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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - ------ EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - ------ EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
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COMMISSION FILE NUMBER 001-12277
ACNIELSEN CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 06-1454128
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
177 BROAD STREET, STAMFORD, CONNECTICUT 06901
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (203) 961-3000.
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- - ------------------- ---------------------
Common Stock, par value $.01 per share..................New York Stock Exchange
Preferred Share Purchase Rights.........................New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
Indicate by check mark whether the registrant (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
---
As of January 31, 1997, 56,903,732 shares of Common Stock of ACNielsen
Corporation were outstanding. The aggregate market value of the shares of
Common Stock held by nonaffiliates of the registrant (based upon its closing
transaction price on the Composite Tape on such date) was approximately $929
million. * (Continued)
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* Calculated by excluding all shares held by executive officers and directors
of the registrant, without conceding that all such persons are affiliates of
the registrant for purposes of the Federal securities laws.
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DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<S> <C> <C>
PART I
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ITEM 1 - Business Page 45, Note 16, Operations by
Geographic Area, of the 1996
Annual Report.
PART II
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ITEM 5 - Market for the Registrant's Common Page 27, Management's Discussion and
Equity and Related Stockholder Analysis, of the 1996 Annual Report.
Matters
ITEM 6 - Selected Financial Data Page 46, Summary Financial Data, of the
1996 Annual Report.
ITEM 7 - Management's Discussion and Analysis Pages 23 to 27, Management's Discussion
of Financial Condition and Results of and Analysis, of the 1996 Annual Report.
Operations
ITEM 8 - Financial Statements and Supplementary Pages 29 to 46 of the 1996 Annual Report.
Data
PART III
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ITEM 10 - Directors and Executive Officers of the Pages 5 to 8 of the Company's Proxy
Registrant Statement dated March 11, 1997.
ITEM 11 - Executive Compensation Pages 15 to 27 of the Company's Proxy
Statement dated March 11, 1997.
ITEM 12 - Security Ownership of Certain Beneficial Pages 2 to 4 of the Company's Proxy
Owners and Management Statement dated March 11, 1997.
ITEM 13 - Certain Relationships and Related Page 26 of the Company's Proxy
Transactions Statement dated March 11, 1997.
</TABLE>
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The Index to Exhibits is located on Pages 19 and 20.
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PART I
As used in this report, except where the context indicates otherwise,
the terms "Company" and "ACNielsen" mean ACNielsen Corporation and all
subsidiaries consolidated in the financial statements incorporated herein by
reference.
ITEM 1. BUSINESS
GENERAL
ACNielsen Corporation began operating as an independent, publicly-held
company on November 1, 1996 (the "Distribution Date") as a result of the
distribution (the "Distribution") on that date by The Dun & Bradstreet
Corporation ("D&B") of the Company's $.01 par value Common Stock, at a
distribution ratio of one share of the Company for three shares of D&B. As part
of a reorganization of its businesses, D&B also distributed all of the
outstanding common stock of Cognizant Corporation ("Cognizant") on the
Distribution Date.
ACNielsen Corporation, which has its headquarters in Stamford,
Connecticut, was incorporated in the State of Delaware on April 30, 1996 as a
wholly-owned subsidiary of D&B for the purpose of effecting the Distribution.
ACNielsen Corporation operates principally through subsidiaries and the Company
generally is comprised of the former D&B businesses that deliver market
research, information and analysis to the worldwide consumer products and
services industries.
DESCRIPTION OF BUSINESS
ACNielsen is a global leader in delivering market research, information
and analysis to the consumer products and services industries. ACNielsen
services are offered in over 90 countries around the globe. ACNielsen provides
its clients with market research, information and analysis for understanding and
making critical decisions about their products and their markets. ACNielsen also
conducts media measurement and related businesses, including its television
audience measurement business which operates outside the U.S. and Canada.
ACNielsen operates outside the United States through a number of
subsidiaries, affiliates and joint ventures, including ACNielsen*SRG, the
largest provider of market research services in the Asia Pacific region, and ANR
in Eastern Europe. In 1996, nearly 80% of ACNielsen's revenues were generated
outside the United States.
ACNielsen operates across a wide spectrum of research services. These
services generally fall into four categories: Retail Measurement Services,
Customized Research Services, Media Measurement Services and Consumer Panel
Services.
ACNielsen also offers its customers, through a wide range of modeling
and analytic services, custom-tailored insights into complex marketing issues.
Typical assignments range from marketing-mix modeling to category management
analysis, including topics as diverse as pricing strategy, consumer driven
market structure, variety management, outlet switching and promotion tactics.
ACNielsen's clients include retailers, brokers and distributors of
retail information, manufacturers of consumer packaged goods and other products,
and companies operating in various service industries (including financial
services, telecommunications, advertising, television and radio broadcasting,
and publishing).
ACNielsen operates in one industry segment, Market Research,
Information and Analysis Services. The approximate revenues attributable to each
type of service provided by ACNielsen were as follows for the periods shown (in
millions of dollars):
<TABLE>
<CAPTION>
Year ended December 31,
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1996 1995 1994
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<S> <C> <C> <C>
Retail Measurement ..................... $ 974 $ 938 $ 912
Customized Research .................... 188 172 58
Media Measurement ...................... 114 99 67
Consumer Panel ......................... 83 72 55
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Total ......................... $1,359 $1,281 $1,092
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The number of full-time equivalent employees of the Company at December
31, 1996 was approximately 18,100. Of this number, approximately 2,200 full-time
equivalent employees are located in the United States, and none of these are
represented by labor unions. ACNielsen's non-U.S. employees are subject to
numerous labor council relationships which vary due to the diverse cultures in
which ACNielsen operates. Management believes that labor relations generally are
satisfactory and have been maintained in a normal and customary manner.
RETAIL MEASUREMENT SERVICE
Through its Retail Measurement Services, the cornerstone of ACNielsen's
business, the Company delivers quality data to customers on product movement and
related causal information on six continents. Introduced in 1933, ACNielsen's
original Food and Drug Indexes soon became the industry measurement tool for
understanding the dynamics of product sales. Over the years, technology has
dramatically improved ACNielsen's ability to collect and analyze information
from retailers and consumers. The availability of scanning technology in retail
outlets in many countries around the world has broadened both the scope and
capabilities of ACNielsen's original retail indexes.
ACNielsen's Retail Measurement Services are available in over 65
countries. Retail Measurement Services include scanning and retail audit
services, account level reports, information delivery, merchandising and
category management services and marketing and sales applications, along with
modeling and analytic services.
Scanning
Using the bar codes printed on products and scanners installed in
retail outlets, ACNielsen gathers information weekly from stores in the United
States and certain countries in Europe, Latin America and Asia Pacific.
ACNielsen's customers can monitor performance trends and evaluate price and
promotion effectiveness by tracking and forecasting non-promoted as well as
promotional product movement.
ACNielsen offers its customers a number of additional services to
enhance each customer's understanding of its markets. Among these are services
reporting data by customer-defined markets, services aggregating consumer data
in multiple channels, and services disaggregating data to satisfy particular
needs of customers.
Retail Audit
Because scanning data is available only in certain industry sectors and
in certain countries, retail audit remains a valuable source of market
information as a basic measurement tool and as a supplement to scanning data.
Retail audit involves the continuous measurement by ACNielsen field auditors of
product and category performance in the retail trade, and reporting to clients
on sales, distribution, stocks, price and other measures which assist them in
marketing and trade negotiations.
Retail Audit is divided into industry segments, traditionally called
Indexes. The Food Index is generally the largest, but there are also Health and
Beauty, Durables, Confectionery, Liquor, Cash & Carry, plus a number of local
country Indexes.
In-Store Observation
ACNielsen field auditors collect data on where products are located in
stores, how many facings they have, and on which shelf they are positioned, etc.
(broken down by store type, store size and geographic region). ACNielsen also
collects causal data (information that impacts sales). These data add to market
insights and help to monitor the implementation of retailer/manufacturer
promotional agreements in terms of numeric distribution, space allocation and
promotional execution.
Levels of Information
ACNielsen provides information and insight to customers from a macro to
a micro level. Whether on a country, market or individual retailer level,
ACNielsen measures the competitive environment in which manufacturers and
retailers conduct business. In some countries ACNielsen also provides store
census data which allow retailers and manufacturers to understand consumer
behavior within a specific store or group of stores as well as within a retail
trading area or market.
ACNielsen's account-specific information provides sales and marketing
managers with a comprehensive array of retailer-specific sales and merchandising
information, producing reports of product and category performance that
encompass an organization's own brands as well as competing brands.
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On a global basis, ACNielsen sells and provides its multi-national
customers international reports within and across country boundaries. Products
include an International Database (periodic reports of a multi-country retail
database) and an International Market Report (a one-time report on a market and
its competitive environment).
Delivery of Information
ACNielsen converts the data which it collects into insights yielding
competitive advantage for its clients. These include multi-dimensional
reporting, analytical modeling, data navigation and expert systems tools, with
services offered in over 65 countries. ACNielsen delivers its information to
customers via on-line services and reports on paper, CD-ROM, tape and diskette.
The ACNielsen INF*ACT Workstation is a tightly integrated Windows-based
analytical and applications development tool set used worldwide by ACNielsen's
customers. Employing on-line analytical processing capabilities, the Workstation
enables organizations to access and analyze a wide range of corporate and
syndicated information.
ACNielsen also offers a series of Windows-based intelligent business
applications that can enhance the ACNielsen INF*ACT Workstation functionality,
giving organizations the ability to plan, analyze and execute successful
marketing and sales programs. Among these applications are Opportunity Explorer,
Executive Spotlight, Business Review, Trade Manager, Category Manager, Promotion
Optimizer, BrandView and BrandTrack.
In addition, ACNielsen offers merchandising tools through the SPACEMAN
portfolio of products and the PRICEMAN products.
CUSTOMIZED RESEARCH SERVICES
Customized Research Services are used by manufacturers, retailers,
financial institutions and other service organizations that seek to understand
the position of their current, new and proposed products and services in the
marketplace. With customized research capabilities in more than half of the
countries in which it operates, ACNielsen is well-positioned to offer its global
retail measurement clients, including both manufacturers and retailers, consumer
insights from customized research as well as to understand dynamic new markets
such as entertainment, fast foods, financial services and telecommunications.
In addition to services at the country level, through ACNielsen*SRG,
ACNielsen offers multi-country customized studies at both the regional and
global levels. ACNielsen*SRG, has specialist offices in Hong Kong, London, New
York, Tokyo and Singapore, to carry out research in Asia Pacific, Western
Europe, North and South America, the Middle East and Africa.
MEDIA MEASUREMENT SERVICES
The information produced by Media Measurement Services includes
audience estimates for television, radio and print, plus advertising expenditure
measurement and customized media research. Television and radio ratings and
readership data are utilized by the sellers of programs, sellers of time and
space, advertising media planners and time and space buyers, on behalf of
manufacturers/advertisers and media owners, to determine the best, most
cost-efficient way of reaching their customers.
ACNielsen's television audience measurement services, which operate
outside the United States and Canada, utilize a representative panel of
households, each with a meter attached to televisions in the household. Viewers
in the household log into the meter whenever they watch TV to record the
identity and viewing times of the programs being viewed. In a few countries
written diaries are used instead of, or in addition to, meters, with viewers
writing the channels, programs and the times watched. As in the case of meter
panels, individual and household figures are projected to represent national
viewing habits.
ACNielsen's television audience measurement services are operational in
approximately 20 countries. In 1996, ACNielsen launched an electronic meter
service in Shanghai, the first such service introduced in China. Electronic
meter service also began in Ireland during 1996. There are plans to introduce
electronic meters into Indonesia during 1997.
ACNielsen's advertising expenditure measurement service provides to its
customers, primarily advertising agencies and manufacturers/advertisers,
verification that an individual commercial or commercial campaign ran as
contracted, reports the cost of the manufacturers' own and competitors'
advertisements and alerts users to new, competitive ad campaigns.
