
"Insurance Amount" has the meaning set forth in Section
5.8(c).
"Intellectual Property" has the meaning set forth in
Section 3.10(a).
"Issued Patents" has the meaning set forth in Section
3.10(a).
"JMM" means Jupiter Media Metrix, Inc., a Delaware
corporation.
"JMM Agreement" has the meaning set forth in Section 6.2.
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"Leased Employees" has the meaning set forth in Section
3.22.
"Material Adverse Effect," with respect to any entity or
group of entities, means any event, change or effect that is materially adverse
to the financial condition, properties, assets, liabilities, business,
operations or results of operations of such entity and its subsidiaries, taken
as a whole, other than any event, change or effect resulting from any of the
following, in and of itself: (a) a change in generally accepted accounting
principles in the United States or any foreign jurisdiction or any
interpretation thereof; (b) a change or occurrence affecting the industry or
industries in which such entity or entities is or are engaged generally, except
to the extent the effect on such entity is materially disproportionate as
compared to the effect on substantially similarly situated entities engaged in
such industry or industries generally; (c) a change in general economic
conditions in the United States or in any foreign jurisdiction, except to the
extent the effect of such change on such entity is materially disproportionate
as compared to the effect on substantially similarly situated entities; (d) any
adverse change to the extent attributable to the announcement or pendency of the
Merger, including any cancellations of or delay in customer orders, any
reduction in sales or revenues, any disruption in supplier, distributor, partner
or similar relations or any loss of employees; (e) any adverse change to the
extent attributable to the announcement, pendency or consummation of the
transactions contemplated by the JMM Agreement, including any cancellations of
or delay in customer orders, any reduction in sales or revenues, any disruption
in supplier, distributor, partner or similar relations, any loss of employees,
or any adverse change affecting JMM; or (f) any adverse change to the extent
attributable to the taking or engaging in by ACN (or any affiliate thereof) or
the Company of any Transition Matters or incurrence thereby of any Transition
Costs or otherwise in connection with the implementation of the plan relating to
the Company's international operations described in the definition of Transition
Matters set forth below.
"Material Contract" has the meaning set forth in Section
3.13.
"Merger Consideration" means the shares of NetRatings
Common Stock to be issued in the Merger.
"Merger Sub Common Stock" means the common stock, par
value $.001 per share, of Merger Sub.
"Nasdaq" means The Nasdaq Stock Market, Inc.
"NetRatings Common Stock" means the common stock, $.001
par value per share, of NetRatings.
"NetRatings Employee Stock Purchase Plan" has the meaning
set forth in Section 4.4.
"NetRatings Financial Statements" has the meaning set
forth in Section 4.3(b).
"NetRatings Indemnified Person" and "NetRatings
Indemnified Persons" have the meanings set forth in Section 7.2.
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"NetRatings Plans" has the meaning set forth in Section
5.5.
"NetRatings SEC Documents" has the meaning set forth in
Section 4.3(a).
"NetRatings Stock Option Plan" has the meaning set forth
in Section 4.4.
"NMR" means Xxxxxxx Media Research, Inc., a Delaware
corporation.
"NNM" means the Nasdaq National Market.
"Patent Applications" has the meaning set forth in Section
3.10(a).
"Patents" has the meaning set forth in Section 3.10(a).
"Person" means any individual, corporation, general or
limited partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union or other entity or any Governmental
Entity.
"Post-Closing Agreement" has the meaning set forth in
Section 6.1.
"Preferred Exchange Ratio" means 749,341.
"Returns" has the meaning set forth in Section 3.19(b).
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the United States Securities Act of
1933, as amended.
"Services Agreement" has the meaning set forth in Section
6.1.
"Surviving Corporation" has the meaning set forth in
Section 2.1.
"Tax" has the meaning set forth in Section 3.19(a).
"Third Party Intellectual Property" has the meaning set
forth in Section 3.10(d).
"Trademarks" has the meaning set forth in Section 3.10(a).
"Transition Costs" means any and all costs and expenses
relating to or incurred in connection with Transition Matters, whether incurred
by ACN (or any affiliate thereof) or any other Person.
"Transition Matters" means any and all actions taken to
effect or further the discontinuation, reduction, cessation or other reduction
or modification of the international operations of the Company (and, to the
extent relating to the Company, ACN) and/or the Company's (and, to the extent
relating to the Company, ACN's) business and operations and presence in the
following jurisdictions, including, without limitation, (i) the termination of
the
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Company's (and, to the extent relating to the Company, ACN's) relationships,
contracts and arrangements with its customers in such jurisdictions, (ii) the
termination of the Company's (and, to the extent relating to the Company, ACN's)
relationships, contracts and arrangements with its suppliers and service
providers (including, without limitation ACN and its affiliates) in such
jurisdictions, (iii) the termination of the Company's (and, to the extent
relating to the Company, ACN's) relationships, contracts and arrangements with
respect to such jurisdictions, and (iv) the termination of any real property or
personal property leases or similar arrangements of the Company (and, to the
extent relating to the Company, ACN) in such jurisdictions:
1. Argentina
2. Austria
3. Belgium
4. Finland
5. India
6. Ireland
7. Israel
8. Mexico
9. New Zealand
10. Xxxxxx
00. Xxxxxx
12. Portugal
13. Singapore
14. South Africa
15. South Korea
16. Taiwan
Notwithstanding anything to the contrary set forth herein, the taking or
implementation of any Transition Matter or incurrence or payment of any
Transition Cost by the Company or ACN (or an affiliate thereof) shall not, in
and of itself, constitute a breach of any representation, warranty, agreement or
covenant of the Company or ACN contained herein.
1.2 Other Terms Used in this Agreement. In this Agreement, any
reference to any event, change, condition or effect being "material" with
respect to any entity or group of entities means that such event, change,
condition or effect is material as it relates to the financial condition,
properties, assets (including intangible assets), liabilities, business,
operations or results of operations of such entity or group of entities, taken
as a whole. In this Agreement, any reference to a party's "knowledge" means such
party's actual knowledge after reasonable inquiry of officers, directors and
other employees of such party reasonably believed to have knowledge of such
matters. In this Agreement, any reference to "generally accepted accounting
principles" means the generally accepted accounting principles that are applied
in the United States, except as otherwise specified. In this Agreement, any
reference to a party's "subsidiary" or "subsidiaries" means any entity whose
financial results are required to be consolidated with that party's financial
results under generally accepted accounting principles, as in effect on the date
of this Agreement, as a result of that party's ownership of the entity's equity
securities or ability to elect members of the entity's board of directors or
similar governing body.
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2. The Merger.
2.1 The Merger. At the Effective Time and subject to and upon the
terms and conditions of this Agreement and the applicable provisions of the
General Corporation Law of the State of Delaware ("Delaware Law"), Merger Sub
shall be merged with and into the Company, the separate corporate existence of
Merger Sub shall cease and the Company shall continue as the surviving
corporation. The Company as the surviving corporation after the Merger is
hereinafter sometimes referred to as the "Surviving Corporation."
2.2 Closing; Effective Time. The closing of the transactions
contemplated hereby (the "Closing") shall take place on the date hereof (the
"Closing Date"). The Closing shall take place at the offices of Xxxx Xxxx Xxxx &
Freidenrich, counsel to NetRatings, or at such other location as the parties
hereto agree. Concurrently with the Closing, the parties hereto shall cause the
Merger to be consummated by the filing of a certificate of merger with the
Secretary of State of the State of Delaware in accordance with the relevant
provisions of Delaware Law (the time of such filing, the "Effective Time").
2.3 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement and the applicable provisions
of Delaware Law, including Section 259 thereof. Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time, all the property,
rights, privileges, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
2.4 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the certificate of
incorporation of the Company as in effect immediately prior to the Effective
Time shall be the certificate of incorporation of the Surviving Corporation;
provided, however, that paragraph 4 of the Company's certificate of
incorporation shall be amended and restated in its entirety as set forth on
Annex A hereto, and paragraphs 5, 6, 7, 13 and 14 of the Company's certificate
of incorporation shall be deleted in their entirety.
(b) At the Effective Time, the Bylaws of the Company as in
effect immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation until thereafter amended.
2.5 Directors and Officers. At the Effective Time, (i) the
directors of Merger Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation, until their respective successors are
duly elected or appointed and qualified, and (ii) the officers of the Company
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation and shall continue to hold the offices they held immediately prior
to the Effective Time, to serve until their respective successors are duly
elected or appointed and qualified.
2.6 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of Merger Sub, the Company or the
holders of any of the following securities:
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(a) Cancellation of Treasury Securities. At the Effective
Time, each share of Company Capital Stock held by the Company as treasury stock
or otherwise immediately prior to the Effective Time shall automatically be
cancelled and retired and no consideration or payment shall be delivered
therefor or in respect thereof.
(b) Conversion of Company Class A Preferred Stock. Each
share of Company Class A Preferred Stock issued and outstanding immediately
prior to the Effective Time shall be converted and exchanged, without any action
on the part of the holders thereof, into the right to receive a number of fully
paid and nonassessable shares of NetRatings Common Stock equal to the Preferred
Exchange Ratio.
(c) Conversion of Company Common Stock. Subject to Section
2.6(d), each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares owned by NetRatings or any direct
or indirect subsidiary of NetRatings) shall be converted and exchanged, without
any action on the part of the holders thereof, into the right to receive a
number of fully paid and nonassessable shares of NetRatings Common Stock at the
rate of .00936 shares of NetRatings Common Stock for each share of Company
Common Stock (the "Common Exchange Ratio").
(d) Cancellation of Company Capital Stock Owned by
NetRatings. At the Effective Time, each share of Company Capital Stock owned by
NetRatings or any direct or indirect subsidiary of NetRatings immediately prior
to the Effective Time shall be canceled and extinguished without any conversion
thereof.
(e) Company Stock Options. At the Effective Time, all
options to purchase Company Common Stock then outstanding under the Company
Option Plan ("Company Options") at the Effective Time shall be assumed by
NetRatings in accordance with Section 5.4.
(f) Capital Stock of Merger Sub. At the Effective Time,
each share of Merger Sub Common Stock issued and outstanding immediately prior
to the Effective Time shall be converted into and exchanged for one validly
issued, fully paid and nonassessable share of common stock of the Surviving
Corporation. Each stock certificate of Merger Sub evidencing ownership of any
such shares shall continue to evidence ownership of such shares of capital stock
of the Surviving Corporation.
(g) Certificate Legends. The shares of NetRatings Common
Stock to be issued pursuant to this Section 2.6 shall not have been registered
and shall be characterized as "restricted securities" under the federal
securities laws, and under such laws such shares may be resold without
registration under the Securities Act, only in certain limited circumstances.
Each certificate evidencing shares of NetRatings Common Stock to be issued
pursuant to this Section 2.6 shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH
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REGISTRATION WITHOUT AN EXEMPTION UNDER THE SECURITIES ACT OR AN OPINION
OF LEGAL COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED."
and any legends required by state securities laws.
2.7 Exchange Procedures.
(a) At or after the Closing, each holder of Company
Capital Stock shall deliver to NetRatings any certificate or certificates which
immediately prior to the Effective Time represented outstanding shares of
Company Capital Stock (each a "Certificate"), which shares were converted into
the right to receive shares of NetRatings Common Stock pursuant to Section 2.6,
and NetRatings shall issue to each such holder of Company Capital Stock
immediately upon receipt of such Certificate a certificate representing the
number of whole shares of NetRatings Common Stock into which the shares
represented by such Certificate immediately prior to the Effective Time were
converted pursuant to Section 2.6 in connection with the Merger, and the
Certificate(s) so surrendered shall forthwith be canceled.