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In connection with the Distribution, ACNielsen entered into the TAM
Master Agreement (the "TAM Master Agreement") with Cognizant relating to the
conduct of the television audience measurement business (the "TAM Business").
See "Tam Master Agreement" below for further information on the TAM Master
Agreement.
CONSUMER PANEL SERVICES
Consumer Panel Services help organizations achieve competitive
advantage by applying consumer insights resident in the ACNielsen consumer panel
database. With a comprehensive portfolio of tools for reporting and analysis,
ACNielsen measures the multi-faceted dynamics of consumer behavior across all
outlets including: consumer demographics, percentage of households purchasing,
quantity purchased, frequency of purchases, shopping trips and shopping
expenditures, products purchased, level of deal sensitivity, price paid, and
attitudinal and usage information.
In the United States, the ACNielsen Consumer Panel, called Homescan,
consists of approximately 40,000 demographically balanced U.S. households that
use hand-held scanners to record every bar-coded item purchased. This panel is
being expanded to approximately 52,000 in 1997. Outside the United States, more
than 60,000 households in 15 countries are included in the ACNielsen consumer
panel databases.
ACNielsen employs multiple data collection processes throughout the
world. In the United States and several other countries, ACNielsen installs
in-home scanners with which panelists scan items at home as they unpack
purchases from each shopping trip, recording price, promotions and quantity
purchased, as well as the age and gender of the shopper and intended user.
Information detailing each shopping trip is immediately transmitted, via
telephone lines, to ACNielsen.
Consumer panel applications can be used by both manufacturers and
retailers to understand demographics and purchasing habits of consumers. As with
all information derived from the ACNielsen Consumer Panel, data-capture activity
is from all outlet types including grocery, drug, mass merchandiser and
warehouse clubs. Customers can choose from a wide variety of applications or
analyses, from customized and complex to syndicated and basic. ACNielsen offers
a full suite of syndicated category management applications. These reports give
manufacturers and retailers insights into cross outlet shopping, consumer
loyalty and the value of consumer segments.
ACNielsen also provides delivery tools that allow marketers to process,
chart and analyze ACNielsen Consumer Panel information quickly and easily. Among
these are CD-ROM tools and Panel*Fact for Windows, which enable managers to
create customized reports to meet their individual analytic needs and to share
data and analyses with various members within an organization.
RELATIONSHIP AMONG ACNIELSEN, D&B AND COGNIZANT AFTER DISTRIBUTION
Prior to the Distribution, D&B, Cognizant and ACNielsen entered into
certain agreements governing their relationship subsequent to the Distribution
and providing for the allocation of tax, employee benefits and certain other
liabilities and obligations arising from periods prior to the Distribution. The
following description summarizes certain terms of such agreements, but is
qualified by reference to the texts of such agreements which are filed with this
Form 10-K.
DISTRIBUTION AGREEMENT
D&B, Cognizant and ACNielsen entered into the Distribution Agreement
providing for, among other things, certain corporate transactions required to
effect the Distribution and other arrangements among D&B, Cognizant and
ACNielsen subsequent to the Distribution.
In particular, the Distribution Agreement defines the assets and
liabilities allocated to and assumed by Cognizant and those allocated to and
assumed by ACNielsen. The Distribution Agreement also defines what constitutes
the "Cognizant Business" and what constitutes the "ACNielsen Business".
Pursuant to the Distribution Agreement, D&B is obligated to transfer or
cause to be transferred all its right, title and interest in the assets
comprising the Cognizant Business to Cognizant and all its right, title and
interest in the assets comprising the ACNielsen Business to ACNielsen; Cognizant
is obligated to transfer or cause to be transferred all its right, title and
interest in the assets comprising the D&B business to D&B and all its right,
title and interest in the assets comprising the ACNielsen Business to ACNielsen;
and ACNielsen is obligated to transfer or cause to be transferred all its right,
title and interest in the assets comprising the D&B business to D&B and all its
right, title and interest in the assets comprising the Cognizant Business to
Cognizant. All assets were transferred without any representation or warranty,
"as is-where is", and the relevant transferee bears the risk that any necessary
consent to transfer was not obtained. Each party also agreed to exercise its
respective commercially reasonable efforts promptly to
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obtain any necessary consents and approvals and to take such actions as may be
reasonably necessary or desirable to carry out the purposes of the Distribution
Agreement and the other agreements summarized below.
The Distribution Agreement provides for, among other things,
assumptions of liabilities and cross indemnities designed to allocate generally,
effective as of the Distribution Date, financial responsibility for the
liabilities arising out of or in connection with (i) the Cognizant Business,
including the IMS and Nielsen Media Research businesses, to Cognizant, (ii) the
ACNielsen Business to ACNielsen and (iii) all other liabilities to D&B.
No party to the Distribution Agreement will have any liability to any
other party for inaccurate forecasts or arising out of any pre-Distribution
arrangement, course of dealing or understanding (other than the Distribution
Agreement or the other agreements as described below) unless such arrangement,
course of dealing or understanding is specifically set forth on a schedule to
the Distribution Agreement.
The Distribution Agreement includes provisions governing the
administration of certain insurance programs and the procedures for making
claims. The Distribution Agreement also allocates the right to proceeds and the
obligation to incur deductibles under certain insurance policies.
With respect to transfers contemplated by the Distribution Agreement
which were not effected on or prior to the Distribution Date, the parties are
required to cooperate to effect such transfers as promptly as practicable
following the Distribution Date, and pending any such transfers, to hold any
asset not so transferred in trust for the use and benefit of the party entitled
thereto (at the expense of the party entitled thereto), and to retain any
liability not so transferred for the account of the party by whom such liability
is to be assumed.
The Distribution Agreement provides that neither D&B, Cognizant nor
ACNielsen will take any action that would jeopardize the intended tax
consequences of the Distribution. Specifically, each of D&B, Cognizant and
ACNielsen agree to maintain its status as a company engaged in the active
conduct of a trade or business, as defined in Section 355(b) of the Internal
Revenue Code, until the second anniversary of the Distribution Date. As part of
the request for a ruling that the Distribution will be tax free for Federal
income tax purposes, ACNielsen represented to the Internal Revenue Service that,
subject to certain exceptions, it has no plan or intent to liquidate, merge or
sell all or substantially all of its assets. As a result, ACNielsen may not
initiate any action leading to a change of control as such action could result
in the foregoing representations, and the ruling based thereon, being called
into question. Accordingly, the acquisition of control of ACNielsen prior to the
second anniversary may be more difficult or less likely to occur because of the
potential substantial contractual damages associated with a breach of such
provisions of the Distribution Agreement.
Under the Distribution Agreement, each of D&B, Cognizant and ACNielsen
agrees to provide to the other parties, subject to certain conditions, access to
certain corporate records and information and to provide certain services on
such terms as are set forth in a Transition Services Agreement among such
parties.
The Distribution Agreement also provides that, except as otherwise set
forth therein or in any other agreement, all costs or expenses incurred on or
prior to the Distribution Date in connection with the Distribution will be
charged to and paid by D&B. D&B agreed to be liable for any claims based upon
actual or alleged misstatements or omissions in the Registration Statement on
Form 10 filed with the Securities and Exchange Commission by ACNielsen. Except
as set forth in the Distribution Agreement or any related agreement, each party
shall bear its own costs and expenses incurred after the Distribution Date.
TAX ALLOCATION AGREEMENT
D&B, Cognizant and ACNielsen entered into a Tax Allocation Agreement to
the effect that D&B will pay its entire consolidated tax liability for the tax
years that Cognizant and ACNielsen were included in D&B's consolidated Federal
income tax return. For periods prior to the Distribution Date, D&B will
generally be liable for state and local taxes measured by income or imposed in
lieu of income taxes. The Tax Allocation Agreement allocates liability to D&B,
Cognizant and ACNielsen for their respective shares of other state and local
taxes as well as any foreign taxes attributable to periods prior to the
Distribution Date, as well as certain other matters.
EMPLOYEE BENEFITS AGREEMENT
D&B, Cognizant and ACNielsen entered into an Employee Benefits
Agreement (the "Employee Benefits Agreement"), which allocates responsibility
for certain employee benefits matters on and after the Distribution Date.
The Employee Benefits Agreement provides that (i) ACNielsen will adopt
a new defined benefit pension plan for its U.S. employees (which plan has been
adopted), (ii) D&B will continue to sponsor its plan for the benefit of its U.S.
employees as well as
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former employees who terminated employment on or prior to the Distribution Date
and (iii) assets and liabilities of the D&B pension plan that are attributable
to ACNielsen employees will be transferred to the new ACNielsen plan.
The Employee Benefits Agreement provides that D&B will be required to
retain the liability for all benefits under D&B's nonqualified supplemental
pension plans that were vested prior to the Distribution Date, but ACNielsen
will guarantee payment of these benefits to its employees in the event that D&B
is unable to satisfy its obligations.
The Employee Benefits Agreement also provides that (i) D&B will
continue to sponsor its welfare plans for its employees as well as all former
employees who retired or became disabled on or prior to the Distribution Date,
(ii) as of the Distribution Date, ACNielsen will adopt welfare plans for the
benefit of its employees and (iii) ACNielsen will provide retiree welfare
benefits to its continuing employees who would have been eligible to receive
these benefits from D&B had they retired on or prior to the Distribution Date.
If ACNielsen fails to provide any retiree welfare benefits to its employees who
were eligible to receive benefits from D&B but who did not elect to receive them
from D&B, D&B will provide such employees with the same level of retiree welfare
benefits that it provides to its retirees generally.
D&B, Cognizant and ACNielsen each generally retain the severance
liabilities of their respective employees who terminated employment prior to the
Distribution Date.
The Employee Benefits Agreement also sets forth certain provisions with
respect to the adjustment and replacement of D&B stock options and tandem
limited stock appreciation rights outstanding as of the Distribution Date.
The Employee Benefits Agreement also provides that D&B will generally
retain all employee benefit litigation liabilities that were asserted prior to
the Distribution Date (but not such liabilities that relate to any transferred
retirement and savings plan assets of Cognizant or ACNielsen employees). As of
the Distribution Date, ACNielsen employees generally ceased participation in D&B
employee benefit plans, and ACNielsen will generally recognize, among other
things, its employees' past service with D&B under its employee benefit plans.
Except as specifically provided therein, nothing in the Employee Benefits
Agreement restricts D&B's or ACNielsen's ability to amend or terminate any of
their respective employee benefit plans after the Distribution Date.
INDEMNITY AND JOINT DEFENSE AGREEMENT
D&B, Cognizant and ACNielsen entered into the Indemnity and Joint
Defense Agreement pursuant to which they agreed (i) to certain arrangements
allocating potential liabilities ("IRI Liabilities") that may arise out of or in
connection with the IRI Action, as defined below in "Item 3, Legal Proceedings",
and (ii) to conduct a joint defense of such action.
In particular, the Indemnity and Joint Defense Agreement provides that
ACNielsen will assume exclusive liability for IRI Liabilities up to a maximum
amount to be determined at the time such liabilities, if any, become payable
(the "ACN Maximum Amount") and that Cognizant and D&B will share liability
equally for any amounts in excess of the ACN Maximum Amount. The ACN Maximum
Amount will be determined by an investment banking firm as the maximum amount
which ACNielsen is able to pay after giving effect to (i) any plan submitted by
such investment bank which is designed to maximize the claims paying ability of
ACNielsen without impairing the investment banking firm's ability to deliver a
viability opinion (but which will not require any action requiring stockholder
approval), and (ii) payment of related fees and expenses. For these purposes,
financial viability means the ability of ACNielsen, after giving effect to such
plan, the payment of related fees and expenses and the payment of the ACN
Maximum Amount, to pay its debts as they become due and to finance the current
and anticipated operating and capital requirements of its business, as
reconstituted by such plan, for two years from the date any such plan is
expected to be implemented.
In addition, ACNielsen has agreed to certain restrictions on payments
of dividends and share repurchases above specified levels. ACNielsen also agreed
not to engage in mergers, acquisitions or dispositions, including joint venture
investments, if, after giving effect to any such transaction, ACNielsen would be
unable to meet a specified fixed charge coverage ratio, and, if any such
transaction involves aggregate consideration in excess of $50 million, then
ACNielsen will also be required to receive and to cause to be delivered to
Cognizant and D&B an investment banker's fairness opinion.
The Indemnity and Joint Defense Agreement also sets forth certain
provisions governing the defense of the IRI Action pursuant to which the parties
agree to be represented by the same counsel. Legal expenses are to be shared
equally by the three parties.
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TAM MASTER AGREEMENT
Cognizant and ACNielsen entered into the TAM Master Agreement (the "TAM
Master Agreement") relating to the conduct of the television audience
measurement business (the "TAM Business").
The TAM Master Agreement, together with certain ancillary trademark and
technology licensing agreements (together with the TAM Master Agreement, the
"TAM Agreement"), provides that Cognizant or a newly established entity will
license to ACNielsen a nonexclusive right to use certain trademarks in
connection with the TAM Business outside the United States and Canada for five
years. Cognizant will also license to ACNielsen a nonexclusive right to use
specified technology in Australia, Ireland and India in connection with the TAM
Business for five years or such longer period as is required to fulfill
contractual obligations existing on the Distribution Date.
In the event that on or prior to the third anniversary of the
Distribution Date, ACNielsen determines to sell all or substantially all of (i)
its assets or the assets of the TAM Business (as defined in the TAM Master
Agreement), or (ii) its assets that generate more than 50% of the TAM Business,
or ACNielsen takes action to be acquired or is acquired by a third party,
Cognizant will have the right to require ACNielsen to sell all of ACNielsen's
TAM Business to Cognizant at the book value thereof (as calculated in accordance
with the TAM Master Agreement) plus certain transfer costs. In addition, in the
event that prior to the third anniversary of the Distribution Date, ACNielsen
determines to sell all or substantially all of its TAM Business in a particular
country, Cognizant will have the right to require ACNielsen to sell such
business to Cognizant at the book value thereof (as calculated in accordance
with the TAM Master Agreement) plus certain transfer costs.
INTELLECTUAL PROPERTY AGREEMENT
D&B, Cognizant and ACNielsen entered into an Intellectual Property
Agreement (the "IP Agreement") which provides for the allocation and recognition
by and among these companies of rights under patents, copyrights, software,
technology, trade secrets and certain other intellectual property owned by D&B,
Cognizant or ACNielsen and their respective subsidiaries as of the Distribution
Date. The IP Agreement also contains various provisions governing the future use
of certain trademarks owned by ACNielsen prior to the Distribution Date,
including limitations upon both Cognizant's and ACNielsen's use of the "Nielsen"
name, standing alone or as part of a name describing any new product or service
to be offered. (See Item 1- "Intellectual Property.")
COMPETITION
ACNielsen has numerous competitors in its various lines of business
throughout the world. Some are large companies with diverse product and service
lines; others have more limited product and service offerings. Competition comes
from companies specializing in marketing research; the in-house research
departments of manufacturers and advertising agencies; retailers selling
information directly or through brokers; information management and software
companies; and consulting and accounting firms.
In Retail Measurement Services, ACNielsen's principal competitor in the
United States is Information Resources, Inc. (IRI). IRI is also active in
Canada, Europe and Latin America by itself and through joint ventures with GfK
(Germany), Sofres/Secodip (France), Taylor Nelson AGB (U.K.) and other
companies, and is expanding globally.
In Customized Research Services, a significant competitor is Kantar
which operates globally through BMRB International, Millward Brown International
and Research International.
In Media Measurement Services, significant competitors include Taylor
Nelson AGB in Europe, IBOPE in Latin America, GfK in Germany, AGB Italia in
Europe, Latin America and the Middle East, Sofres in France, Spain and Asia, and
Video Research in Japan.
In Consumer Panel Services, significant competitors include NPD,
operating in North America, and a Europanel consortium, which includes Taylor
Nelson AGB, Sofres/Secodip, GfK and Dympanel (Spain), operating in Europe. IRI
also competes in this area.
Principal competitive factors include innovation, the quality,
reliability and comprehensiveness of analytical services and data provided,
flexibility in tailoring services to client needs, price and geographical
coverage.
7
<PAGE> 10
FOREIGN OPERATIONS
As indicated above, ACNielsen engages in a significant portion of its
business outside of the United States, with nearly 80% of its revenues in 1996
being generated through non-U.S. sources. ACNielsen's foreign operations are
subject to the usual risks inherent in carrying on business outside the United
States, including fluctuations in relative currency values, possible
nationalization, expropriation, price controls or other restrictive government
actions. ACNielsen believes that the risk of nationalization or expropriation is
reduced because its products are services and information, rather than products
which require manufacturing facilities or the use of natural resources.
INTELLECTUAL PROPERTY
ACNielsen owns and controls trade secrets, confidential information,
trademarks, trade names, copyrights and other intellectual property rights
which, in the aggregate, are of material importance to ACNielsen's business.
Management of ACNielsen believes that the "ACNielsen" name and related names,
marks and logos are of material importance to ACNielsen. ACNielsen is licensed
to use certain technology and other intellectual property rights owned and
controlled by others, and, similarly, other companies are licensed to use
certain technology and other intellectual property rights owned and controlled
by ACNielsen.
Pursuant to the Intellectual Property (IP) Agreement among D&B,
Cognizant and ACNielsen, ACNielsen has exclusive rights to the use of the
"ACNielsen" name worldwide; however, ACNielsen's future use of the "Nielsen"
name standing alone is prohibited and, as a part of a name describing new
products and services to be offered, is subject to certain limitations. In
addition, the IP Agreement also provides for the establishment of a new entity,
jointly owned by Cognizant and ACNielsen, into which certain trademarks
incorporating or relating to the "Nielsen" name in various countries will be
assigned. This entity is obligated to license such trademarks on a royalty-free
basis to Cognizant or ACNielsen for use in a manner consistent with the terms of
the IP Agreement and for purposes of conducting their respective businesses
after the Distribution, and is responsible for preserving the quality of those
trademarks and minimizing any risk of possible confusion. Pursuant to the TAM
Agreement, ACNielsen received from Cognizant a non-exclusive license to use
certain trademarks, technology and related intellectual property rights in the
conduct of the TAM Business outside of the United States and Canada for a period
of five years. ACNielsen shall not be licensed to use any such names or
technology in connection with the conduct of such business within the United
States or Canada. The technology and other intellectual property rights licensed
by ACNielsen are important to its business, although management of ACNielsen
believes that ACNielsen's business, as a whole, is not dependent upon any one
intellectual property or group of such properties.
The names of ACNielsen's products and services referred to herein are
registered or unregistered trademarks or service marks owned by or licensed to
ACNielsen or its subsidiaries.
FORWARD-LOOKING STATEMENTS
The Company may from time to time make oral forward-looking statements.
In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company is hereby identifying important
factors that could cause actual results to differ materially from those
contained in any forward-looking statement made by or on behalf of the Company.
Any such statement is qualified by reference to the following cautionary
statements.
The Company is currently implementing a turnaround strategy, the
success of which depends in large part on the Company's ability to collect,
process and deliver data in a timely, cost-effective and high quality manner;
reduce costs and improve productivity; and integrate and centralize various
foreign operations. Data collection is largely dependent on the availability of
retail sources that are willing to sell the data to the Company at prices
acceptable to the Company. In addition, the Company operates in highly
competitive markets and its businesses are subject to changes in general
economic conditions which impact the Company's clients' demand for the Company's
services; significant price and service competition; rapid technological
developments in the collection, manipulation and delivery of information; the
impact of foreign exchange rate fluctuations since so much of the Company's
earnings are generated abroad; the degree of acceptance of new product
introductions; and the uncertainties of litigation, including the IRI Action; as
well as other risks and uncertainties detailed from time to time in the
Company's Securities and Exchange Commission filings. Developments in any of
these areas could cause the Company's results to differ from results that have
been or may be projected by or on behalf of the Company. The Company cautions
that the foregoing list of important factors is not exclusive. The Company does
not undertake to update any forward-looking statement that may be made from time
to time by or on behalf of the Company.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
As stated above, the Company operates in one industry segment, Market Research,
Information and Analysis Services.
8
<PAGE> 11
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
The response to item 101(d) of Regulation S-K is incorporated herein by
reference to Note 16 Operations by Geographic Area on Page 44 of the 1996 Annual
Report.
ITEM 2. PROPERTIES
ACNielsen's real properties are geographically distributed to meet
sales and operating requirements worldwide. Most of ACNielsen's properties are
leased from third parties, including D&B and Cognizant. ACNielsen's properties
are generally considered to be both suitable and adequate to meet current
operating requirements and virtually all space is being utilized.
ITEM 3. LEGAL PROCEEDINGS
On July 29, 1996, IRI filed a complaint in the United States District
Court for the Southern District of New York, naming as defendants D&B, A.C.
Nielsen Company (a wholly-owned subsidiary of ACNielsen Corporation) and I.M.S.
International, Inc. (the "IRI Action").
The complaint alleges various violations of the United States antitrust
laws: (1) a violation of Section 1 of the Sherman Act through an alleged
practice of tying A.C. Nielsen Company services in different countries or of
A.C. Nielsen Company and IMS services; (2) a violation of Section 1 of the
Sherman Act through alleged unreasonable restraints of trade consisting of the
contracts described above and through alleged long-term agreements with
multi-national customers; (3) a violation of Section 2 of the Sherman Act for
monopolization and attempted monopolization of export markets through alleged
exclusive data acquisition agreements with retailers in foreign countries, the
contracts with customers described above, and other means; (4) a violation of
Section 2 of the Sherman Act for attempted monopolization of the United States
market through the alleged exclusive data agreements described above, predatory
pricing, and other means; and (5) a violation of Section 2 of the Sherman Act
for an alleged use of market power in export markets to gain an unfair
competitive advantage in the United States.
The complaint also alleges two claims of tortious interference with
contract and tortious interference with a prospective business relationship.
These claims relate to the acquisition by defendants of Survey Research Group
Limited ("SRG"). IRI alleges that SRG violated an alleged agreement with IRI
when it agreed to be acquired by defendants and that defendants induced SRG to
breach that agreement.
IRI's complaint alleges damages in excess of $350 million, which amount
IRI has asked to be trebled under the antitrust laws. IRI also seeks punitive
damages in an unspecified amount.
In connection with such action, D&B, Cognizant (the parent company of
IMS) and the Company have entered into the Indemnity and Joint Defense Agreement
described above in "Item 1, Indemnity and Joint Defense Agreement".
Management of ACNielsen is unable to predict at this time the final
outcome of the IRI Action or whether its resolution could materially affect
ACNielsen's results of operations, cash flows or financial position.
Directorate General IV of the Commission of the European Union (the
"Commission") had commenced an investigation of the Company for the possible
violation of European Union competition law. In May 1996, the Commission issued
a Statement of Objections with respect to certain of the Company's practices in
Europe, including discounting and other sales practices. On November 28, 1996,
the Company delivered an Undertaking to Directorate General IV of the
Commission. In accepting the Undertaking, the Commission agreed to terminate its
investigation of the Company without any adverse decision or fine. Pursuant to
the Undertaking, the Company agreed not to engage in certain sales practices and
contracts with multinational customers. In the opinion of management, compliance
with the Undertaking will not affect the company's results of operations, cash
flows or financial position.
ACNielsen and its subsidiaries are also involved in other legal
proceedings and litigation arising in the ordinary course of business. In the
opinion of management, the outcome of such current legal proceedings, claims
and litigation, if decided adversely, could have a material effect on quarterly
or annual operating results or cash flows when resolved in a future period.
However, in the opinion of management, these matters will not materially affect
ACNielsen's consolidated financial position.