(b) Until so surrendered, each outstanding Certificate
that, prior to the Effective Time, represented shares of Company Capital Stock
will be deemed from and after the Effective Time, for all purposes, to evidence
the ownership of the number of full shares of NetRatings Common Stock into which
such shares of Company Capital Stock shall have been converted in connection
with the Merger.
2.8 No Further Ownership Rights in Company Capital Stock. The
Merger Consideration delivered upon the surrender for exchange of shares of
Company Capital Stock in accordance with the terms hereof (including any
dividends or distributions) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Company Capital Stock,
and there shall be no further registration of transfers on the records of the
Surviving Corporation of shares of Company Capital Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be cancelled and exchanged substantially as provided in this Section 2.
2.9 Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, NetRatings shall issue
in exchange for such lost, stolen or destroyed Certificates, upon the making of
an affidavit of that fact by the holder thereof such NetRatings Common Stock
(and dividends and distributions) as may be required pursuant to Section 2.6;
provided, however, that NetRatings may, as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed Certificate to
provide to NetRatings an indemnity agreement against any claim that may be made
against NetRatings with respect to the Certificate.
2.10 Tax Consequences. It is intended by the parties hereto that
the Merger shall constitute a reorganization within the meaning of Section
368(a) of the Code.
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2.11 Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, any further action is reasonably necessary or
desirable to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of the Company and Merger Sub, the
officers and directors of the Company and Merger Sub are fully authorized in the
name of their respective corporations or otherwise to take, and will take, all
such lawful and necessary action, so long as such action is not inconsistent
with this Agreement.
3. Representations and Warranties of the Company and ACN. The Company
and ACN each represent and warrant to NetRatings and Merger Sub that the
statements contained in this Section 3 are true and correct, except as disclosed
in a document of even date herewith and delivered by the Company to NetRatings
referring to the representations and warranties in this Agreement (the "Company
Disclosure Schedule") and as otherwise qualified herein. The Company Disclosure
Schedule will be arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Section 3, and the disclosure in any such
numbered and lettered section of the Company Disclosure Schedule shall qualify
only the corresponding subsection in this Section 3 (except to the extent
disclosure in any numbered and lettered section of the Company Disclosure
Schedule is specifically cross-referenced in another numbered and lettered
section of the Company Disclosure Schedule).
3.1 Organization, Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has the corporate power to own its
properties and to carry on its business as now being conducted and as currently
proposed to be conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which the failure to be so qualified and in
good standing could reasonably be expected to have a Material Adverse Effect on
the Company. The Company has delivered to NetRatings true and correct copies of
the Company's certificate of incorporation and bylaws, each as amended to date.
The Company is not in violation of any of the provisions of its certificate of
incorporation or bylaws. The Company has no subsidiaries. Except as set forth in
Section 3.1 of the Company Disclosure Schedule, the Company does not directly or
indirectly own any equity or similar interest in, or any interest convertible or
exchangeable or exercisable for, any equity or similar interest in, any Person.
3.2 Authority. The Company and ACN have all requisite corporate
power and authority to enter into this Agreement 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 on the part of the Company and ACN.
This Agreement has been duly executed and delivered by the Company and ACN and
constitutes the valid and binding obligation of each of the Company and ACN
enforceable against each of the Company and ACN in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting or relating to creditors' rights generally, and
subject to general principles of equity. The execution and delivery of this
Agreement by the Company and ACN does not, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in any
violation of or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any material obligation or loss of any material benefit under (i) any provision
of the certificate of incorporation or bylaws of the Company or ACN or
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(ii) any mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or ACN or any of their
respective properties or assets, in the case of clause (ii), except as set forth
in Section 3.2 of the Company Disclosure Schedule or for such conflicts,
violations, defaults, rights of termination, cancellation or acceleration or
losses as could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on the Company. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to the Company or ACN in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (a) the filing of the certificate
of merger as provided in Section 2.2, (b) the filing by NetRatings of a Form D
with the SEC in accordance with Regulation D following the Effective Time, (c)
the filing by NetRatings of a Form 8-K with the SEC, (d) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable state securities laws and the securities laws
of any foreign country, (e) such filings as may be required under Foreign
Antitrust Laws, and (f) such other consents, approvals, orders, authorizations,
registrations, declarations or filings which, if not obtained or made, could not
reasonably be expected to have a Material Adverse Effect on the Company and
could not reasonably be expected to prevent, or materially alter or delay any of
the transactions contemplated by this Agreement.
3.3 Governmental Authorization. The Company or ACN has obtained
each federal, state, county, local or foreign governmental consent, license,
permit, grant, or other authorization of a Governmental Entity (i) pursuant to
which the Company currently operates or holds any interest in any of its
properties or (ii) that is required for the operation of the Company's business
or the holding of any such interests, and all of such consents, grants, permits,
licenses or other authorizations are in full force and effect, except where the
failure to have obtained any such consents, licenses, permits, grants or other
authorizations or maintain any of them in full force and effect could not
reasonably be expected to have a Material Adverse Effect on the Company.
3.4 Financial Statements. The Company has delivered to NetRatings
(i) its audited balance sheet as of December 31, 2000 and its audited statements
of operations, cash flows and stockholders' equity for the fiscal year then
ended (the "Company Audited Financial Statements"), (ii) its unaudited balance
sheet as of December 31, 2001 and its unaudited statements of operations and
cash flows for the fiscal year then ended (the "Company 2001 Unaudited Financial
Statements") and (iii) its unaudited balance sheet as of March 31, 2002 (the
"Company Balance Sheet") and its unaudited statements of operations and cash
flows for the three-month period then ended (collectively with the Company
Balance Sheet, the "Company Interim Financial Statements"). The Company 2001
Unaudited Financial Statements and the Company Interim Financial Statements are
referred to collectively herein as the "Company Unaudited Financial Statements,"
and the Company Audited Financial Statements and the Company Unaudited Financial
Statements are referred to collectively herein as the "Company Financial
Statements." The Company Financial Statements have been prepared in accordance
with generally accepted accounting principles (except as disclosed in the notes
thereto and except that the Company Unaudited Financial Statements do not
contain footnotes and, in the case of the Company Interim Financial Statements,
are subject to normal year-end audit adjustments) applied on a consistent basis
throughout the periods indicated and with each other.
11
The Company Financial Statements fairly present in all material respects the
consolidated financial condition and operating results of the Company as of the
dates and for the periods indicated therein. The Company maintains and will
continue to maintain a standard system of accounting established and
administered in accordance with generally accepted accounting principles.
3.5 Capital Structure. The authorized capital stock of the
Company consists of (a) 200,000,000 shares of Company Common Stock, of which
19,900,000 are issued and outstanding as of the date of this Agreement, and (b)
2,000,000 shares of Company Preferred Stock, (i) of which 50,000 shares are
designated Company Class A Preferred Stock, one of which is issued and
outstanding as of the date of this Agreement, and which, as of the date of this
Agreement, is convertible into 80,100,000 shares of Company Common Stock, and
(ii) of which 50,000 are designated Class B Preferred Stock, $0.001 par value
per share, none of which are outstanding as of the date hereof. All outstanding
shares of Company Common Stock and Company Class A Preferred Stock have been
duly authorized and validly issued and are fully paid and non-assessable and
free of any liens or encumbrances other than any liens or encumbrances created
by or imposed upon the holders thereof (including those arising under the
Company Stockholders Agreement, the Company Rights Agreement and the Company's
certificate of incorporation), and are not subject to preemptive rights or
rights of first refusal created by statute, the certificate of incorporation or
bylaws of the Company or any agreement to which the Company is a party or by
which it is bound, other than the Company Stockholders Agreement and the Company
Rights Agreement. As of the date of this Agreement, there are 10,000,000 shares
of Company Common Stock reserved for issuance under the Company Option Plan, of
which 5,251,000 are subject to outstanding Company Options, none of which are or
will be exercisable prior to the Effective Time. Except for the rights created
pursuant to this Agreement, and the Company Options (and any stock option
agreements issued in connection therewith) and other rights disclosed above in
this Section 3.5 (including any rights under the Company Stockholders Agreement,
the Company Option Plan or the Company Rights Agreement) and the Company Class A
Preferred Stock, there are no options, warrants, calls, rights, commitments or
agreements of any character to which the Company is a party or by which it is
bound obligating the Company to issue, deliver, sell, repurchase or redeem or
cause to be issued, delivered, sold, repurchased or redeemed, any shares of
Company Capital Stock or obligating the Company to grant, extend, accelerate the
vesting of, change the price of, or otherwise amend or enter into any such
option, warrant, call, right, commitment or agreement. All shares of Company
Common Stock issuable upon conversion of the Company Class A Preferred Stock or
upon exercise of the Company Options described in this Section 3.5 will be, when
issued pursuant to the respective terms of such Company Class A Preferred Stock
or Company Options, as applicable, duly authorized, validly issued, fully paid
and nonassessable. Other than the Company Stockholders Agreement, the Company
Rights Agreement and the Company Option Plan (and any stock option agreements
issued thereunder), there are no other contracts, commitments or agreements
relating to voting, purchase or sale of the Company's capital stock (i) between
or among the Company and any of its stockholders and (ii) to the knowledge of
the Company or ACN, between or among any of the Company's stockholders. All
shares of outstanding Company Common Stock and Company Class A Preferred Stock
and the Company Options were issued in compliance with all applicable federal
and state securities laws.
12
3.6 Absence of Certain Changes. From March 31, 2002 (the "Company
Balance Sheet Date") through the date of this Agreement, the Company has
conducted its business in the ordinary course consistent with past practice and
there has not occurred, except as set forth in Section 3.6 of the Company
Disclosure Schedule or as specifically contemplated by this Agreement: (i) any
change, event or condition (whether or not covered by insurance) that has
resulted in, or could reasonably be expected to result in, a Material Adverse
Effect with respect to the Company; (ii) any acquisition, sale or transfer of
any material asset of the Company other than in the ordinary course of business
and consistent with past practice; (iii) any change in accounting methods or
practices (including any change in depreciation or amortization policies or
rates) by the Company or any revaluation by the Company of any of its assets, in
each case, other than as required by changes in generally accepted accounting
principles or other applicable principles of accounting or auditing; (iv) any
declaration, setting aside, or payment of a dividend or other distribution with
respect to the shares of the Company or any direct or indirect redemption,
purchase or other acquisition by the Company of any of its shares of capital
stock; (v) any Material Contract entered into by the Company, other than in the
ordinary course of business and as provided to NetRatings, or any material
amendment or termination of, or default under, any Material Contract; (vi) any
amendment or change to the certificate of incorporation or bylaws of the
Company; (vii) any increase in or modification of the compensation or benefits
payable or to become payable by the Company to any of its directors or
employees, other than in the ordinary course of business consistent with past
practice; or (viii) any negotiation or agreement by the Company to do any of the
things described in the preceding clauses (i) through (vii) (other than
negotiations with NetRatings and its representatives regarding the transactions
contemplated by this Agreement). As of the Closing Date, there are no accrued
but unpaid dividends on shares of the Company's capital stock.
3.7 Absence of Undisclosed Liabilities. The Company has no
material obligations or liabilities of any nature (matured or unmatured, fixed
or contingent) other than (i) those set forth or adequately provided for in the
Company Balance Sheet, (ii) those incurred in the ordinary course of business
and not required to be set forth in the Company Balance Sheet under generally
accepted accounting principles, (iii) those incurred in the ordinary course of
business since the Company Balance Sheet Date and consistent with past practice,
(iv) those incurred in connection with the execution and performance of this
Agreement and (v) those arising as Transition Costs or in connection with
Transition Matters.
3.8 Litigation. Except as set forth in Section 3.8 of the Company
Disclosure Schedule, as of the date of this Agreement, there is no private or
governmental action, suit, proceeding, claim, arbitration or investigation
pending before any Governmental Entity, foreign or domestic (excluding
collection actions brought by the Company in the ordinary course consistent with
past practice), or, to the knowledge of the Company or ACN, threatened in
writing against the Company or any of its properties or any of its officers or
directors (in their capacities as such). As of the date of this Agreement, there
is no judgment, decree or order against the Company, or, to the knowledge of the
Company or ACN, any of its directors or officers (in their capacities as such).
3.9 Restrictions on Business Activities. Except as set forth in
Section 3.9 of the Company Disclosure Schedule, there is no agreement, judgment,
injunction, order or decree binding upon the Company which has or could
reasonably be expected to have the effect of
13
prohibiting or materially impairing any current or future business practice of
the Company, any acquisition of property by the Company or the conduct of
business by the Company as currently conducted or as currently proposed to be
conducted by the Company.
3.10 Intellectual Property.
(a) For purposes of this Agreement, "Intellectual
Property" means:
(i) all United States and foreign issued patents,
reissued or reexamined patents, revivals of patents, utility models,
certificates of invention, registrations of patents and extensions thereof,
regardless of country or formal name (collectively, "Issued Patents");
(ii) all United States and foreign published or
unpublished provisional and substantive patent applications, reexamination
proceedings, invention disclosures and records of invention (collectively
"Patent Applications" and, with the Issued Patents, "Patents");
(iii) all United States and foreign copyrights and
copyrightable works, including all rights of authorship, use, publication,
reproduction, distribution, performance transformation, moral rights and rights
of ownership of copyrightable works, and all rights to register and obtain
renewals and extensions of registrations, together with all other interests
accruing by reason of international copyright conventions (collectively,
"Copyrights");
(iv) trademarks, registered trademarks,
applications for registration of trademarks, service marks, registered service
marks, applications for registration of service marks, trade names, registered
trade names and applications for registrations of trade names (collectively,
"Trademarks") and domain name registrations;
(v) all technology, ideas, inventions, designs,
proprietary information, manufacturing and operating specifications, know-how,
formulae, trade secrets, technical data, computer programs, software and
processes; and
(vi) all other intangible assets, properties and
rights (whether or not appropriate steps have been taken to protect, under
applicable law, such other intangible assets, properties or rights).
(b) The Company owns and has good and marketable title to,
or possesses legally enforceable rights to use, all material Intellectual
Property used in the business of the Company as currently conducted by the
Company, subject to such exceptions as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company. The Intellectual Property owned by and licensed to the Company
collectively constitutes all of the Intellectual Property necessary to enable
the Company to conduct its business as such business is currently being
conducted, subject to such exceptions as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company. Other than NetRatings or, as set forth on Section 3.10(b) of the
Company Disclosure Schedule, ACN, no current or former officer, director,
stockholder, employee, consultant or independent contractor has any right, claim
or interest in or with respect to any Company
14
Intellectual Property. Except as set forth in Section 3.10(b) of the Company
Disclosure Schedule, there are no royalties, fees or other payments payable by
the Company to any Person (other than NetRatings) under any written or oral
contract or understanding by reason of the ownership, use, sale or disposition
of Company Intellectual Property. Notwithstanding anything to the contrary in
this Agreement, NetRatings and Merger Sub hereby acknowledge and agree that, to
the extent that any Company Intellectual Property is owned by NetRatings or is
licensed from NetRatings, neither the Company nor ACN shall be liable for any
breach, default or misrepresentation in or under this Section 3.10 which arises
from or in connection with any defect in said Intellectual Property or any
rights associated therewith, where such defect or absence of rights was the
result of or arises out of any action or inaction on the part of NetRatings.
Further, notwithstanding anything to the contrary in this Agreement, it shall
under no circumstances constitute a breach, default or misrepresentation by the
Company or ACN of or under any representation or warranty set forth in this
Section 3.10, if any such representation or warranty shall be inaccurate or
incorrect or incomplete due to any breach, default or misrepresentation by
NetRatings in, of, or under any contract or agreement or other understanding
between NetRatings and the Company, or the inaccuracy or incorrectness of any
representation or warranty set forth in any such contract or agreement or
understanding.
(c) With respect to each item of Intellectual Property
incorporated into any product of the Company or otherwise used in the business
of the Company (except "off the shelf" or other software widely available
through regular commercial distribution channels at a cost not exceeding $10,000
on standard terms and conditions and any Intellectual Property licensed from or
contributed by NetRatings), as modified for the Company's operations ("Company
Intellectual Property"), Schedule 3.10(c) of the Company Disclosure Schedule
lists:
(i) all Patents and Patent Applications, all
registered Trademarks and pending trademark registrations and all registered
Copyrights (in each case only to the extent any of the foregoing are owned by or
have been assigned to the Company), including the jurisdictions in which each
such Intellectual Property has been issued or registered or in which any such
application for such issuance or registration has been filed; and
(ii) the following agreements relating to the
Company Intellectual Property other than any such agreements to which NetRatings
is a party: (A) any exclusive licenses of Intellectual Property to or from the
Company; (B) agreements pursuant to which the amounts actually paid or payable
under firm commitments to the Company are $50,000 or more; (C) joint development
agreements; (D) any agreement by which the Company grants any ownership right to
any Company Intellectual Property owned by the Company (other than with
customers or panelists entered into in the ordinary course of business); (E) any
option relating to any Company Intellectual Property; and (F) agreements
pursuant to which any party is granted any rights to access source code or to
use source code to create derivative works of Company Intellectual Property.
(d) Section 3.10(d) of the Company Disclosure Schedule
lists all licenses, sublicenses and other agreements to which the Company is a
party and pursuant to which the Company is authorized to use any Intellectual
Property owned by any third party, excluding (i) "off the shelf" or other
software at a cost not exceeding $10,000 and widely available through regular
commercial distribution channels on standard terms and conditions and
15
(ii) any Intellectual Property licensed from or contributed by NetRatings
("Third Party Intellectual Property").
(e) To the knowledge of the Company and ACN, as of the
date of this Agreement, there is no unauthorized use, disclosure, infringement
or misappropriation of any material Company Intellectual Property, including any
Third Party Intellectual Property, by any third party, including any employee or
former employee of the Company or ACN. Except as set forth in Section 3.10(e) of
the Company Disclosure Schedule, the Company has not entered into any agreement
to indemnify any other person against any charge of infringement of any
Intellectual Property, other than indemnification provisions contained in
standard sales or agreements to end users arising in the ordinary course of
business, the forms of which have been delivered to NetRatings or its counsel
and indemnification provisions contained in any agreements between the Company
and NetRatings. There are no royalties, fees or other payments payable to the
Company by any Person by reason of the ownership, use, sale or disposition of
Intellectual Property.
(f) The Company is not in breach in any material respect
of any license, sublicense or other agreement relating to the Company
Intellectual Property or Third Party Intellectual Property which is material to
the Company, or where such breach could reasonably be expected to result in
material harm or a material loss to the Company. Except as set forth in Section
3.10(f) of the Company Disclosure Schedule, neither the execution, delivery nor
performance of this Agreement or any ancillary agreements contemplated hereby,
nor the consummation of the Merger or any of the other transactions contemplated
by this Agreement, will violate, or conflict with in any material respect, or
result in an infringement on the Company's right to own or use any Company
Intellectual Property, including any Third Party Intellectual Property, which is
material to the Company or where such violation, conflict or infringement could
reasonably be expected to result in material harm or a material loss to the
Company.
(g) All material Patents and registered Trademarks and
Copyrights owned by or assigned to the Company are valid and subsisting. All
maintenance and annual fees have been fully paid and all fees paid during
prosecution and after issuance of any Patent comprising or relating to such item
have been paid in the correct entity status amounts. The Company is not
infringing, misappropriating or making unlawful use of, and has not received any
written notice or other written communication of any actual, alleged, possible
or potential infringement, misappropriation or unlawful use of, any proprietary
asset owned or used by any third party, where such infringement,
misappropriation or use could reasonably be expected to result in material harm
or a material loss to the Company or is known to the Company or ACN as of the
date of this Agreement. As of the date of this Agreement, except as set forth in
Section 3.10(g) of the Company Disclosure Schedule, to the knowledge of the
Company and ACN, there is no proceeding pending or threatened in writing against
the Company, nor has any written claim or demand been made to the Company or
ACN, which challenges the legality, validity, enforceability or ownership of any
item of Company Intellectual Property or Third Party Intellectual Property or
alleges a claim of infringement by the Company of any Intellectual Property of
any third party. The Company has not brought a proceeding alleging infringement
of Company Intellectual Property or breach of any license or agreement involving
Intellectual Property against any third party.
16
(h) All current and former officers and employees of the
Company who have or had access to any Company Intellectual Property have
executed and delivered to the Company an agreement regarding the protection of
proprietary information and the assignment to the Company of any Intellectual
Property arising from services performed for the Company by such persons, except
where the failure by the Company to have obtained such agreement could not
reasonably be expected to have a Material Adverse Effect on the Company. All
current and former consultants and independent contractors to the Company
involved in the development or modification of Company Intellectual Property
have executed and delivered to the Company an agreement regarding the protection
of proprietary information and the assignment to the Company of any intellectual
property arising from services performed for the Company by such persons, except
where the failure by the Company to have obtained such agreement could not
reasonably be expected to have a Material Adverse Effect on the Company. To the
knowledge of the Company, no employee or independent contractor of the Company
is in violation of any term of any patent disclosure agreement or employment
contract or any other contract or agreement relating to the relationship of any
such employee or independent contractor with the Company, subject only to such
exceptions as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company. Except for NetRatings
or, as set forth in Section 3.10(h) of the Company Disclosure Schedule, ACN, no
current or former officer, director, stockholder, employee, consultant or
independent contractor has any right, claim or interest in or with respect to
any Company Intellectual Property, subject only to such exceptions as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.
(i) The Company has taken commercially reasonable and
customary measures and precautions as necessary to protect and maintain the
confidentiality of all Company Intellectual Property (except such Company
Intellectual Property whose value would be unimpaired by public disclosure) and
otherwise to maintain and protect the full value of all Company Intellectual
Property it owns or uses, subject only to such exceptions as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company. The Company has not disclosed confidential
proprietary information of the Company to any third party, either directly or
through a third party, except pursuant to the terms of a written confidentiality
agreement between the Company and such third party and, to the knowledge of the
Company and ACN, no disclosure or use of any such information by or on behalf of
a third party has occurred without the Company's consent or as otherwise
permitted under such confidentiality agreements, in each case, subject to such
exceptions as could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on the Company.
(j) As of the date of this Agreement, the Company is not
subject to any proceeding or outstanding decree, order, judgment, or stipulation
restricting in any manner the use, transfer or licensing by the Company of any
Company Intellectual Property which is material to the Company which could
reasonably be expected to materially and adversely affect the validity, use or
enforceability of such Company Intellectual Property. Other than agreements to
which NetRatings is a party, the Company is not subject to any agreement which
restricts in any material respect the use, transfer, delivery or licensing by
the Company of any Company Intellectual Property or any products or services of
the Company.