Reference is made to Note 14 of Notes to the Financial Statements on
Pages 42-43 of the 1996 Annual Report, which is incorporated herein by
reference.
9
<PAGE> 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
Executive officers are elected by the Board of Directors to hold office
until their respective successors are chosen and qualified.
Listed below are the executive officers of the registrant at March 1,
1997 and brief summaries of their business experience during the past five
years.
<TABLE>
<CAPTION>
Name Title Age
- - ---------------------- ---------------------------------------------------- ---
<S> <C> <C>
Nicholas L. Trivisonno Chairman and Chief Executive Officer* 49
Robert J Lievense President and Chief Operating Officer* 51
Michael P. Connors Vice Chairman* 41
Earl H. Doppelt Executive Vice President and General Counsel 43
Robert J. Chrenc Executive Vice President and Chief Financial Officer 52
</TABLE>
*Member of the Board of Directors.
Mr. Trivisonno was elected Chairman and Chief Executive Officer of
ACNielsen, effective May 1996; he served as Executive Vice President-Finance and
Chief Financial Officer of D&B, effective September 1995 through November 1,
1996. Prior thereto, he had served with GTE Corporation (telecommunications)
through July 1995 as Executive Vice President-Strategic Planning and Group
President, effective October 1993, as Senior Vice President-Finance, effective
January 1989, and as Corporate Vice President and Controller, effective November
1988. He also served as a director of GTE Corporation from April 1995 through
July 1995.
Mr. Lievense was elected President and Chief Operating Officer of
ACNielsen, effective May 1996; he served as Executive Vice President of D&B,
effective February 1995 through November 1, 1996. He had been elected Senior
Vice President of D&B, effective July 1993. Previously he had served as Chairman
of Dataquest Incorporated (technology information), effective September 1991,
and President of NCH Promotional Services, Inc. (coupon processing), effective
August 1990.
Mr. Connors was elected Vice Chairman of ACNielsen, effective May 1996;
he served as Senior Vice President and Chief Human Resources Officer of D&B,
effective April 1995 through November 1, 1996. Prior thereto, he had served as
Senior Vice President of American Express Travel Related Services, effective
September 1989.
Mr. Doppelt was elected Executive Vice President and General Counsel of
ACNielsen, effective May 1996; he had served as Senior Vice President and
General Counsel of D&B, effective May 1994 through November 1, 1996. Prior
thereto, he had served with Viacom Inc. (global entertainment) as Senior Vice
President and Deputy General Counsel, effective March 1994, and with Paramount
Communications Inc. (global entertainment), as Senior Vice President and Deputy
General Counsel, effective September 1992, and as Vice President and Deputy
General Counsel, effective October 1986.
Mr. Chrenc was elected Executive Vice President and Chief Financial
Officer of ACNielsen, effective June 1996. Prior thereto he was a Partner of
Arthur Andersen LLP (accounting), effective September 1979 to May 1996.
10
<PAGE> 13
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Information in response to this Item is set forth under Dividends and
Common Stock Information in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" on Page 27 of the 1996 Annual Report, which
information is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data required by this Item is incorporated herein by
reference to the information relating to the years 1992 through 1996 set forth
in "Summary Financial Data" on Page 46 of the 1996 Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Information in response to this Item is set forth in "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
Pages 23 to 27 of the 1996 Annual Report, which information is incorporated
herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Schedule under Item 14 on Page
14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information in response to this Item is incorporated herein by
reference to the section entitled "Election of Directors" in the Company's proxy
statement dated March 11, 1997 filed with the Securities and Exchange
Commission, except that "Executive Officers of the Registrant" on Page 10 of
this report responds to Item 401(b) and (e) of Regulation S-K with respect to
the Company's executive officers.
ITEM 11. EXECUTIVE COMPENSATION
Information in response to this Item is incorporated herein by
reference to the section entitled "Compensation of Executive Officers and
Directors and Certain Transactions" in the Company's proxy statement dated March
11, 1997 filed with the Securities and Exchange Commission.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information in response to this Item is incorporated herein by
reference to the section entitled "Security Ownership of Management and Others"
in the Company's proxy statement dated March 11, 1997 filed with the Securities
and Exchange Commission.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information in response to this Item is incorporated herein by
reference to the section entitled "Compensation of Executive Officers and
Directors and Certain Transactions" in the Company's proxy statement dated March
11, 1997 filed with the Securities and Exchange Commission.
11
<PAGE> 14
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) List of documents filed as part of this report.
(1) Financial Statements.
See Index to Financial Statements and Schedule on Page 14.
(2) Financial Statement Schedule.
See Index to Financial Statements and Schedule on Page 14.
(3) Other Financial Information.
Summary Financial Data. See Index to Financial
Statements and Schedule on Page 14.
(4) Exhibits.
See Index to Exhibits on Pages 19 to 20, which indicates
which Exhibits are management contracts or compensatory
plans required to be filed as Exhibits. Only responsive
information appearing on Pages 23 to 46 to Exhibit 13 is
incorporated herein by reference, and no other information
appearing in Exhibit 13 is or shall be deemed to be filed
as part of this Form 10-K.
(b) Reports on Form 8-K.
A report was filed on Form 8-K on October 18, 1996 to describe
the adoption of the Company's Shareholders' Rights Plan.
12
<PAGE> 15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ACNIELSEN CORPORATION
(REGISTRANT)
By: /c/ NICHOLAS L. TRIVISONNO
-------------------------------------
NICHOLAS L. TRIVISONNO
(CHAIRMAN AND CHIEF EXECUTIVE OFFICER)
By: /c/ ROBERT J. CHRENC
-------------------------------------
ROBERT J. CHRENC
(EXECUTIVE VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER)
By: /c/ WILLIAM R. HICKS
-------------------------------------
WILLIAM R. HICKS
(VICE PRESIDENT AND CONTROLLER)
Date: March 26, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
/s/ ROBERT H. BEEBY /s/ ROBERT HOLLAND, JR.
- - ------------------------------------- ---------------------------------------
(ROBERT H. BEEBY, DIRECTOR) (ROBERT HOLLAND JR., DIRECTOR)
/s/ MICHAEL P. CONNORS /s/ ROBERT J LIEVENSE
- - ------------------------------------- ---------------------------------------
(MICHAEL P. CONNORS, DIRECTOR) (ROBERT J LIEVENSE, DIRECTOR)
/s/ DONALD W. GRIFFIN /s/ JOHN R. MEYER
- - ------------------------------------- ---------------------------------------
(DONALD W. GRIFFIN, DIRECTOR) (JOHN R. MEYER, DIRECTOR)
/s/ THOMAS C. HAYS /s/ BRIAN B. PEMBERTON
- - ------------------------------------- ---------------------------------------
(THOMAS C. HAYS, DIRECTOR) (BRIAN B. PEMBERTON, DIRECTOR)
/s/ KAREN L. HENDRICKS /s/ ROBERT N. THURSTON
- - ------------------------------------- ---------------------------------------
(KAREN L. HENDRICKS, DIRECTOR) (ROBERT N. THURSTON, DIRECTOR)
/s/ ROBERT M. HENDRICKSON /s/ NICHOLAS L. TRIVISONNO
- - ------------------------------------- ---------------------------------------
(ROBERT M. HENDRICKSON, DIRECTOR) (NICHOLAS L. TRIVISONNO, DIRECTOR)
Date: March 26, 1997
13
<PAGE> 16
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
FINANCIAL STATEMENTS:
The Company's consolidated financial statements, the notes thereto and
the related report thereon of Arthur Andersen LLP, independent public
accountants, for the year ended December 31, 1996 appearing on Pages 28 to 46 of
the 1996 Annual Report, are incorporated by reference into this Annual Report on
Form 10-K (see below). The additional financial data indicated below should be
read in conjunction with such consolidated financial statements.
<TABLE>
<CAPTION>
PAGE
-------------------
1996 ANNUAL
10-K REPORT
----- -----------
<S> <C> <C>
Report of Independent Public Accountants F-6 28
Statement of Management Responsibility
for Financial Statements F-6 28
As of December 31, 1996 and 1995:
Consolidated Balance Sheets F-8 30
For the years ended December 31, 1996, 1995 and 1994:
Consolidated Statements of Operations F-7 29
Consolidated Statements of Cash Flows F-9 31
Consolidated Statements of Shareholders' Equity F-10 32
Notes to Consolidated Financial Statements F-11 33
Quarterly Financial Data (Unaudited) for the years ended
December 31, 1996 and 1995 F-23 45
Management's Discussion and Analysis of Financial
Condition and Results of Operations F-1 23
Other financial information:
Five-year selected financial data F-24 46
SCHEDULE:
Reports of Independent Public Accountants 15-17 --
ACNielsen Corporation and Subsidiaries:
II-Valuation and Qualifying Accounts for the years ended
December 31, 1996, 1995 and 1994 18 --
</TABLE>
Schedules other than the one listed above are omitted as not required
or inapplicable or because the required information is provided in the
consolidated financial statements, including the notes thereto.
14
<PAGE> 17
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To the Shareholders and Board of Directors of ACNielsen Corporation:
We have audited in accordance with generally accepted auditing
standards, the 1996 consolidated financial statements included in the Company's
1996 Annual Report incorporated by reference in this Form 10-K, and have issued
our report thereon dated February 19, 1997. Our audit was made for the purpose
of forming an opinion on those statements taken as a whole. The 1996 schedule
listed in the accompanying index is the responsibility of the Company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, fairly states in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Stamford, Connecticut
February 19, 1997
15
<PAGE> 18
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of ACNielsen Corporation:
We have audited the combined financial statements of ACNielsen
Corporation, as defined in the notes to the financial statements, as of December
31, 1995 and for each of the two years in the period ended December 31, 1995, as
listed in the Index to Financial Statements on page 14 of this Form 10-K. These
combined financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement . An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the financial position of ACNielsen
Corporation as of December 31, 1995 and the results of its operations and its
cash flows for each of the two years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
As discussed in the notes to the financial statements, in 1995 the
Company changed its method of accounting for the impairment of long-lived
assets.
COOPERS & LYBRAND L.L.P.
Stamford, Connecticut
September 16, 1996
16
<PAGE> 19
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of ACNielsen Corporation:
Our report on the combined financial statements of ACNielsen Corporation, as
defined in the notes to the financial statements, as of December 31, 1995 and
for each of the two years in the period ended December 31, 1995, is included on
page 16 of this Form 10-K. In connection with our audits of such financial
statements, we have also audited the related financial statement schedule for
each of the years ended December 31, 1995 and 1994, set forth on page 18 of this
Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Stamford, Connecticut
September 16, 1996
17
<PAGE> 20
SCHEDULE II
ACNIELSEN CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- - --------------------------------------------------------------------------------------------------------------------------
BALANCE ADDITIONS BALANCE
BEGINNING CHARGED TO AT END
DESCRIPTION OF PERIOD OPERATIONS(A) DEDUCTIONS(B) OF PERIOD
- - ------------------------------------------ --------- ------------- ------------- ---------
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
<S> <C> <C> <C> <C>
For the Year Ended December 31, 1996 $ 17,289 $ 3,853 $ 10,295 $ 10,847
======== ======== ======== ========
For the Year Ended December 31, 1995 $ 8,077 $ 10,523 $ 1,311 $ 17,289
======== ======== ======== ========
For the Year Ended December 31, 1994 $ 6,332 $ 4,443 $ 2,698 $ 8,077
======== ======== ======== ========
</TABLE>
NOTE:
(a) The increase in additions in 1995 is substantially attributable to
bad debts in Europe.
(b) Represents primarily the charge-off of uncollectible accounts for
which a reserve was provided.
18
<PAGE> 21
INDEX TO EXHIBITS
EXHIBIT NUMBER
REGULATION S-K DESCRIPTION
- - -------------- -------------------------------------------------------------
3 Articles of Incorporation and By-laws.
(a) Restated Certificate of Incorporation of the Company
dated October 7, 1996 (filed as Exhibit 3.1 to the
Company's Registration Statement on Form 10, File No.