17
3.11 Interested Party Transactions. The Company is not indebted
to any director, officer, or employee of the Company (except for amounts due as
normal salaries and bonuses and in reimbursement of expenses incurred in the
ordinary course of business), and no such person is indebted to the Company.
Other than as set forth in Section 3.11 of the Company Disclosure Schedule or as
contemplated by this Agreement, and except for transactions with NetRatings,
there have been no transactions since inception which would require disclosure
if the Company were subject to disclosure under Item 404 of Regulation S-K under
the Securities Act.
3.12 Minute Books. The minute books of the Company made available
to NetRatings contain a materially complete and accurate summary of all meetings
of directors and stockholders or actions by written consent since the time of
incorporation of the Company through the date of this Agreement, and reflect all
material transactions referred to in such minutes accurately in all material
respects.
3.13 Material Contracts. All Material Contracts to which the
Company is a party as of the date of this Agreement are listed in Section 3.13
of the Company Disclosure Schedule, excluding Material Contracts to which
NetRatings is a party. With respect to each Material Contract, (x) except as set
forth in Section 3.13 of the Company Disclosure Schedule and (y) except for
Material Contracts which expire or are terminated in accordance with their terms
after the date hereof, and (z) other than, as to clauses (ii) and (iii),
Material Contracts to which NetRatings is a party: (i) the Material Contract is
legal, valid, binding and enforceable and in full force and effect with respect
to the Company, subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
except as the availability of equitable remedies may be limited by general
principles of equity; (ii) to the knowledge of the Company and ACN, the Material
Contract is legal, valid, binding, enforceable and in full force and effect with
respect to each other party thereto, subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and except as the availability of equitable remedies
may be limited by general principles of equity; and (iii) neither the Company
nor, to the knowledge of the Company and ACN, any other party, is in material
breach or default, and no event has occurred which (with notice or lapse of
time) would constitute a material breach or default by the Company or, to the
knowledge of the Company or ACN, by any such other party, or permit termination,
or material modification or acceleration, under the Material Contract.
Notwithstanding anything to the contrary in this Section 3.13, it shall under no
circumstances constitute a breach, misrepresentation or default by the Company
or ACN of or under any representation or warranty set forth in this Agreement,
if any such representation or warranty shall be inaccurate or incorrect or
incomplete due to any breach, default or misrepresentation by NetRatings in, of
or under any contract, agreement or other understanding between NetRatings and
the Company. "Material Contract" means any contract, agreement or commitment to
which the Company is a party (i) with expected receipts or expenditures in
excess of $50,000, (ii) required to be listed on the Company Disclosure Schedule
pursuant to Section 3.10(c)(ii) or Section 3.10(d), (iii) requiring the Company
to indemnify any Person, except for agreements substantially similar to the
standard forms of end-user licenses previously delivered by the Company to
NetRatings, (iv) granting any exclusive rights to any party, (v) evidencing
indebtedness for borrowed or loaned money of $50,000 or more, including
guarantees of any such indebtedness, or (vi) which could reasonably be expected
to have a Material Adverse Effect on the Company, if breached by the Company in
such a manner as would (A) permit any other
18
party to cancel or terminate the same (with or without notice of passage of
time) or (B) provide a basis for any other party to claim money damages (either
individually or in the aggregate with all other such claims under that contract)
from the Company or (C) give rise to a right of acceleration of any material
obligation or loss of any material benefit under any such contract, agreement or
commitment.
3.14 Accounts Receivable. Subject to any reserves set forth in
the Company Financial Statements, the accounts receivable shown on the Company
Financial Statements, have arisen solely out of bona fide sales and deliveries
of goods, performance of services, and other business transactions in the
ordinary course of business consistent with past practices, are not, except as
set forth in Section 3.14 of the Company Disclosure Schedule, subject to any
prior assignment, lien or security interest and, to the knowledge of the Company
or ACN, are not subject to valid defenses, set-offs or counter claims. The
reserves for doubtful accounts on the Company Financial Statements have been
booked in accordance with generally accepted accounting principles applied in a
manner consistent with the Company's past practice, were reasonable in amount at
the time they were established, and are believed by the Company and ACN to be
reasonable in amount as of the date of this Agreement.
3.15 Customers and Suppliers. Except as set forth in Section 3.15
of the Company Disclosure Schedule, no customer or supplier of the Company whose
aggregate payments to or from the Company during the 12 months ended March 31,
2002 were not less than $50,000 or whose agreements or arrangements with the
Company contemplate such aggregate payments during the 12 months immediately
following March, 2002 has canceled or otherwise terminated, or made any written
threat to the Company to cancel or otherwise terminate, its relationship with
the Company, and to the knowledge of the Company or ACN, no such supplier or
customer has indicated in writing its intention to cancel or otherwise terminate
its relationship with the Company or to decrease materially its services or
supplies to the Company or its usage of the services or products of the Company,
as the case may be.
3.16 Employees and Consultants. Section 3.16 of the Company
Disclosure Schedule contains, as of the date of this Agreement, (a) a list of
the names and positions of (i) all full-time employees of the Company and (ii)
employees of ACN and its affiliates leased by the Company who devote their full
work time to the Company, (b) their respective salaries or wages and 2002 bonus
targets and (c) the dates on which they started working for the Company. Section
3.16 of the Company Disclosure Schedule lists all employees of ACN who, as of
the date of this Agreement, provide material services to the Company other than
individuals who provide Shared Services, as such term is defined in the Services
Agreement.
3.17 Title to Property. The Company has (a) good and marketable
title to all of its tangible assets and personal properties reflected as owned
in the Company Balance Sheet or acquired after the date of the Company Balance
Sheet (except properties and assets which have been sold or otherwise disposed
of, or have become obsolete, since the Company Balance Sheet Date in the
ordinary course of business), and (b) with respect to leased real and tangible
personal properties and assets, valid leasehold interests therein, free and
clear of all mortgages, liens, pledges, charges or encumbrances of any kind or
character, except (i) liens for current taxes not yet due and payable, (ii) such
imperfections of title, liens and easements as do not and will not materially
detract from or interfere with the use of the properties subject thereto or
affected
19
thereby, or otherwise materially impair business operations involving such
properties, (iii) liens securing debt which are reflected on the Company Balance
Sheet and (iv) such other mortgages, liens, pledges, charges or encumbrances as
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company. The plants, property and equipment of
the Company that are used in the operations of its business are in all material
respects in good operating condition and repair, subject to normal wear and
tear. All properties used in the operations of the Company as of March 31, 2002
are reflected in the Company Balance Sheet to the extent required by generally
accepted accounting principles. All leases with respect to real and tangible
personal property to which the Company is a party are in full force and effect
and are valid, binding and enforceable in accordance with their respective
terms, on the Company and, to the knowledge of the Company and ACN, the other
party or parties thereto, in each case, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium, or other similar laws affecting the
enforcement of creditors' rights generally and except as the availability of
equitable remedies may be limited by general principles of equity. True and
correct copies of all leases with respect to tangible personal property that
contemplate payments by the Company exceeding $50,000 per year and all leases
with respect to real property have been provided to NetRatings. The Company owns
no real property.
3.18 Environmental Matters. To the knowledge of the Company and
ACN, the Company is not in violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety, and to
each of their knowledge, no material expenditures are or will be required in
order to comply with any such existing statute, law or regulation.
3.19 Taxes. Except as set forth in Section 3.19 of the Company
Disclosure Schedule:
(a) As used in this Agreement, the terms "Tax" and,
collectively, "Taxes" mean any and all federal, state and local taxes of any
country, assessments and other governmental charges, duties, impositions and
liabilities, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, stamp transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed with respect
to such amounts and any obligations under any agreements or arrangements with
any other person with respect to such amounts and including any liability for
taxes of a predecessor entity.
(b) The Company has prepared and timely filed all material
returns, estimates, information statements and reports required to be filed by
the Company prior to the Effective Time with any taxing authority ("Returns")
relating to any and all Taxes concerning or attributable to the Company or its
operations with respect to Taxes for any period ending on or before the Closing
Date and such Returns are true and correct in all material respects and have
been completed in all material respects in accordance with applicable law.
(c) The Company, as of the Closing Date: (i) has paid all
Taxes shown to be payable on such Returns covered by Section 3.19(b) and (ii)
has withheld with respect to its employees all Taxes required to be withheld.
20
(d) There is no material Tax deficiency outstanding or
assessed or, to the knowledge of the Company or ACN, proposed in writing against
the Company that is not reflected as a liability on the Company Balance Sheet
nor has the Company executed any agreements or waivers extending any statute of
limitations on or extending the period for the assessment or collection of any
Tax.
(e) The Company has no material liabilities for unpaid
Taxes that have not been accrued for or reserved on the Company Balance Sheet in
accordance with generally accepted accounting principles, whether asserted or
unasserted, contingent or otherwise and neither the Company nor ACN has any
knowledge of any basis for the assertion of any such material liability
attributable to the Company, its assets or operations.
(f) The Company is not a party to any tax-sharing
agreement or similar arrangement with any other party, and the Company has not
assumed an obligation to pay any Tax obligations of, or with respect to any
transaction relating to, any other person or agreed to indemnify any other
person with respect to any Tax.
(g) The Company's Returns have never been audited by a
government or taxing authority, nor is any such audit in process or pending, and
the Company has not been notified in writing of any request for such an audit or
other examination.
(h) The Company has never been a member of an affiliated
group of corporations filing a consolidated federal income tax return other than
a group the common parent of which is ACN or ACN Holdings, Inc.
(i) The Company has disclosed to NetRatings (i) any Tax
exemption, Tax holiday or other Tax sparing arrangement that the Company has in
any jurisdiction, including the nature, amount and lengths of such Tax
exemption, Tax holiday or other Tax-sparing arrangement and (ii) any expatriate
tax programs or policies affecting the Company. The Company is in compliance in
all material respects with all terms and conditions required to maintain such
Tax exemption, Tax holiday or other Tax-sparing arrangement and the consummation
of the transactions contemplated hereby will not have any adverse effect on the
continuing validity and effectiveness of any such Tax exemption, Tax holiday or
other Tax- sparing arrangement or order.
(j) The Company has made available to NetRatings copies of
all material Returns filed for all periods since its inception.
(k) The Company has not filed any consent agreement under
Section 341(f) of the Code or agreed to have Section 341(f)(4) apply to any
disposition of assets owned by the Company.
(l) The Company has not been at any time a United States
Real Property Holding Corporation within the meaning of Section 897(c)(2) of the
Code.
(m) The Company does not have any liability for the Taxes
of any corporation or other business entity (other than the Company), other than
any Person that is or was a member of a group the common parent of which is ACN
or ACN Holdings, Inc., as
21
contemplated by Section 3.19(h), under Treasury Regulation Section 1.1502-6 or
any similar provision of state, local or foreign law.
3.20 Employee Benefit Plans.
(a) Section 3.20 of the Company Disclosure Schedule
contains a complete and accurate list of each material plan, program, policy,
practice, contract, agreement or other arrangement providing for employment,
compensation, retirement, deferred compensation, loans, severance, separation,
relocation, repatriation, expatriation, visas, work permits, termination pay,
performance awards, bonus, incentive, stock option, stock purchase, stock bonus,
phantom stock, stock appreciation right, supplemental retirement, fringe
benefits, cafeteria benefits, or other benefits, whether written or unwritten,
including, without limitation, each "employee benefit plan" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), which is or has been sponsored, maintained, contributed to,
or required to be contributed to by the Company or maintained for the benefit of
employees of the Company and, with respect to any such plans which are subject
to Code Section 401(a), any trade or business (whether or not incorporated)
which is or, at any relevant time, was treated as a single employer with the
Company within the meaning of Section 414(b), (c), (m) or (o) of the Code (an
"ERISA Affiliate"), (collectively, the "Company Employee Plans"). Except as
otherwise disclosed in Section 3.20 of the Company Disclosure Schedule, such
Section separately lists each Company Employee Plan that has been adopted or
maintained by the Company, whether formally or informally, for the benefit of
employees outside the United States ("Company International Employee Plans").