001-12277 (the "Form 10") and incorporated herein by
reference).
(b) Amended and Restated By-laws of the Company (filed as
Exhibit 3.2 to the Form 10 and incorporated herein by
reference).
4 Instruments Defining the Rights of Security Holders, Including
Indentures.
ACNielsen Corporation $125,000,000 Credit Agreement
dated as of December 19, 1996. *
10 Material Contracts. (All of the following documents, except
for items (a) through (f), are management contracts or
compensatory plans or arrangements required to be filed
pursuant to Item 14(c).)
(a) Distribution Agreement dated as of October 28, 1996
among The Dun & Bradstreet Corporation, Cognizant
Corporation and ACNielsen Corporation. *
(b) Tax Allocation Agreement dated as of October 28, 1996
among The Dun & Bradstreet Corporation, Cognizant
Corporation and ACNielsen Corporation. *
(c) Employee Benefits Agreement dated as of October 28,
1996 among The Dun & Bradstreet Corporation,
Cognizant Corporation and ACNielsen Corporation. *
(d) Intellectual Property Agreement dated as of October
28, 1996 among The Dun & Bradstreet Corporation,
Cognizant Corporation and ACNielsen Corporation. *
(e) TAM Master Agreement dated as of October 28, 1996
between Cognizant Corporation and ACNielsen
Corporation. *
(f) Indemnity and Joint Defense Agreement dated as of
October 28, 1996 among The Dun & Bradstreet
Corporation, Cognizant Corporation and ACNielsen
Corporation. *
(g) 1996 ACNielsen Corporation Non-Employee Directors'
Stock Incentive Plan. *+
(h) 1996 ACNielsen Corporation Non-Employee Directors'
Deferred Compensation Plan. *+
(i) 1996 ACNielsen Corporation Key Employees' Stock
Incentive Plan. *+
(j) 1996 ACNielsen Corporation Replacement Plan for
Certain Employees Holding The Dun & Bradstreet
Corporation Equity-Based Awards. *+
* Filed herewith.
+ This exhibit constitutes a management contract, compensatory plan, or
arrangement.
19
<PAGE> 22
EXHIBIT NUMBER
REGULATION S-K DESCRIPTION
- - -------------- ------------------------------------------------------------
(k) 1996 ACNielsen Corporation Senior Executive
Incentive Plan. *+
(l) 1996 ACNielsen Corporation Management Incentive
Bonus Plan. *+
(m) ACNielsen Corporation Supplemental Executive
Retirement Plan. *+
(n) ACNielsen Corporation Retirement Benefit Excess
Plan. *+
(o) ACNielsen Corporation Executive Transition Plan. *+
(p) Form of Change-in-Control Agreements. *+
(q) Form of Option Agreement. *+
(r) Form of LSAR Agreement. *+
(s) Form of Directors' Restricted Stock Agreement. *+
11 Statement Re Computation of Per Share Earnings.
Computation of Earnings Per Share of Common Stock on
a Fully Diluted Basis *
13 Annual Report to Security Holders.
1996 Annual Report *
21 Subsidiaries of the Registrant.
List of Active Subsidiaries as of January 31, 1997 *
23 Consents of Experts and Counsel.
23.1 Consent of Arthur Andersen LLP *
23.2 Consent of Coopers & Lybrand L.L.P. *
27 Financial Data Schedule. *
* Filed herewith.
+ This exhibit constitutes a management contract, compensatory plan, or
arrangement.
20
<PAGE> 1
EXHIBIT 4
EXECUTION COPY
CREDIT AGREEMENT
dated as of
December 19, 1996
among
ACNIELSEN CORPORATION
The Borrowing Subsidiaries Party Hereto
The Lenders Party Hereto
THE NORTHERN TRUST COMPANY,
as Co-Agent
and
THE CHASE MANHATTAN BANK,
Administrative Agent
$125,000,000 REVOLVING CREDIT AND COMPETITIVE ADVANCE FACILITY
<PAGE> 2
2
================================================================================
FACILITY
================================================================================
[CS&M #6700-469]
<PAGE> 3
3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
Definitions
SECTION 1.01. Defined Terms................................... 1
SECTION 1.02. Classification of Loans and Borrowings ......... 26
SECTION 1.03. Terms Generally ................................ 26
SECTION 1.04. Accounting Terms; GAAP.......................... 26
SECTION 1.05. Exchange Rates.................................. 27
ARTICLE II
The Credits
SECTION 2.01. Commitments..................................... 27
SECTION 2.02. Loans and Borrowings............................ 29
SECTION 2.03. Requests for Revolving Borrowings............... 30
SECTION 2.04. Competitive Bid Procedure....................... 31
SECTION 2.05. Swingline Loans................................. 34
SECTION 2.06. Funding of Borrowings........................... 36
SECTION 2.07. Interest Elections.............................. 37
SECTION 2.08. Termination and Reduction of Commitments....... 39
SECTION 2.09. Repayment of Loans; Evidence of Debt ........... 40
SECTION 2.10. Prepayment of Loans............................. 41
SECTION 2.11. Fees............................................ 43
SECTION 2.12. Interest........................................ 44
SECTION 2.13. Alternate Rate of Interest...................... 45
SECTION 2.14. Increased Costs; Illegality..................... 46
SECTION 2.15. Break Funding Payments.......................... 50
SECTION 2.16. Taxes........................................... 51
SECTION 2.17. Payments Generally; Pro Rata
</TABLE>
<PAGE> 4
4
<TABLE>
<CAPTION>
<S> <C> <C>
Treatment; Sharing of Setoffs ................... 52
SECTION 2.18. Mitigation Obligations; Replacement of
Lenders..................................... 55
SECTION 2.19. Borrowing Subsidiaries........................... 56
SECTION 2.20. Adjustment of Applicable Rate.................... 57
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers............................. 57
SECTION 3.02. Authorization; Enforceability.................... 57
SECTION 3.03. Governmental Approvals; No Conflicts............. 58
SECTION 3.04. Financial Condition; No Material Adverse Change.. 58
SECTION 3.05. Properties....................................... 59
SECTION 3.06. Litigation and Environmental Matters............. 60
SECTION 3.07. Compliance with Laws and Agreements.............. 60
SECTION 3.08. Investment and Holding Company Status............ 61
SECTION 3.09. Taxes............................................ 61
SECTION 3.10. ERISA............................................ 61
SECTION 3.11. Disclosure....................................... 61
SECTION 3.12. Subsidiaries..................................... 62
SECTION 3.13. Solvency......................................... 62
ARTICLE IV
Conditions
SECTION 4.01. Effective Date................................... 62
SECTION 4.02. Each Credit Event................................ 64
SECTION 4.03. First Credit Event...............................
SECTION 4.04. Each Borrowing Subsidiary Credit Event .......... 65
ARTICLE V
Affirmative Covenants
SECTION 5.01. Financial Statements and Other
</TABLE>
<PAGE> 5
5
<TABLE>
<CAPTION>
<S> <C> <C>
Information................................. 66
SECTION 5.02. Notices of Material Events....................... 67
SECTION 5.03. Existence; Conduct of Business................... 68
SECTION 5.04 Payment of Obligations........................... 68
SECTION 5.05. Maintenance of Properties; Insurance............. 69
SECTION 5.06. Books and Records; Inspection Rights............. 69
SECTION 5.07. Compliance with Laws............................. 69
SECTION 5.08. Use of Proceeds.................................. 69
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness..................................... 70
SECTION 6.02. Liens............................................ 71
SECTION 6.03. Fundamental Changes.............................. 72
SECTION 6.04. Investments, Loans, Advances,
Guarantees and Acquisitions; Hedging Agreements.. 73
SECTION 6.05. Restricted Payments and Issuances................ 75
SECTION 6.06. Transactions with Affiliates..................... 75
SECTION 6.07. Sale and Lease-Back Transactions................. 75
SECTION 6.08. Restrictive Agreements........................... 76
SECTION 6.09. Certain Agreements............................... 76
SECTION 6.10. Borrowing Subsidiaries........................... 77
SECTION 6.11. Leverage Ratio................................... 77
SECTION 6.12. Fixed Charge Coverage Ratio...................... 77
SECTION 6.13. Minimum EBITDA................................... 77
ARTICLE VII
Events of Default................................ 78
ARTICLE VIII
The Administrative Agent......................... 81
ARTICLE IX
Guarantee........................................ 84
</TABLE>
6
<PAGE> 6
<TABLE>
<CAPTION>
6
ARTICLE X
Miscellaneous
<S> <C> <C>
SECTION 10.01. Notices......................................... 86
SECTION 10.02. Waivers; Amendments............................. 87
SECTION 10.03. Expenses; Indemnity; Damage Waiver.............. 88
SECTION 10.04. Successors and Assigns.......................... 90
SECTION 10.05. Survival........................................ 93
SECTION 10.06. Counterparts; Integration; Effectiveness........ 94
SECTION 10.07. Severability.................................... 94
SECTION 10.08. Right of Setoff................................. 94
SECTION 10.09. Governing Law; Jurisdiction; Consent
to Service of Process........................... 95
SECTION 10.10. WAIVER OF JURY TRIAL............................ 96
SECTION 10.11. Headings........................................ 96
SECTION 10.12. Confidentiality................................. 96
SECTION 10.13. Interest Rate Limitation........................ 97
SECTION 10.14. Conversion of Currencies........................ 97
</TABLE>
SCHEDULES:
Schedule 1.01 -- Alternate Procedures
Schedule 1.01(a) -- Spin-Off Related Payments
Schedule 2.01 -- Lenders, Commitments, Multicurrency
Lenders and Multicurrency Commitments
Schedule 3.06 -- Disclosed Matters
Schedule 3.12 -- Subsidiaries and Material Subsidiaries
Schedule 4.03 -- Credit Agreements
Schedule 6.02 -- Existing Liens
Schedule 6.04(a) -- Existing Investments
Schedule 6.08 -- Restrictive Agreements
EXHIBITS:
Exhibit A -- Form of Assignment and Acceptance
<PAGE> 7
7
Exhibit B-1 -- Form of Opinion of Company's Counsel
Exhibit B-2 -- Form of Opinion of Simpson Thacher & Bartlett
Exhibit C -- Form of Opinion of Borrowing Subsidiary's
Counsel
Exhibit D -- Form of Borrowing Subsidiary Agreement
Exhibit E -- Form of Borrowing Subsidiary Termination
<PAGE> 8
CREDIT AGREEMENT dated as of December 19, 1996, among
ACNIELSEN CORPORATION, the BORROWING SUBSIDIARIES party
hereto, the LENDERS party hereto, THE NORTHERN TRUST COMPANY,
as Co-Agent, and THE CHASE MANHATTAN BANK, as Administrative
Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement,
the following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Administrative Agent" means The Chase Manhattan Bank, in its
capacity as administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
"Agreement Currency" has the meaning assigned to such term
in Section 10.14.
<PAGE> 9
2
"Alternate Base Rate" means, for any day, a rate per annum equal to
the greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.
"Alternate Procedures" means, with respect to the Multicurrency
Loans in a specified Committed Currency, any alternate notice, funding or
payment procedures approved by the Administrative Agent, the applicable Borrower
and the Multicurrency Lenders and set forth in Schedule 1.01 or in one or more
supplements thereto.
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.