(b) The Company has furnished to NetRatings true and
complete copies of documents embodying each of the Company Employee Plans (other
than the Company International Employee Plans) and summary plan descriptions of
such Plans, and Form 5500 (Annual Report) for the most recent plan year. The
Company has furnished NetRatings with the most recent Internal Revenue Service
determination letter issued with respect to each such Company Employee Plan, and
to the knowledge of the Company, nothing has occurred since the issuance of each
such letter which could reasonably be expected to cause the loss of the tax-
qualified status of any Company Employee Plan subject to Code Section 401(a).
(c) Except as set forth in Section 3.20(c) of the Company
Disclosure Schedule, (i) each Company Employee Plan (other than the Company
International Employee Plans) has been administered in accordance with its terms
and in compliance with the requirements prescribed by any and all statutes,
rules and regulations (including ERISA and the Code), except, in each case, as
could not reasonably be expected to have, in the aggregate, a Material Adverse
Effect on the Company, and the Company and each ERISA Affiliate have performed
all material obligations required to be performed by them under, are not in
material respect in default under or violation of and have no knowledge of any
material default or violation by any other party to, any such Company Employee
Plans; (ii) any Company Employee Plan intended to be qualified under Section
401(a) of the Code has either obtained from the Internal Revenue Service a
favorable determination letter as to its qualified status under the Code,
including all amendments to the Code which are currently effective, or has time
remaining to apply under applicable Treasury Regulations or Internal Revenue
Service pronouncements for a determination or opinion letter and to make any
amendments necessary to obtain a favorable
22
determination or opinion letter; (iii) none of the Company Employee Plans
maintained in the United States promises or provides retiree medical or other
retiree welfare benefits to any person employed or formerly employed by the
Company; (iv) there has been no "prohibited transaction," as such term is
defined in Section 406 of ERISA or Section 4975 of the Code, with respect to any
Company Employee Plan, subject to such exceptions as could not reasonably be
expected to have a Material Adverse Effect on the Company; (v) none of the
Company or any ERISA Affiliate is subject to any liability or penalty under
Sections 4976 through 4980 of the Code or Title I of ERISA with respect to any
Company Employee Plan, subject to such exceptions as could not reasonably be
expected to have a Material Adverse Effect on the Company; (vi) all
contributions required to be made by the Company to any Company Employee Plan
have been paid or accrued on the Company Financial Statements or the books of
the Company; (vii) with respect to each Company Employee Plan, no "reportable
event" within the meaning of Section 4043 of ERISA (excluding any such event for
which the thirty (30) day notice requirement has been waived under the
regulations to Section 4043 of ERISA) nor any event described in Section 4062,
4063 or 4041 or ERISA has occurred, subject to such exceptions as could not
reasonably be expected to have a Material Adverse Effect on the Company; (viii)
each Company Employee Plan subject to ERISA, has prepared in good faith and
timely filed all requisite governmental reports (which were true and correct as
of the date filed) and has properly and timely filed and distributed or posted
all notices and reports to employees required to be filed, distributed or posted
with respect to each such Company Employee Plan, subject to such exceptions as
could not reasonably be expected to have a Material Adverse Effect on the
Company; (ix) no suit, administrative proceeding, action or other litigation has
been brought, or, to the knowledge of the Company or ACN is threatened in
writing, against or with respect to any such Company Employee Plan, including
any audit or inquiry by the IRS or United States Department of Labor; and (x)
there has been no amendment to, written interpretation or announcement by the
Company which could reasonably be expected to materially increase the expense of
maintaining any Company Employee Plan above the level of expense incurred with
respect to that plan for the most recent fiscal year included in the Company
Financial Statements.
(d) Except as provided in Section 3.20(d) of the Company
Disclosure Schedule, neither the Company nor ACN maintains, sponsors,
participates in, contributes to, or is obligated to contribute to, or has
otherwise incurred any obligation or liability (including, without limitation,
any contingent liability) under any "multiemployer plan" (as defined in Section
3(37) of ERISA) or to any "pension plan" (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA or Section 412 of the Code. None of the Company or
any ERISA Affiliate has any actual or potential withdrawal liability (including,
without limitation, any contingent liability) for any complete or partial
withdrawal (as defined in Sections 4203 and 4205 of ERISA) from any
multiemployer plan (as defined in Section 3(37) of ERISA), subject to such
exceptions as could not reasonably be expected to have a Material Adverse Effect
on the Company.
(e) With respect to each Company Employee Plan, the
Company has complied with (i) the applicable health care continuation and notice
provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA") and the regulations thereunder or any state law governing health care
coverage extension or continuation; (ii) the applicable requirements of the
Family and Medical Leave Act of 1993 and the regulations
23
thereunder; (iii) the applicable requirements of the Health Insurance
Portability and Accountability Act of 1996 ("HIPAA"); and (iv) the applicable
requirements of the Cancer Rights Act of 1998, in each case, except to the
extent that such failure to comply could not reasonably be expected to have, in
the aggregate, a Material Adverse Effect on the Company. The Company has no
material unsatisfied obligations to any employees, former employees, or
qualified beneficiaries pursuant to COBRA, HIPAA, or any state law governing
health care coverage extension or continuation.
(f) Except as set forth in Section 3.20(f) of the Company
Disclosure Schedule, the consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee, independent
contractor or consultant of or to the Company or any ERISA Affiliate to material
severance benefits or any other material payment (including, without limitation,
unemployment compensation, golden parachute, bonus or benefits under any Company
Employee Plan), except as expressly provided in this Agreement or (ii)
accelerate the time of payment or vesting of any such benefits or increase the
amount of compensation due any such employee, independent contractor or
consultant. No benefit payable or which may become payable by the Company
pursuant to any Company Employee Plan or as a result of or arising under this
Agreement shall constitute an "excess parachute payment" (as defined in Section
280G(b)(1) of the Code) which is subject to the imposition of an excise Tax
under Section 4999 of the Code or the deduction for which would be disallowed by
reason of Section 280G of the Code. Except as set forth in Section 3.20(f) of
the Company Disclosure Schedule, each Company Employee Plan can be amended,
terminated or otherwise discontinued after the Effective Time in accordance with
its terms, without material liability to NetRatings or the Company (other than
ordinary administration expenses typically incurred in a termination event).
(g) Except as set forth in Section 3.20(g) of the Company
Disclosure Schedule, each Company International Employee Plan has been
established, maintained and administered in compliance in all material respects
with its terms and conditions and with the requirements prescribed by any and
all statutory or regulatory laws that are applicable to such International
Company Employee Plan. No Company International Employee Plan has unfunded
liabilities, that, as of the Effective Time, will not be offset by insurance or
fully accrued on the Company Financial Statements or the books of the Company.
Except as required by law, no condition exists that would result in material
liability to the Company or NetRatings should any International Company Employee
Plan (other than the Company Option Plan) be terminated or amended at any time
for any reason.
3.21 Employee Matters. The Company and, as to employees of ACN
and its affiliates (other than NetRatings) that render services to the Company
and are listed in Section 3.16 of the Company Disclosure Schedule ("Leased
Employees"), ACN and its affiliates (other than NetRatings) are in compliance in
all material respects with all currently applicable laws and regulations
respecting terms and conditions of employment including, without limitation,
applicant and employee background checking, immigration laws, discrimination
laws, verification of employment eligibility, employee leave laws,
classification of workers as employees and independent contractors, wage and
hour laws, and occupational safety and health laws. As of the date of this
Agreement, there are no proceedings pending or, to the knowledge of the Company
or ACN, threatened in writing, between the Company and any of its current or
24
former employees or Leased Employees. As of the date of this Agreement, there
are no claims pending, or, to the knowledge of the Company or ACN, threatened in
writing, against the Company under any workers' compensation or long term
disability plan or policy. Except as set forth in Section 3.20(a) of the Company
Disclosure Schedule, the Company is not a party to any collective bargaining
agreement or other labor union contract in the United States and, to the
Company's and ACN's knowledge, is not a party to such agreement or contract
outside of the United States, except for those imposed by statute or local law
or disclosed on Section 3.20(a) of the Company Disclosure Schedule, nor does the
Company have knowledge of any activities or proceedings of any labor union to
organize its employees. The Company has provided all employees, and ACN and its
affiliates have provided all Leased Employees, with all wages, benefits,
relocation benefits, stock options, bonuses and incentives, and all other
compensation which became due and payable through the date of this Agreement.
3.22 Insurance. The Company has or is currently covered by
policies of insurance and bonds of the type and in amounts customarily carried
by persons conducting businesses or owning assets similar to those of the
Company. There is no material claim relating to the Company pending under any of
such policies or bonds as to which coverage has been denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under all
such policies and bonds have been paid, and the Company is otherwise in
compliance in all material respects with the terms of such policies and bonds.
3.23 Compliance with Laws. The Company has complied in all
material respects with, is not in material violation of and has not received any
notices of material violation with respect to, any federal state, local or
foreign statute, law or regulation with respect to the conduct of its business,
or the ownership or operation of its business.
3.24 Brokers' and Finders' Fees. Except as set forth in Section
3.24 of the Company Disclosure Schedule, neither ACN nor the Company has
incurred any obligation for any brokerage or finders' fees or agents'
commissions or investment bankers' fees or any similar charges in connection
with the Merger, this Agreement or any transaction contemplated hereby for which
NetRatings or the Surviving Corporation will be liable.
3.25 Privacy Policy.
(a) For purposes of this Section 3.25:
(i) "Written Panelist Privacy Statement" means the
Company's privacy policy statement applicable to information collected from the
Company's panel subjects, which statement is delivered in written form to such
panel subjects.
(ii) "Electronic Panelist Privacy Statement" means
the Company's privacy policy statement applicable to information collected from
the Company's panel subjects, which statement is presented electronically to the
person installing the software which enables the gathering of the information
described in the statement.
(iii) "Public Website Privacy Statement" means the
Company's privacy policy statement on its public site on the World Wide Web
applicable to information collected via the Company's public site on the World
Wide Web.
25
(b) Panel Subjects.
(i) The Written Panelist Privacy Statement and
Electronic Panelist Privacy Statement are accurate and consistent in all
material respects with the Company's actual practices with respect to the
collection and disclosure of personally identifiable information of the
Company's panel subjects. The Company does not use or disclose information
obtained from panelists unless, at the time the Company's data collection
software is installed, the installer of such software accepts, by means of a
click-through, the Company's Electronic Panelist Privacy Statement. The Written
Panelist Privacy Statement and Electronic Panelist Privacy Statement comply in
all material respects with all applicable privacy laws and regulations regarding
the disclosure of personal data as applicable to personally identifiable data
collected by the Company of the Company's panel subjects. The Company's use and
distribution of all personally identifiable data collected by the Company from
the Company's panel subjects is governed by law and the Written Panelist Privacy
Statement and Electronic Panelist Privacy Statement pursuant to which the data
was collected. Attached as Section 3.25(b) of the Company Disclosure Schedule
are true and correct copies of: (i) the Electronic Panelist Privacy Statement in
English, and (ii) a Written Panelist Privacy Statement that is substantially
similar in all material respects to the actual versions delivered to panelists.