<PAGE> 10
3
"Applicable Rate" means, for any day, with respect to any
Eurocurrency Revolving Loan, or with respect to the participation fees or
commitment fees payable hereunder, as the case may be, the applicable rate per
annum set forth below under the caption "Eurocurrency Spread/ Participation Fee
Rate" or "Commitment Fee Rate", as the case may be, based upon the Fixed Charge
Coverage Ratio for the most recently ended period of four fiscal quarters for
which the Company's consolidated financial statements have been delivered
pursuant to Section 5.01(a) or (b):
<TABLE>
<CAPTION>
=========================================================================
Eurocurrency Commitment Fee
Fixed Charge Coverage Ratio: Spread/ Rate
Participation Fee Rate
=========================================================================
<S> <C> <C>
Category 1 1.00% .300%
----------
Less than 1.15 to 1.00
=========================================================================
Category 2 .750% .250%
----------
Greater than or equal to 1.15 to
1.00 and less than
or equal to 1.20 to 1.00
=========================================================================
Category 3 .500% .200%
----------
Greater than 1.20 to 1.00
=========================================================================
</TABLE>
Each change in the Applicable Rate resulting from a change in the
Fixed Charge Coverage Ratio shall be effective during the period commencing on
and including the date that is the second Business Day after the delivery to the
Administrative Agent pursuant to Section 5.01(a) or (b) of consolidated
financial statements indicating such change and ending on the date immediately
preceding the effective date of the next such change; provided that (a) the
Applicable Rate shall be determined by reference to Category 3 until the earlier
of (i) the date on which the Company delivers its financial statements for the
fiscal year ending December 31, 1996, pursuant to Section 5.01(a) and (ii) March
31, 1997, and (b) subject to Section 2.20, if the Company fails to deliver the
consolidated financial statements required to be delivered by it pursuant to
Section 5.01(a) or (b) and such failure results in an Event of Default
hereunder, the Applicable Rate shall be determined by reference to Category 1
during the period from the expiration of the time for delivery thereof until
such
<PAGE> 11
4
consolidated financial statements are delivered, provided, further, that, if the
Company fails to deliver the financial statements for the fiscal year ending
December 31, 1996, pursuant to Section 5.01(a), the Applicable Rate shall be
determined by reference to Category 1 during the period from the expiration of
the time for delivery thereof until such consolidated financial statements are
delivered.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 10.04), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the Administrative Agent
and the Company.
"Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitments.
"Board" means the Board of Governors of the Federal Reserve
System of the United States of America.
"Borrower" means the Company or any Borrowing Subsidiary.
"Borrowing" means (a) Revolving Loans of the same Type and currency,
made, converted or continued on the same date and, in the case of Eurocurrency
Loans, as to which a single Interest Period is in effect, (b) a Competitive Loan
or group of Competitive Loans of the same Type made on the same date and as to
which a single Interest Period is in effect or (c) a Swingline Loan.
"Borrowing Date" means any Business Day specified in a notice
pursuant to Section 2.03, 2.04 or 2.05 as a date on which the relevant Borrower
requests Loans to be made hereunder.
"Borrowing Request" means a request for a Revolving Borrowing in
accordance with Section 2.03.
<PAGE> 12
5
"Borrowing Subsidiary" means, at any time, any Subsidiary of the
Company designated as a Borrowing Subsidiary by the Company pursuant to Section
2.19 that has not ceased to be a Borrowing Subsidiary pursuant to such Section
or Article VII; provided, that the Company owns or Controls at least 95% of the
ordinary voting power of such Subsidiary.
"Borrowing Subsidiary Agreement" means a Borrowing Subsidiary
Agreement substantially in the form of Exhibit D.
"Borrowing Subsidiary Termination" means a Borrowing Subsidiary
Termination substantially in the form of Exhibit E.
"Brazilian Facility" means that certain Unsecured Revolving Credit
Facility dated as of November 1, 1996, between AC Nielsen Ltda. and The First
National Bank of Boston, providing for unsecured revolving loans not to exceed
at any time $13,000,000.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to remain closed; provided that (i) when used in connection with a Eurocurrency
Loan, the term "Business Day" shall also exclude any day on which banks are not
open for dealings in deposits in the applicable currency in the London interbank
market and (ii) when used in connection with a Multicurrency Loan, the term
"Business Day" shall also exclude any day on which banks in the jurisdiction
where such Loans are being made and where payments thereof are required to be
made are required by law to remain closed.
"Calculation Date" means (a) the last Business Day of each calendar
month and such other Business Days during such calendar month as may be notified
by the Company to the Administrative Agent and (b) at any time when the sum of
the Revolving Credit Exposures exceeds 75% of the aggregate amount of the
Lenders' Commitments, the last Business Day of each calendar week.
<PAGE> 13
6
"Capital Expenditures" means, for any period, without duplication
(a) the additions to property, plant and equipment and other capital
expenditures of the Company and its consolidated Subsidiaries that are (or would
be) reflected in a consolidated statement of cash flow of the Company for such
period prepared in accordance with GAAP, and (b) the additions to hardware and
software of the Company and its consolidated Subsidiaries that are (or would be)
reflected in a consolidated statement of cash flow of the Company for such
period prepared in accordance with GAAP.
"Capital Lease Obligations" of any Person means the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Cash Interest Expense" means, for any period, Interest Expense paid
in cash during such period.
"Change in Control" means (a) the acquisition of ownership, directly
or indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of shares
representing more than 25% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Company; or (b) occupation of a
majority of the seats (other than vacant seats) on the board of directors of the
Company by Persons who were neither (i) nominated by the board of directors of
the Company nor (ii) appointed by directors so nominated.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority
<PAGE> 14
7
after the date of this Agreement or (c) compliance by any Lender (or,
for purposes of Section 2.14(b), by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans,
Competitive Loans or Swingline Loans.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Commitment" means, with respect to each Lender, the commitment of
such Lender to make Revolving Loans and to acquire participations in
Multicurrency Loans and Swingline Loans hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's Revolving Credit
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04. The initial
amount of each Lender's Commitment is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Commitment, as applicable. The initial amount of total Commitments is
$125,000,000.
"Committed Currency" means (a) Japanese Yen and (b) any other
Eligible Currency that shall be designated by the Company in a notice delivered
to the Administrative Agent and approved by the Administrative Agent and all the
Lenders as a Committed Currency.
"Company" means ACNielsen Corporation, a Delaware
corporation.
"Competitive Bid" means an offer by a Lender to make a Competitive
Loan in accordance with Section 2.04.
<PAGE> 15
8
"Competitive Bid Rate" means, with respect to any Competitive Bid,
the Margin or the Fixed Rate, as applicable, offered by the Lender making such
Competitive Bid.
"Competitive Bid Request" means a request for Competitive Bids in
accordance with Section 2.04.
"Competitive Borrowing" means a Borrowing comprised of
Competitive Loans.
"Competitive Loan" means a Loan in dollars made pursuant to
Section 2.04.
"Competitive Loan Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Competitive
Loans at such time.
"Consolidated Tangible Assets" means the total assets of the Company
and its consolidated Subsidiaries less their consolidated Intangible Assets. For
purposes of this definition, "Intangible Assets" means the amount of (i) all
write-ups in the book value of any asset owned by the Company or a consolidated
Subsidiary and (ii) all unamortized debt discount and expense, unamortized
deferred charges, goodwill, patents, trademarks, service marks, trade names,
copyrights and other intangible assets.
"Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
<PAGE> 16
9
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.
"Dollar Equivalent" means, on any date of determination, with
respect to any amount in any Committed Currency, the equivalent in dollars of
such amount, determined by the Administrative Agent pursuant to Section 1.05(a)
using the Exchange Rate with respect to such Committed Currency then in effect.
"dollars" or "$" refers to lawful money of the United
States of America.
"Domestic Borrowing Subsidiary" means any Borrowing Subsidiary
organized under the laws of any jurisdiction in the United States.
"EBITDA" means, for any period, the consolidated net income of the
Company and its consolidated Subsidiaries for such period plus, to the extent
deducted in computing such consolidated net income for such period, the sum
(without duplication) of (a) income tax expense, (b) Interest Expense, (c)
depreciation and amortization expense, (d) extraordinary losses, (e) the
Spin-Off Related Payments and (f) any other non-cash charges or expenses, minus,
to the extent added in computing such consolidated net income for such period,
(i) consolidated interest income, (ii) extraordinary gains and (iii) any other
non-cash income; provided that (i) EBITDA for the fiscal quarter ended March 31,
1996 shall be deemed to be $4,886,000, (ii) EBITDA for the fiscal quarter ended
June 30, 1996 shall be deemed to be $34,763,000 and (iii) EBITDA for the fiscal
quarter ended September 30, 1996 shall be deemed to be $38,558,000.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 10.02).
<PAGE> 17
10
"Eligible Currency" means at any time any currency (other than
dollars) that is freely tradeable and exchangeable into dollars in the London
market and for which an Exchange Rate can be determined by reference to the
Reuters World Currency Page or another publicly available service for displaying
exchange rates.
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Company or any Subsidiary
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Company, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued
<PAGE> 18
11
thereunder with respect to a Plan (other than an event for which the 30-day
notice period is waived); (b) the existence with respect to any Plan of an
"accumulated funding deficiency" (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section
412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of
the minimum funding standard with respect to any Plan; (d) the incurrence by the
Company or any of its ERISA Affiliates of any liability under Title IV of ERISA
with respect to the termination of any Plan; (e) the receipt by the Company or
any ERISA Affiliate from the PBGC or a plan administrator of any notice relating
to an intention to terminate any Plan or Plans or to appoint a trustee to
administer any Plan; (f) the incurrence by the Company or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal
from any Plan or Multiemployer Plan; or (g) the receipt by the Company or any
ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the
Company or any ERISA Affiliate of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.
"Eurocurrency", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the LIBO Rate.
"Event of Default" has the meaning assigned to such term in
Article VII.
"Exchange Rate" means, on any day, with respect to any Committed
Currency, the rate at which such Committed Currency may be exchanged into
dollars (and, for purposes of Section 2.13(i), the rate at which dollars may be
exchanged into such Committed Currency), as set forth at approximately 11:00
a.m., London time, on such date on the Reuters World Currency Page for such
Committed Currency or as otherwise determined in accordance with the Alternate
Procedures. In the event that such rate does not appear on any Reuters
<PAGE> 19
12
World Currency Page, the Exchange Rate shall be determined by reference to such
other publicly available service for displaying exchange rates as may be agreed
upon by the Administrative Agent and the Company, or, in the absence of such
agreement, such Exchange Rate shall instead be the arithmetic average of the
spot rates of exchange of the Administrative Agent in the market where its
foreign currency exchange operations in respect of such Committed Currency are
then being conducted, at or about 10:00 a.m., local time, on such date for the
purchase of dollars (or such Committed Currency, as the case may be) for
delivery two Business Days later; provided that if at the time of any such
determination, for any reason, no such spot rate is being quoted, the
Administrative Agent may use any reasonable method it deems appropriate to
determine such rate, and such determination shall be presumed correct absent
manifest error.
"Excluded Taxes" means, with respect to the Administrative Agent,
any Lender or any other recipient of any payment to be made by or on account of
any obligation of any Borrower hereunder, (a) income or franchise taxes imposed
on (or measured by) its net income (including branch profits or similar taxes)
imposed as a result of a present or former connection between such Lender or the
Administrative Agent and the Governmental Authority imposing such tax (other
than any such connection arising solely from such Lender or the Administrative
Agent having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement) and (b) in the case of a Foreign
Lender (other than an assignee pursuant to a request by a Borrower under Section
2.18(b)), any withholding tax that is imposed on amounts payable to such Foreign
Lender (i) to the extent it is in effect and would apply as of the date such
Foreign Lender becomes a party to this Agreement or (ii) to the extent it
relates to payments received by a new lending office designated by such Foreign
Lender and is in effect and would apply at the time such lending office is
designated (other than any withholding tax imposed on payments (A) by any
Borrowing Subsidiary that is designated after such Foreign Lender becomes a
party to this Agreement or designates a new lending office or (B) by any
Borrower
<PAGE> 20
13
from a Payment Location other than one specifically identified in this Agreement
or any schedule hereto as of the date such Foreign Lender becomes a party to
this Agreement or designates a new lending office), or (iii) that is
attributable to such Foreign Lender's failure to comply with Section 2.16(e),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the applicable Borrower with respect to such
withholding tax pursuant to Section 2.16(a).