(ii) Other than such technological and procedural
measures which have been implemented by NetRatings or are otherwise under
NetRatings' control, the Company has commercially reasonable technological and
procedural measures in place to protect data collected from the Company's panel
subjects against loss, theft, unauthorized access or disclosure. The Company
does not sell, or rent to third parties any personally identifiable data
submitted by the Company's panel subjects. Other than as constrained by the
Written Panelist Privacy Statement and Electronic Panelist Privacy Statement and
by applicable laws and regulations, the Company is not restricted in its use
and/or distribution of personal data collected by the Company from its
panelists. The Company has not received written notice of any material claims
that have arisen regarding the Written Panelist Privacy Statement and Electronic
Panelist Privacy Statement or the implementation thereof.
(c) Public Website.
(i) The Company maintains a link to the Public
Website Privacy Statement from the home page of its public website on which
website personally identifiable information is collected from visitors of such
web site. The Public Website Privacy Statement is accurate and consistent in all
material respects with the Company's actual practices with respect to the
collection, use and disclosure of personally identifiable information of
visitors of the Company's public website. The Public Website Privacy Statement
complies in all material respects with all applicable privacy laws and
regulations regarding the disclosure and use of personal data as applicable to
personally identifiable data collected by the Company of visitors to the
Company's public website. The Company's use and distribution of all personally
identifiable data collected by the Company from visitors of the Company's public
web site is governed by law and by the Public Website Privacy Statement pursuant
to which the data was collected. A true and correct copy of the Public Website
Privacy Statement is attached as Section 3.25(c) of the Company Disclosure
Schedule.
26
(ii) The Company has commercially reasonable
technological and procedural measures in place to protect data collected from
visitors of the Company's public website against loss, theft, unauthorized
access or disclosure. The Company does not sell, or rent to third parties any
personally identifiable data submitted by visitors of the Company's public web
site. Other than as constrained by the Public Website Privacy Statement and by
applicable laws and regulations, the Company is not restricted in its use and/or
distribution of personal data collected by the Company from visitors to its
public website. The Company has not received written notice of any material
claims that have arisen regarding the Public Website Privacy Statement or the
implementation thereof.
4. Representations and Warranties of NetRatings and Merger Sub.
NetRatings and Merger Sub represent and warrant to ACN that the statements
contained in this Section 4 are true and correct.
4.1 Organization, Standing and Power. Each of NetRatings and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each of NetRatings and Merger
Sub has the corporate power to own its properties and to carry on its business
as now being conducted and as currently proposed to be conducted and is duly
qualified to do business and is in good standing in each jurisdiction in which
the failure to be so qualified and in good standing could not reasonably be
expected to have a Material Adverse Effect on NetRatings. NetRatings has
delivered to ACN a true and correct copy of the certificate of incorporation and
bylaws of NetRatings and Merger Sub, each as amended to date. Neither NetRatings
nor Merger Sub is in violation of any of the provisions of its respective
certificate of incorporation or bylaws.
4.2 Authority. NetRatings and Merger Sub have all requisite
corporate power and authority to enter into this Agreement 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 on the part of NetRatings and
Merger Sub. This Agreement has been duly executed and delivered by NetRatings
and Merger Sub and constitutes the valid and binding obligations of NetRatings
and Merger Sub enforceable against NetRatings and Merger Sub in accordance with
its terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to creditors' rights
generally, and subject to general principles of equity. The execution and
delivery of this Agreement does not and the consummation of the transactions
contemplated hereby will not conflict with, or result in any violation of, or
default under (with or without notice or lapse of time, or both), or give rise
to a right of termination, cancellation or acceleration of any material
obligation or loss of a material benefit under (i) any provision of the
certificate of incorporation or bylaws of NetRatings or any of its subsidiaries,
or (ii) any mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to NetRatings or any of
its subsidiaries or their properties or assets, in the case of clause (ii),
except for violations, defaults, rights of termination, cancellation or
acceleration that could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on NetRatings. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to NetRatings or any of its
subsidiaries in connection with the execution and delivery of this Agreement by
NetRatings and
27
Merger Sub or the consummation by NetRatings and Merger Sub of the transactions
contemplated hereby, except for (a) the filing of the Certificate of Merger as
provided in Section 2.2, (b) the filing by NetRatings of a Form D with the SEC
in accordance with Regulation D following the Effective Time, (c) the filing by
NetRatings of a Form 8-K with the SEC, (d) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable state securities laws and the securities laws of any foreign country,
(e) such filings as may be required under Foreign Antitrust Laws (f) the filing
by NetRatings with Nasdaq of a Notification Form for Listing of Additional
Shares with respect to the shares of NetRatings Common Stock to be issued in the
Merger and issuable upon exercise of Company Options assumed in the Merger, and
(g) such other consents, authorizations, filings, approvals and registrations
which, if not obtained or made, could not reasonably be expected to have a
Material Adverse Effect on NetRatings and could not reasonably be expected to
prevent, materially alter or delay any of the transactions contemplated by this
Agreement.
4.3 SEC Documents: Financial Statements.
(a) NetRatings has timely filed all forms, reports and
documents (including all exhibits and all information incorporated therein)
required to be filed with the SEC by NetRatings since December 8, 1999 (together
with NetRatings' Registration Statement on Form S-1 (Registration No.
333-87717), the "NetRatings SEC Documents"). The NetRatings SEC Documents (i)
when filed, complied in all material respects with the applicable requirements
of the Securities Act and the Exchange Act, as the case may be, and the rules
and regulations of the SEC promulgated thereunder and (ii) did not at the time
they were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated in such
NetRatings SEC Documents or necessary in order to make the statements in such
NetRatings SEC Documents, in the light of the circumstances under which they
were made, not misleading.
(b) The financial statements of NetRatings, including the
notes thereto, included in the NetRatings SEC Documents (the "NetRatings
Financial Statements") complied as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto as of their respective dates, and have been
prepared in accordance with generally accepted accounting principles applied on
a basis consistent throughout the periods indicated and consistent with each
other (except as may be indicated in the notes thereto or, in the case of
unaudited statements included in Quarterly Reports on Form 10-Q, as permitted by
Form 10-Q of the SEC). The NetRatings Financial Statements fairly present the
consolidated financial condition and operating results of NetRatings and its
subsidiaries at the dates and during the periods indicated therein (subject, in
the case of unaudited statements, to normal, recurring year-end adjustments).
There has been no change in NetRatings accounting policies except as described
in the notes to the NetRatings Financial Statements.
4.4 Capital Structure. The authorized capital stock of NetRatings
consists of 200,000,000 shares of Common Stock, $.001 par value, and 5,000,000
shares of Preferred Stock, $.001 par value, of which there were 33,817,522
shares of NetRatings Common Stock and no shares of Preferred Stock issued and
outstanding as of the close of business on March 28, 2002.
28
Other than as described in the preceding sentence, there are no outstanding
shares of capital stock or voting securities of NetRatings other than shares of
NetRatings Common Stock issued after March 28, 2002 upon the exercise of options
issued under the NetRatings Stock Option Plan (the "NetRatings Stock Option
Plan") or shares of NetRatings Common Stock issued under the NetRatings Employee
Stock Purchase Plan (the "NetRatings Employee Stock Purchase Plan"). The
authorized capital stock of Merger Sub consists of 100 shares of Common Stock
all of which are issued and outstanding and are held by NetRatings. All
outstanding shares of NetRatings and Merger Sub have been duly authorized and
are validly issued, fully paid and nonassessable. NetRatings has reserved
10,577,500 shares of NetRatings Common Stock for issuance to employees,
directors and independent contractors pursuant to the NetRatings Stock Option
Plan, of which 4,136,557 shares are subject to outstanding options, and 250,000
shares of NetRatings Common Stock for issuance pursuant to the NetRatings
Purchase Plan, of which 118,206 shares are available for issuance. Other than
this Agreement, the NetRatings Stock Option Plan and the NetRatings Purchase
Plan, there are no other options, warrants, calls, rights, commitments or
agreements of any character to which NetRatings or Merger Sub is a party or by
which either of them is bound obligating NetRatings or Merger Sub to issue,
deliver, sell, repurchase or redeem or cause to be issued, delivered, sold,
repurchased or redeemed, any shares of the capital stock of NetRatings or Merger
Sub or obligating NetRatings or Merger Sub to grant, extend or enter into any
such option, warrant, call, right, commitment or agreement.
4.5 Issuance of Shares. The issuance and delivery of the
NetRatings Common Stock as Merger Consideration in accordance with this
Agreement has been duly authorized by all necessary corporate action on the part
of NetRatings, and, when issued at or after the Effective Time as contemplated
hereby, such shares of NetRatings Common Stock will be duly and validly issued,
fully paid and nonassessable. Such NetRatings Common Stock, when so issued and
delivered in accordance with the provisions of this Agreement, shall be free and
clear of all liens and encumbrances and adverse claims, other than restrictions
on transfer created by applicable securities laws, and will not have been issued
in violation of the preemptive rights or rights of first refusal or similar
rights of any Person.
4.6 Blue Sky Laws. NetRatings has taken such steps as may be
necessary to comply with the securities and blue sky laws of all jurisdictions
which are applicable to the issuance of the NetRatings Common Stock and
assumption of Company Options in connection with the Merger. The Company and ACN
shall each use its commercially reasonable efforts to assist NetRatings as may
be necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable in connection with the issuance of NetRatings
Common Stock and assumption of Company Options in connection with the Merger.
4.7 Interim Operations of Merger Sub. Merger Sub was formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement, has engaged in no other business activities and has conducted its
operations only as contemplated by this Agreement.
5. Additional Agreements.
5.1 Sale of Shares Pursuant to Regulation D. The parties hereto
acknowledge and agree that the shares of NetRatings Common Stock issuable to ACN
pursuant to Section 2.6
29
hereof shall constitute "restricted securities" within the Securities Act. The
certificates of NetRatings Common Stock shall bear the legends set forth in
Section 2.6(g).
5.2 Confidentiality. The parties acknowledge that they have
previously executed a non-disclosure agreement dated as the date hereof (the
"Confidentiality Agreement"), which Confidentiality Agreement is hereby
incorporated herein by reference and shall continue in full force and effect in
accordance with its terms.
5.3 Public Disclosure. Unless otherwise permitted by this
Agreement, NetRatings and the Company shall consult with each other before
issuing any press release or otherwise making any public statement or making any
other public or non-confidential disclosure (whether or not in response to an
inquiry) regarding the terms of this Agreement and the transactions contemplated
hereby, and neither shall issue any such press release or make any such
statement or disclosure without the prior approval of the other (which approval
shall not be unreasonably withheld), except as may be required by law or by
obligations pursuant to any listing agreement with any national securities
exchange or Nasdaq.