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" of any Person means the chief financial officer,
treasurer or controller of such Person.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of
(a) EBITDA for such period to (b) the sum of (i) Cash Interest Expense for such
period, (ii) Capital Expenditures made in cash during such period, (iii) cash
tax payments by the Company and its consolidated Subsidiaries during such
period, (iv) required principal payments (whether at maturity or pursuant to any
amortization, sinking fund or mandatory prepayment, redemption or repurchase
provisions) by the Company and its consolidated Subsidiaries in connection with
Indebtedness for borrowed money or in connection with any Capital Lease
Obligation, provided, that if the Brazilian Facility is
<PAGE> 21
14
terminated and all amounts outstanding thereunder are paid in full on or prior
to June 30, 1997, fixed charges with respect to any period during which the
Brazilian Facility is terminated and all amounts outstanding thereunder are paid
in full shall not include any principal payments in respect of the Brazilian
Facility, (v) expenditures in connection with acquisitions of other Persons or
business units, but only to the extent that the consideration paid (other than
consideration paid in equity or through an asset swap or assumption of
indebtedness, in each case as permitted by the terms of this Agreement) in
connection with acquisitions completed during any calendar year exceeds
$10,000,000 and (vi) cash restructuring payments by the Company or its
consolidated Subsidiaries during such period (but only to the extent such
payments exceed $60,000,000 during the term of this Agreement), provided, that
subclauses (i) through (vi) of clause (b) of this definition shall not include
any Spin-Off Related Payment.
"Fixed Rate" means, with respect to any Competitive Loan (other than
a Eurodollar Competitive Loan), the fixed rate of interest per annum specified
by the Lender making such Competitive Loan in its related Competitive Bid.
"Fixed Rate Loan" means a Competitive Loan bearing interest
at a Fixed Rate.
"Foreign Lender" means, with respect to any Loan, any Lender making
such Loan that is organized under the laws of a jurisdiction other than the
Relevant Jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is not organized
under the laws of any jurisdiction in the United States.
"Funded Indebtedness" means at any date, all Indebtedness for
borrowed money and all Capital Lease Obligations of the Company and its
consolidated Subsidiaries reflected on the consolidated balance sheet of the
Company at such date in accordance with GAAP.
"GAAP" means generally accepted accounting principles in
the United States of America.
<PAGE> 22
15
"Governmental Authority" means the government of the United States
of America, any other nation or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"Hazardous Materials" means all explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or
<PAGE> 23
16
currency exchange rate or commodity price hedging arrangement.
"IJDA" means the Indemnity and Joint Defense Agreement dated as of
October 28, 1996, among the Company, The Dun & Bradstreet Corporation and
Cognizant Corporation, as amended by the side letter dated December 10, 1996,
from the Company and confirmed and agreed by The Dun & Bradstreet Corporation
and Cognizant Corporation.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business and amounts payable
to employees in the ordinary course of business), (f) all Indebtedness of others
of the type described in the other clauses of this definition secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, (g)
all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease
Obligations of such Person, (i) all obligations, contingent or otherwise, of
such Person as an account party in respect of letters of credit and letters of
guaranty and (j) all obligations, contingent or otherwise, of such Person in
respect of bankers' acceptances. The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person would under applicable
law or any agreement or instrument be liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such
<PAGE> 24
17
Indebtedness provide that such Person shall not be liable therefor.
"Indemnified Taxes" means Taxes arising from any payment made
hereunder or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement other than Excluded Taxes and Other Taxes.
"Information Statement" means the Information Statement of the
Company and Cognizant Corporation filed with the Securities and Exchange
Commission on October 17, 1996.
"Interest Election Request" means a request by the relevant Borrower
to convert or continue a Revolving Borrowing in accordance with Section 2.07.
"Interest Expense" means, for any period, the interest expense of
the Company and its consolidated Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, including (i) the amortization of
debt discounts to the extent included in interest expense in accordance with
GAAP, (ii) the amortization of all fees (including fees with respect to interest
rate protection agreements or other interest rate hedging arrangements) payable
in connection with the incurrence of Indebtedness to the extent included in
interest expense in accordance with GAAP and (iii) the portion of any rents
payable under capital leases allocable to interest expense in accordance with
GAAP, provided that if the Brazilian Facility is terminated and all amounts
outstanding thereunder are paid in full on or prior to June 30, 1997, Interest
Expense with respect to any period during which the Brazilian Facility is
terminated and all amounts outstanding thereunder are paid in full shall not
include any Interest Expense in respect of the Brazilian Facility.
"Interest Payment Date" means (a) with respect to any ABR Loan
(other than a Swingline Loan), the last day of each March, June, September and
December, (b) with respect to any Eurocurrency Loan, the last day of the
Interest
<PAGE> 25
18
Period applicable to the Borrowing of which such Loan is a part and, in the case
of a Eurocurrency Borrowing with an Interest Period of more than three months'
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months' duration after the first day of such Interest Period,
(c) with respect to any Fixed Rate Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and, in the case of a
Fixed Rate Borrowing with an Interest Period of more than 90 days' duration
(unless otherwise specified in the applicable Competitive Bid Request), each day
prior to the last day of such Interest Period that occurs at intervals of 90
days' duration after the first day of such Interest Period, and any other dates
that are specified in the applicable Competitive Bid Request as Interest Payment
Dates with respect to such Borrowing, and (d) with respect to any Swingline
Loan, the day that such Loan is required to be repaid.
"Interest Period" means (a) with respect to any Eurocurrency
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter, as the relevant Borrower may elect and (b) with respect
to any Fixed Rate Borrowing, the period (which shall not be less than one day or
more than 360 days) commencing on the date of such Borrowing and ending on the
date specified in the applicable Competitive Bid Request; provided, that (i) if
any Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, in the case
of a Eurocurrency Borrowing only, such next succeeding Business Day would fall
in the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day and (ii) any Interest Period pertaining to a
Eurocurrency Borrowing that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last Business Day
of the last calendar month of such Interest Period. For purposes hereof, the
date of a Borrowing initially shall be the date on which such Borrowing is made
and, in the case of
<PAGE> 26
19
a Revolving Borrowing, thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.
"Investment" has the meaning assigned to such term in
Section 6.04.
"Judgment Currency" has the meaning assigned to such term
in Section 10.14.
"Lenders" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a Lender pursuant to an Assignment and Acceptance,
other than any such Person that ceases to be a Lender pursuant to an Assignment
and Acceptance. Unless the context otherwise requires, the term "Lenders"
includes the Multicurrency Lenders and the Swingline Lender.
"Leverage Ratio" means, at any time, the ratio of (a) Total Debt at
such time to (b) EBITDA minus Capital Expenditures for the most recent period of
four consecutive fiscal quarters of the Company ended at or prior to such time.
"LIBO Rate" means, with respect to any Eurocurrency Borrowing for
any Interest Period, the rate appearing on Page 3750 (or, in the case of a
Multicurrency Borrowing, the rate appearing on the Page for the applicable
Committed Currency) of the Telerate Service (or on any successor or substitute
page of such Service, or any successor to or substitute for such Service,
providing rate quotations comparable to those currently provided on such page of
such Service, as determined by the Administrative Agent, in consultation with
the Company, from time to time for purposes of providing quotations of interest
rates applicable to dollar deposits (or, in the case of a Multicurrency
Borrowing, deposits in the applicable Committed Currency) in the London
interbank market) at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period, as the rate for dollar
deposits (or the applicable Committed Currency) with a maturity comparable to
such Interest Period. In the event
<PAGE> 27
20
that such rate is not available at such time for any reason, then the "LIBO
Rate" with respect to such Eurocurrency Borrowing for such Interest Period shall
be the rate at which the Administrative Agent is offered dollar deposits of
$5,000,000 (or, in the case of a Multicurrency Borrowing, deposits in the
applicable Committed Currency in an amount the Dollar Equivalent of which is
approximately equal to $5,000,000) and for a maturity comparable to such
Interest Period in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities (other than
securities issued by the Company), any purchase option, call or similar right of
a third party with respect to such securities, except for any such option or
similar right granted in connection with a transaction permitted under Section
6.03.
"Loans" means the loans made by the Lenders to the
Borrowers pursuant to this Agreement.
"Margin" means, with respect to any Competitive Loan bearing
interest at a rate based on the LIBO Rate, the marginal rate of interest, if
any, to be added to or subtracted from the LIBO Rate to determine the rate of
interest applicable to such Loan, as specified by the Lender making such Loan in
its related Competitive Bid.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations or financial condition of the Company and the
Subsidiaries taken as a whole, and (b) the rights of or remedies available to
the Lenders under this Agreement.
<PAGE> 28
21
"Material Indebtedness" means Indebtedness (other than the Loans),
or obligations in respect of one or more Hedging Agreements, of the Company and
its Subsidiaries in an aggregate outstanding principal amount exceeding
$10,000,000. For purposes of determining Material Indebtedness, the "principal
amount" of the obligations of the Company or any Subsidiary in respect of any
Hedging Agreement at any time shall be the maximum aggregate amount (giving
effect to any netting agreements) that the Company or such Subsidiary would be
required to pay if such Hedging Agreement were terminated at such time.
"Material Subsidiary" means any Borrowing Subsidiary and any
Subsidiary (a) the Consolidated Tangible Assets of which exceed 3% of the
Consolidated Tangible Assets of the Company and its consolidated Subsidiaries as
of the end of the most recently completed fiscal year or (b) the Net Revenue of
which exceeds 3% of the Net Revenue of the Company and its consolidated
Subsidiaries for the most recently completed fiscal year; provided, that (i) any
Subsidiary that directly or indirectly owns a Material Subsidiary shall itself
be a Material Subsidiary and (ii) in the event Subsidiaries that would otherwise
not be Material Subsidiaries shall in the aggregate account for a percentage in
excess of 10% of the Consolidated Tangible Assets or 10% of the Net Revenue of
the Company and its consolidated Subsidiaries as of the end of and for the most
recently completed fiscal year, then one or more of such Subsidiaries designated
by the Company (or, if the Company shall make no designation, one or more of
such Subsidiaries in descending order based on their respective contributions to
Consolidated Tangible Assets), shall be included as Material Subsidiaries to the
extent necessary to eliminate such excess.
"Maturity Date" means December 17, 1999.
"Moody's" means Moody's Investors Service, Inc.
"Multicurrency Borrowing" means a Borrowing comprised of
Multicurrency Loans.
<PAGE> 29
22
"Multicurrency Commitment" means, with respect to each Multicurrency
Lender, the commitment of such Lender (expressed in dollars) to make
Multicurrency Loans, expressed as an amount representing the maximum aggregate
Dollar Equivalent of the principal amount of such Lender's outstanding
Multicurrency Loans, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04. The initial
amount of each Multicurrency Lender's Multicurrency Commitment is set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
shall have assumed its Multicurrency Commitment, as applicable. The initial
amount of the Multicurrency Commitments is $30,000,000.
"Multicurrency Equivalent" means, on any date of determination, with
respect to any amount in dollars, the equivalent in the relevant Committed
Currency of such amount, determined by the Administrative Agent using the
Exchange Rate with respect to such Committed Currency then in effect as
determined pursuant to Section 1.05(a).
"Multicurrency Lenders" means the Lenders designated as such on
Schedule 2.01 and any other Person that shall become a Multicurrency Lender
pursuant to an Assignment and Acceptance, other than any such Person that ceases
to be a Multicurrency Lender pursuant to an Assignment and Acceptance.
"Multicurrency Loan" means a Revolving Loan denominated in
a Committed Currency.
"Multicurrency Loan Exposure" means, with respect to any Lender at
any time, such Lender's Applicable Percentage of the Dollar Equivalent of the
aggregate principal amount of the outstanding Multicurrency Loans.
"Multiemployer Plan" means a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
<PAGE> 30
23
"Net Cash" means all cash and cash equivalents of the Company minus
Funded Indebtedness and the Spin-Off Related Payments.
"Net Revenue" means, with respect to any Person for any period, the
net revenue of such Person and its consolidated subsidiaries, determined on a
consolidated basis in accordance with GAAP for such period.