5.4 Company Options.
(a) At the Effective Time, each Company Option, whether
vested or unvested, will be assumed by NetRatings as contemplated by this
Section 5.4. Section 5.4 of the Company Disclosure Schedule hereto sets forth a
true and complete list as of the Closing Date of all holders of outstanding
Company Options, including the number of shares of Company Common Stock subject
to each such option, the exercise or vesting schedule, the exercise price per
share and the term of each such Company Option. Each such Company Option so
assumed by NetRatings under this Agreement shall continue to have, and be
subject to, the same terms and conditions set forth in the Company Option Plan
and any other document governing such Company Option immediately prior to the
Effective Time, except that (i) such Company Option will be exercisable for that
number of whole shares of NetRatings Common Stock equal to the product of the
number of shares of Company Common Stock that were issuable upon exercise of
such Company Option immediately prior to the Effective Time multiplied by the
Common Exchange Ratio and rounded down to the nearest whole number of shares of
NetRatings Common Stock, (ii) the per share exercise price for the shares of
NetRatings Common Stock issuable upon exercise of such assumed option will be
equal to the quotient determined by dividing the exercise price per share at
which such Company Option was exercisable immediately prior to the Effective
Time by the Common Exchange Ratio, rounded up to the nearest whole tenth of a
cent, and (iii) the term, vesting schedule and other provisions of such Company
Option shall remain unchanged, provided that all outstanding Options shall be
exercisable as of the Effective Time to the extent vested as of the Effective
Time and will continue to become exercisable as they vest after the Effective
Time. Consistent with the terms of the Company Option Plan and the documents
governing the outstanding Company Options, the Merger will not result in the
termination of any of the outstanding Company Options or, except as contemplated
by the preceding sentence, the acceleration of the exercisability or vesting of
such Company Options upon NetRatings' assumption of the Company Options in the
Merger. Within 20 business days after the Effective Time, NetRatings will issue
to each person who, immediately prior to the Effective Time, was a holder of an
outstanding Company Option a
30
document in form and substance reasonably satisfactory to ACN evidencing the
foregoing assumption of such Company Option by NetRatings.
(b) As soon as practicable after the Effective Time, but
in any event within 30 days thereafter, NetRatings shall file a registration
statement on Form S-8 (or any successor or other appropriate forms), with
respect to the shares of NetRatings Common Stock subject to the Company Options
assumed by NetRatings and shall use its best efforts to maintain the
effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses in connection
therewith) for so long as the assumed Company Options remain outstanding.
5.5 Employees. On or as soon as practicable following the Closing
Date, all employees of the Company, and, as of their respective hire dates with
the Company or NetRatings or any of their respective subsidiaries, all employees
of ACN and its affiliates who are Dedicated Employees (as defined in the
Services Agreement) and who following the Closing Date become employees of the
Company or NetRatings or any of their respective subsidiaries as contemplated by
the Services Agreement (collectively, the "Company Employees"), shall be
entitled to participate in all employee benefit plans, programs and arrangements
maintained by NetRatings for the benefit of similarly situated employees as of
the Closing Date or such hire date, as applicable (the "NetRatings Plans"). From
and after the Closing Date, or, with respect to Dedicated Employees, their
respective hire dates with the Company or NetRatings or any of their respective
subsidiaries, NetRatings shall, to the extent permitted by the NetRatings Plans
as of the Closing Date, cause the NetRatings Plans to (i) credit the Company
Employees with all of the years and months of service they had been credited
with under any comparable plan in which such Company Employees participated
prior to the Closing Date or hire date (as applicable), (ii) waive any
pre-existing condition of the Company Employees for purposes of any employee
welfare plan (within the meaning of Section 3(1) of ERISA) maintained by
NetRatings to the extent such condition was covered under the applicable plan
maintained by the Company, and (iii) recognize expenses and claims that are
incurred by a Company Employee in the year in which the Closing Date or hire
date (as applicable) occurs and were recognized by a similar Company Employee
Plan for the purpose of computing deductible amounts, co-payments or other
limitations on coverage under the NetRatings Plans.
5.6 Reorganization. NetRatings and the Company shall each use its
best efforts to cause the business combination to be effected by the Merger to
be qualified as a "reorganization" described in Section 368 of the Code.
NetRatings, the Company and the Surviving Corporation will not take any action,
or fail to take any action, that could reasonably be expected to cause the
Merger to fail to qualify as a "reorganization" described in Section 368(a) of
the Code with respect to which no gain or loss will be recognized by a
shareholder of the Company on the conversion of the Company Capital Stock into
NetRatings Common Stock pursuant to the Merger, including, without limitation,
the transfer or other disposition by Surviving Corporation of its assets or
properties.
5.7 Expenses. All costs and expenses incurred by or on behalf of
NetRatings in connection with this Agreement and the transactions contemplated
hereby shall be paid by NetRatings, and all costs and expenses incurred by or on
behalf of the Company or ACN in connection with this Agreement and the
transactions contemplated hereby shall be paid by ACN.
31
5.8 Indemnification and Insurance.
(a) NetRatings and the Surviving Corporation (each an
"Indemnifying Party" and collectively the "Indemnifying Parties") shall jointly
and severally indemnify, defend and hold harmless each person who is now, or has
been at any time prior to the date of this Agreement, an officer, director or
employee of the Company and the heirs, executors, trustees, fiduciaries and
administrators of such officers, directors or employees (each an "Indemnified
Party" and collectively the "Indemnified Parties") against all losses, claims,
damages, costs, expenses, liabilities or judgments or amounts that are paid in
settlement with the approval of the Indemnifying Party (which approval shall not
be unreasonably withheld) of or in connection with any claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director, officer, or
employee of the Company, whether pertaining to any matter existing or occurring
at or prior to the Effective Time and whether asserted or claimed prior to, or
at or after, the Effective Time, including, without limitation, all losses,
claims, damages, costs, expenses, liabilities or judgments based in whole or in
part on, or arising in whole or in part out of, or pertaining to this Agreement
or the transactions contemplated hereby, in each case, to the full extent a
corporation is permitted under the Delaware Law to indemnify its own directors,
officers and employees, as the case may be. Without limiting the foregoing, in
the event any such claim, action, suit, proceeding or investigation is brought
against any Indemnified Party (whether arising before or after the Effective
Time), (i) the Indemnified Parties may retain counsel reasonably satisfactory to
them and NetRatings and the Surviving Corporation, (ii) NetRatings and the
Surviving Corporation shall pay all reasonable fees and expenses of such counsel
for, and all other reasonable costs and expenses of, the Indemnified Parties
promptly as statements therefor are received, and (iii) NetRatings and the
Surviving Corporation will use all reasonable efforts to assist in the vigorous
defense of any such matter; provided, however, that none of NetRatings or the
Surviving Corporation shall be liable for any settlement of any claim effected
without its written consent, which consent, however, shall not be unreasonably
withheld. Any Indemnified Party wishing to claim indemnification under this
Section 5.8, upon learning of such claim, action, suit, proceeding or
investigation, shall promptly notify NetRatings or the Surviving Corporation
(but the failure so to notify an Indemnifying Party shall not relieve it from
any liability which it may have under this Section 5.8, except to the extent
such failure materially prejudices the defense of such claim, action, suit,
proceeding or investigation), and shall deliver to NetRatings and the Surviving
Corporation the undertaking contemplated by Section 145(e) of the Delaware Law.
The obligations of the parties set forth in this Section 5.8 shall be in the
furtherance of and not in limitation of the succeeding paragraphs of this
Section 5.8.
(b) The Surviving Corporation (or, in the event the
Surviving Corporation is dissolved or otherwise no longer in existence,
NetRatings) will fulfill, assume and honor in all respects the indemnification
obligations of the Company pursuant to Delaware Law, the Company's certificate
of incorporation and bylaws and any indemnification agreement between the
Company and any of the Company's directors and officers existing and in force as
of the Closing Date (including this Agreement).
(c) NetRatings and the Surviving Corporation shall, until
the sixth anniversary of the Closing Date or such earlier date as may be
mutually agreed upon by NetRatings, the Surviving Corporation and each person
entitled to the benefits of this
32
Section 5.8, cause to be maintained in effect, to the extent available, the
policies of directors' and officers' liability insurance maintained by or on
behalf of the Company as of the date hereof (or policies of at least the same
coverage and amounts containing terms that are no less advantageous to the
insured parties) with respect to claims arising from facts or events that
occurred on or prior to the Closing Date; provided, however, that in no event
shall the Surviving Corporation be required to expend more than an amount equal
to 150% (the "Insurance Amount") of the current amount expended by the Company
to maintain or procure insurance coverage pursuant hereto and further provided
that if NetRatings is unable to maintain or procure insurance in the amount of
coverage existing at the Closing Date for the Insurance Amount, NetRatings shall
use its reasonable efforts to obtain as much comparable insurance as is
available for the Insurance Amount.
(d) If the Surviving Corporation does not have sufficient
capital to comply with its obligations under this Section 5.8, NetRatings shall
provide the Surviving Corporation with such capital.
5.9 Termination of Existing Agreements. As of the Effective Time,
the following agreements shall be automatically terminated and shall cease to be
of any further legal effect (except for provisions that expressly survive such
termination by their terms and except that such termination shall not affect the
obligation of any party thereto to pay any amounts payable by such party
thereunder as of the time of termination) with no further action required to be
taken by any party thereto in order to effect such termination: (a) the Company
Stockholders Agreement, (b) the Company Rights Agreement, (c) the Company
Operating Agreement and (d) the Company Side Letter.
5.10 NNM Listing. NetRatings shall use its reasonable efforts to
cause the NetRatings Common Stock to be issued in connection with the Merger to
be authorized for listing on the NNM within ten (10) days following the Closing.
6. Additional Deliveries at Closing.
6.1 Services Agreement and Post-Closing Agreement. Substantially
contemporaneously with the execution and delivery of this Agreement, the
Surviving Corporation, NetRatings and ACN have entered into a Services Agreement
(the "Services Agreement"), and the Surviving Corporation and ACN have entered
into a Post-Closing Agreement (the "Post-Closing Agreement"), in substantially
the forms attached to this Agreement as Annex B-1 and Annex B-2, respectively.
6.2 Settlement of Patent Infringement Claim and Grant of License.
On or prior to the Closing Date, the closing of the transactions contemplated by
that certain Agreement (the "JMM Agreement"), dated as of the date hereof,
between JMM and NetRatings, has occurred.
6.3 Amendment of NMR Operating Agreement. The Operating
Agreement, dated August 15, 1999, between NetRatings and NMR has been amended
pursuant to the NMR Commissions Agreement in the form attached hereto as Annex
C.
33
7. Indemnification.
7.1 Survival of Representations and Warranties. All
representations and warranties made by the Company, ACN, NetRatings or Merger
Sub herein, or in any certificate, schedule or exhibit delivered pursuant
hereto, shall survive the Closing and continue in full force and effect until
the first anniversary of the Closing Date (sometimes referred to herein as the
"Termination Date").
7.2 Indemnification by ACN. Subject to the limitations set forth
in this Section 7, ACN hereby agrees to indemnify, defend and hold harmless
NetRatings and the Surviving Corporation and their respective officers,
directors, agents, attorneys and employees, and each person, if any, who
controls or may control NetRatings or the Surviving Corporation within the
meaning of the Securities Act (hereinafter referred to individually as a
"NetRatings Indemnified Person" and collectively as the "NetRatings Indemnified
Persons") from and against any and all losses, costs, damages, liabilities and
expenses arising from claims, demands, actions, causes of action, including,
without limitation, reasonable legal fees (collectively, "Damages"), arising out
of or relating to (i) any misrepresentation or breach of or default under any of
the representations, warranties, covenants and agreements given or made by the
Company or ACN in this Agreement, or (ii) any liability of the Company for Taxes
of any other Person that is or was a member of a group the common parent of
which is ACN or ACN Holdings, Inc. under Treasury Regulation Section 1.1502-6 or
any similar provision of state, local or foreign law. The sole recourse of the
NetRatings Indemnified Persons against ACN and its affiliates for any Damages
for which indemnification is to be provided under clause (i) of this Section 7.2
shall be indemnification under this Section 7, and each NetRatings Indemnified
Person shall act in good faith and in a commercially reasonable manner to
mitigate any Damages they may suffer.
7.3 Indemnification by NetRatings and Merger Sub. Subject to the
limitations set forth in this Section 7, NetRatings hereby agrees to indemnify,
defend and hold harmless ACN and its officers, directors, agents, attorneys and
employees, and each person who controls or may control ACN or the Company within
the meaning of the Securities Act (hereinafter referred to individually as a
"Company Indemnified Person" and collectively as the "Company Indemnified
Persons") from and against any and all Damages arising out of or relating to:
(i) any misrepresentation or breach of or default under any of the
representations, warranties, covenants and agreements given or made by
NetRatings or Merger Sub in this Agreement; or (ii) the operation of the
business of the Surviving Corporation after the Closing. The sole recourse of
the Company Indemnified Persons against NetRatings for any Damages for which
indemnification is to be provided under clause (i) of this Section 7.3 shall be
indemnification under this Section 7.3, and each Company Indemnified Person
shall act in good faith and in a commercially reasonable manner to mitigate any
Damages they may suffer.
7.4 Time Limitations.
(a) ACN will have no obligation to indemnify any
NetRatings Indemnified Persons for any Damages with respect to any
representation or warranty or any covenant, agreement or obligation to be
performed and complied with prior to the Closing Date, unless on or before the
Termination Date, NetRatings or such NetRatings Indemnified Person notifies ACN
of a claim for such indemnification specifying the factual basis of the claim in
34
reasonable detail to the extent then known by NetRatings or such NetRatings
Indemnified Person. A claim for indemnification or reimbursement not based on
any representation or warranty or any covenant or obligation to be performed and
complied on or prior to the Closing Date may be made at any time, subject to
applicable statutes of limitation.
(b) Subject to the immediately following sentence,
NetRatings will have no obligation to indemnify any Company Indemnified Persons
for any Damages with respect to any representation or warranty or any covenant,
agreement or obligation to be performed and complied with prior to the Closing
Date, unless on or before the Termination Date, ACN or such Company Indemnified
Person notifies NetRatings of a claim for such indemnification specifying the
factual basis of the claim in reasonable detail to the extent then known by ACN
or such Company Indemnified Person. A claim for indemnification under clause
(ii) of the first sentence of Section 7.3 may be made at any time, subject to
applicable statutes of limitations.
7.5 Limitations on Amount.
(a) ACN will have no liability to indemnify any NetRatings
Indemnified Person for any Damages under Section 7.2 except and to the extent
that the total of all Damages incurred by NetRatings Indemnified Persons
thereunder exceeds $375,000. Notwithstanding anything to the contrary herein, in
no event shall ACN be obligated to indemnify the NetRatings Indemnified Persons,
together, for Damages under clause (i) of Section 7.2 exceeding $9,600,000 in
the aggregate.
(b) NetRatings will have no liability to indemnify any
Company Indemnified Person for any Damages under clause (i) of the first
sentence of Section 7.3 except and to the extent that the total of all Damages
incurred by Company Indemnified Persons thereunder exceeds $375,000.
Notwithstanding anything to the contrary herein, in no event shall NetRatings be
obligated to indemnify the Company Indemnified Persons, together, for Damages
under clause (i) the first sentence of Section 7.3 exceeding $9,600,000 in the
aggregate.
7.6 Third Party Claims.
(a) Promptly after receipt by an indemnified party under
Section 7.2 or 7.3 of notice of the commencement of any action or proceeding
against it, such indemnified party will, if a claim is to be made against an
indemnifying party under such Section, give notice to the indemnifying party of
the commencement of such action or proceeding, but the failure to notify the
indemnifying party will not relieve the indemnifying party of any liability that
it may have to any indemnified party, except to the extent that the defense of
such action is actually prejudiced by the indemnified party's failure to give
such notice.
(b) If any action or proceeding referred to in Section
7.6(a) is brought against an indemnified party and it gives notice to the
indemnifying party of the commencement of such action or proceeding, the
indemnifying party will be entitled to participate in such action or proceeding
and, to the extent that it wishes (unless the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such action or proceeding and provide indemnification with respect to
such action or proceeding), to assume the
35
defense of such action or proceeding with counsel reasonably satisfactory to the
indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such action or
proceeding, the indemnifying party will not, as long as it diligently conducts
such defense, be liable to the indemnified party under this Section 7 for any
fees of other counsel or any other expenses with respect to the defense of such
action or proceeding, in each case subsequently incurred by the indemnified
party in connection with the defense of such action or proceeding, other than
reasonable costs of investigation. If the indemnifying party assumes the defense
of an action or proceeding, no compromise or settlement of such claims may be
effected by the indemnifying party without the indemnified party's consent
(which shall not be unreasonably withheld) unless (A) there is no finding or
admission of any violation of laws or regulations or any violation of the rights
of any person or entity and no effect on any other claims that may be made
against the indemnified party and (B) the sole relief provided is monetary
damages that are paid in full by the indemnifying party. If notice is given to
an indemnifying party of the commencement of any action or proceeding and the
indemnifying party does not, within ten days after the indemnified party's
notice is given, give notice to the indemnified party of its election to assume
the defense of such action or proceeding, the indemnifying party will be bound
by any determination made in such action or proceeding or any compromise or
settlement effected by the indemnified party.
(c) NetRatings hereby consents to the non-exclusive
jurisdiction of any court in which an action or proceeding is brought against
any Company Indemnified Person for purposes of any claim that a Company
Indemnified Person may have under this Agreement with respect to such action or
proceeding or the matters alleged therein, and agrees that process may be served
on NetRatings with respect to such a claim anywhere in the world. ACN hereby
consents to the non-exclusive jurisdiction of any court in which an action or
proceeding is brought against any NetRatings Indemnified Person for purposes of
any claim that a NetRatings Indemnified Person may have under this Agreement
with respect to such action or proceeding or the matters alleged therein, and
agrees that process may be served on ACN with respect to such a claim anywhere
in the world.
8. General Provisions.
8.1 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed duly delivered (i) upon receipt if delivered
personally, (ii) three (3) business days after being mailed by registered or
certified mail, postage prepaid, return receipt requested, (iii) one (1)
business day after it is sent by nationally recognized commercial overnight
courier service, or (iv) upon transmission, if sent via facsimile (with
confirmation of receipt) to the parties at the following address, or at such
other address for a party as shall be specified upon ten (10) days prior notice
given in the manner contemplated by this Section 8.1:
(a) if to NetRatings or Merger Sub, to:
36
NetRatings, Inc.
000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Fax: (000) 000-0000
Tel: (000) 000-0000
with a copy to:
Xxxx Xxxx Xxxx & Freidenrich LLP
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
Tel: (000) 000-0000
(b) if to the Company, to:
ACNielsen xXxxxxxx.xxx
Stamford Landing
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxxx
Fax: (000) 000-0000
Tel: (000) 000-0000
with a copy to:
Xxxx Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
Tel: (000) 000-0000
37
(c) if to ACN, to:
ACNielsen
000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Fax: (000) 000-0000
Tel: (000) 000-0000
with a copy to:
Xxxx Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
Tel: (000) 000-0000
8.2 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
8.3 Entire Agreement. This Agreement and the documents and
instruments and other agreements specifically referred to herein or delivered
pursuant hereto, including the exhibits and schedules hereto, including the
Company Disclosure Schedule, together constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof except for the Confidentiality Agreement,
which shall continue in full force and effect, and shall survive the Closing, in
accordance with its terms.
8.4 Amendment. This Agreement may be amended by the parties
hereto by action taken or authorized by their respective Boards of Directors,
including, in the case of NetRatings, a majority of the Independent Directors.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
8.5 Assignment. This Agreement shall not be assigned, by any
party hereto, by operation of law or otherwise, without the written consent of
the other parties; provided, that ACN shall be entitled without obtaining such
consent to assign its rights and obligations under this Agreement to any
affiliate of ACN.
8.6 No Third Party Beneficiary. This Agreement is not intended to
confer upon any other person any rights or remedies hereunder, other than the
persons entitled to indemnification under Sections 5.8 and 7 which persons are
intended third party beneficiaries of such Sections 5.8 and 7 and shall be
entitled to enforce such Sections 5.8 and 7 directly.
8.7 Severability. In the event that any provision of this
Agreement, or the application thereof becomes or is declared by a court of
competent jurisdiction to be illegal, void
38
or unenforceable, the remainder of this Agreement will continue in full force
and effect and the application of such provision to other Persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto.
8.8 Remedies Cumulative. Except as otherwise provided herein, any
and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by
law or equity upon such party, and the exercise by a party of any one remedy
will not preclude the exercise of any other remedy.
8.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware
applicable to parties residing in the State of Delaware, without regard to
applicable principles of conflicts of law. Each of the parties hereto
irrevocably consents to the exclusive jurisdiction of any court located within
Delaware in connection with any matter based upon or arising out of this
Agreement or the matters contemplated hereby and it agrees that process may be
served upon it in any manner authorized by the laws of the State of Delaware for
such persons and waives and covenants not to assert or plead any objection which
it might otherwise have to such jurisdiction and such process.
8.10 Rules of Construction. The parties hereto agree that they
have been represented by counsel during the negotiation, preparation and
execution of this Agreement and, therefore, waive the application of any law,
regulation, holding or rule of construction providing that ambiguities in an
agreement or other document will be construed against the party drafting such
agreement or document.
8.11 Enforcement. Each of the parties hereto agrees that
irreparable damage would occur and that the parties would not have any adequate
remedy at law in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Delaware or in Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (a) consents to submit itself to the personal jurisdiction
of any Federal court located in the State of Delaware or any Delaware state
court in the event that any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court, (c) agrees that it will not bring any action relating
to this Agreement or any of the transactions contemplated by this Agreement in
any court other than a Federal court sitting in the State of Delaware or a
Delaware state court and (d) waives any right to trial by jury with respect to
any claim or proceeding related to or arising out of this Agreement or any
transaction contemplated by this Agreement.
8.12 Waiver. Any waiver of any of the terms of this Agreement
must be in writing and must be duly executed by or on behalf of the party to be
charged with such waiver. Any waiver by NetRatings must be approved by the Board
of Directors of NetRatings, including a majority of the Independent Directors.
The failure of a party to exercise any of its rights hereunder or to insist upon
strict adherence to any term hereof on any one occasion shall not be
39
construed as a waiver or deprive that party of the right thereafter to insist
upon strict adherence to the terms of this Agreement at a later date. Further,
no waiver of any of the terms of this Agreement shall be deemed to or shall
constitute a waiver of any other term hereof (whether or not similar).
40
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by each of them or their respective officers thereunto
duly authorized, all as of the date first written above.
ACNIELSEN XXXXXXXX.XXX NETRATINGS,INC.
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxx Xxxxx
---------------------------------- ----------------------------------
Title: VP Title: CFO
-------------------------------- --------------------------------
CNIELSEN CORPORATION ESTANCIA ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxxx Xxxxxx
---------------------------------- ----------------------------------
Title: VP Title: CEO
-------------------------------- --------------------------------
41
ANNEX A
AMENDED AND RESTATED PARAGRAPH 4 OF THE COMPANY'S CERTIFICATE OF INCORPORATION
4. The Corporation shall have the authority to issue a total of 100
shares of common stock, $.001 par value per share.
ANNEX B-1
FORM OF SERVICES AGREEMENT
ANNEX B-2
FORM OF POST-CLOSING AGREEMENT
ANNEX C
FORM OF NMR COMMISSIONS AGREEMENT