"Obligations" means the obligations of each of the Borrowing
Subsidiaries under this Agreement and the Borrowing Subsidiary Agreements with
respect to the payment of (i) the principal of and interest on the Loans to each
such Borrowing Subsidiary when and as due, whether at maturity, by acceleration,
upon one or more dates set for prepayment or otherwise and (ii) all other
monetary obligations of each of the Borrowing Subsidiaries hereunder and
thereunder.
"Other Taxes" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.
"Payment Location" means an office, branch or other place
of business of any Borrower.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA and any successor entity performing similar functions.
"Permitted Acquisitions" means any acquisition by the Company or any
of its Subsidiaries; provided that (i) at the time thereof and after giving
effect thereto no Default shall have occurred and be continuing, (ii) the
aggregate amount (or, in the case of consideration consisting of assets, fair
market value) of the consideration paid by the Company and its Subsidiaries
shall not exceed $50,000,000 on a cumulative basis for all such acquisitions
subsequent to the date hereof, (iii) the Company would be in compliance
<PAGE> 31
24
with Sections 6.11, 6.12 and 6.13 for the most recent calculation period and as
of the last day thereof as if such acquisition had been consummated at the
beginning of such calculation period, (iv) the Company shall deliver to the
Administrative Agent a certificate of a Financial Officer of the Company setting
forth calculations in reasonable detail demonstrating compliance with the
conditions set forth in clause (ii) and (iii) above); and (v) in the case of any
such acquisition of any capital stock of or other ownership interests in any
Person which is not then a Subsidiary of the Company, such acquisition will
result in such Person becoming a Subsidiary of the Company.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or
are being contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary
course of business and securing obligations that are not overdue by more
than 60 days or are being contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary
course of business, and deposits securing liabilities to insurance
carriers under insurance or self-insurance arrangements; and
(e) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that
<PAGE> 32
25
do not secure any monetary obligations and do not materially detract from
the value of the affected property or interfere with the ordinary conduct
of business of the Company or any Subsidiary;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America), in
each case maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from
the date of acquisition thereof and having, at such date of acquisition,
the highest credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition
thereof issued or guaranteed by or placed with, and money market deposit
accounts issued or offered by, any Lender or any domestic office of any
commercial bank organized under the laws of the United States of America
or any State thereof which has a combined capital and surplus and
undivided profits of not less than $500,000,000; and
(d) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) above and entered
into with a financial institution satisfying the criteria described in
clause (c) above.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture,
<PAGE> 33
26
association, company, partnership, Governmental Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) (i) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 302 of ERISA and (ii) in respect of which the
Company or any ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Register" has the meaning set forth in Section 10.04.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Relevant Jurisdiction" means (i) in the case of any Loan to the
Company or any Domestic Borrowing Subsidiary, the United States of America, and
(ii) in the case of any Loan to any other Borrowing Subsidiary, the jurisdiction
imposing (or having the power to impose) withholding tax on payments by such
Borrowing Subsidiary under this Agreement.
"Required Lenders" means, at any time, Lenders having Revolving
Credit Exposures and unused Commitments representing at least 51% of the sum of
the total Revolving Credit Exposures and unused Commitments at such time;
provided that, for purposes of declaring the Loans to be due and payable
pursuant to Article VII, and for all purposes after the Loans become due and
payable pursuant to Article VII or the Commitments expire or terminate, the
<PAGE> 34
27
total Competitive Loan Exposures of the Lenders shall be included in their
respective Revolving Credit Exposures in determining the Required Lenders.
"Reset Date" has the meaning set forth in Section 1.05(a).
"Restricted Payment" means any dividend or other distribution
(whether in cash, securities or other property) with respect to any shares of
any class of capital stock of the Company, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such shares of capital stock of the Company or of any option,
warrant or other right to acquire any such shares of capital stock of the
Company or any voluntary prepayments or redemptions in respect of any
Indebtedness (other than any intercompany Indebtedness) at a time while an Event
of Default shall have occurred and be continuing.
"Revolving Borrowing" means a Borrowing comprised of
Revolving Loans.
"Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum at such time, without duplication, of (a) the outstanding
principal amount of such Lender's Revolving Loans (excluding Multicurrency
Loans, except to the extent such Lender shall have acquired a participation
therein pursuant to Section 2.01(d)), (b) such Lender's Multicurrency Loan
Exposure (other than the portion thereof attributable to Loans in which such
Lender shall have acquired a participation pursuant to Section 2.01(d)) and (c)
such Lender's Swingline Exposure at such time.
"Revolving Loan" means a Loan made pursuant to Section 2.03.
"S&P" means Standard & Poor's.
"Spin-Off" means the distribution by The Dun & Bradstreet
Corporation, to the holders of its common stock,
<PAGE> 35
28
of all outstanding shares of common stock of the Company and Cognizant
Corporation, and all related transactions, including execution and delivery of
any agreements between The Dun & Bradstreet Corporation, Cognizant Corporation
or any subsidiary on the one hand, and the Company or any Subsidiary thereof on
the other hand.
"Spin-Off Information" means the Information Statement and the pro
forma financial statements and projections of the Company after the Spin-Off,
each of which have been delivered to the Lenders prior to the date hereof.
"Spin-Off Related Payments" means the payments described on
Schedule 1.01(a).
"Statutory Reserve Rate" means, with respect to any currency, a
fraction (expressed as a decimal), the numerator of which is the number one and
the denominator of which is the number one minus the aggregate of the maximum
reserve, liquid asset or similar percentages (including any marginal, special,
emergency or supplemental reserves) expressed as a decimal established by any
Governmental Authority of the jurisdiction of such currency to which banks in
such jurisdiction are subject for any category of deposits or liabilities
customarily used to fund loans in such currency or by reference to which
interest rates applicable to Loans in such currency are determined. Such
reserve, liquid asset or similar percentages shall, in the case of dollars,
include those imposed pursuant to Regulation D of the Board. Eurocurrency Loans
shall be deemed to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under Regulation D or any other applicable law, rule or
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.
"subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of
<PAGE> 36
29
the parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or, in the case
of a partnership, more than 50% of the general partnership interests are, as of
such date, owned, controlled or held.
"Subsidiary" means any subsidiary of the Company.
"Swingline Exposure" means, at any time, the aggregate principal
amount of all Swingline Loans outstanding at such time. The Swingline Exposure
of any Lender at any time shall be its Applicable Percentage of the total
Swingline Exposures at such time.
"Swingline Lender" means The Chase Manhattan Bank, in its capacity
as lender of Swingline Loans hereunder.
"Swingline Loan" means a Loan in dollars made pursuant to
Section 2.05.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Total Debt" means, at any date, all indebtedness (including all
Capital Lease Obligations) of the Company and its consolidated Subsidiaries at
such date to the extent such indebtedness should be reflected on the
consolidated balance sheet of the Company (excluding any such items which appear
only in the notes to such consolidated balance sheet) at such date in accordance
with GAAP.
"Transactions" means the execution, delivery and performance by the
Borrowers of this Agreement and the Borrowing Subsidiary Agreements, the
borrowing of Loans and the use of the proceeds thereof.
<PAGE> 37
30
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the LIBO Rate, the Alternate Base Rate
or, in the case of a Competitive Loan or Borrowing, the LIBO Rate or a Fixed
Rate.
"Wholly Owned Subsidiary" means a subsidiary all the capital stock
of which (other than directors' qualifying shares) is owned by the Company or
another Wholly Owned Subsidiary.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes
of this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan") or by Type (e.g., a "Eurocurrency Loan") or by Class and Type
(e.g., a "Eurocurrency Revolving Loan"). Borrowings also may be classified and
referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
"Eurocurrency Borrowing") or by Class and Type (e.g., a "Eurocurrency Revolving
Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to
<PAGE> 38
31
any Person shall be construed to include such Person's successors and assigns,
(c) the words "herein", "hereof" and "hereunder", and words of similar import,
shall be construed to refer to this Agreement in its entirety and not to any
particular provision hereof, (d) all references herein to Articles, Sections ,
Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement and (e) the words "asset" and
"property" shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Company notifies the Administrative Agent that the Company requests
an amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the Company
that the Required Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such
change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
SECTION 1.05. Exchange Rates. (a) Not later than 1:00 p.m., New York
City time, on each Calculation Date, the Administrative Agent shall (i)
determine the Exchange Rate as of such Calculation Date with respect to each
Committed Currency and (ii) give notice thereof to the Lenders and the Company.
The Exchange Rates so determined shall become effective on the first Business
Day immediately following the relevant Calculation Date (a "Reset Date"), shall
remain effective until the next succeeding Reset Date, and shall for all
purposes of this Agreement (other than
<PAGE> 39
32
Section 2.01(d), Section 2.07(e), Section 2.13(i), Section 2.14(g)(ii), Section
10.14 or any other provision expressly requiring the use of a current Exchange
Rate) be the Exchange Rates employed in converting any amounts between dollars
and Committed Currencies.
(b) Not later than 5:00 p.m., New York City time, on each Reset Date
and each Borrowing Date with respect to Multicurrency Loans, the Administrative
Agent shall (i) determine the Dollar Equivalent of the aggregate principal
amount of the Multicurrency Loans then outstanding (after giving effect to any
Multicurrency Loans made or repaid on such date) and (ii) notify the Lenders and
the Company of the results of such determination.
ARTICLE II
The Credits
SECTION 2.01. Commitments. (a) Subject to the terms and conditions
set forth herein, each Lender agrees to make Revolving Loans, denominated in
dollars, to any Borrower from time to time during the Availability Period in an
aggregate principal amount that will not result in (i) such Lender's Revolving
Credit Exposure exceeding such Lender's Commitment or (ii) the aggregate amount
of the Lenders' Revolving Credit Exposures and Competitive Loan Exposures
exceeding the aggregate amount of the Lenders' Commitments.
(b) Subject to the terms and conditions set forth herein, each
Multicurrency Lender agrees to make Multicurrency Loans, denominated in any
Committed Currency, to any Borrower from time to time during the Availability
Period in an aggregate principal amount that will not result in (i) the Dollar
Equivalent of the aggregate principal amount of the Multicurrency Loans of any
Multicurrency Lender exceeding such Lender's Multicurrency Commitment, (ii) the
Dollar Equivalent of the aggregate principal amount of all outstanding
Multicurrency Loans exceeding $30,000,000, (iii) any Lender's Revolving Credit
Exposure
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33
exceeding such Lender's Commitment or (iv) the aggregate amount of the
Lenders' Revolving Credit Exposures and Competitive Loan Exposures exceeding the
aggregate amount of the Lenders' Commitments.
(c) Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrowers may borrow, prepay and reborrow
Revolving Loans.
(d) In the event that any Multicurrency Borrowing shall be
outstanding and (i) the principal of or interest on such Multicurrency Borrowing
shall not be paid within three Business Days after the date on which it is due
and the Multicurrency Lenders holding a majority in interest of the outstanding
Multicurrency Loans of which such Multicurrency Borrowing is comprised shall
deliver to the Administrative Agent a request that the provisions of this
paragraph take effect with respect to such Borrowing or (ii) the Commitments
shall be terminated or the Loans accelerated pursuant to Article VII, then (w)
each Lender shall acquire at face value a participation in the Obligations of
the applicable Borrower in respect of the principal of and interest on such
Multicurrency Borrowing equal to its Applicable Percentage of such Obligations,
(x) such Obligations shall without further action be converted into Obligations
denominated in dollars at the applicable Exchange Rate on the date of such
conversion, as determined by the Administrative Agent in accordance with the
terms hereof, (y) such converted obligations will bear interest at the rate
applicable to overdue ABR Borrowings under Section 2.12(d) and (z) each Lender
shall pay the purchase price for its Applicable Percentage of the dollar amount
thereof by wire transfer of immediately available funds in dollars to the
Administrative Agent in the manner provided in Section 2.06 (and the
Administrative Agent shall promptly wire the amounts so received to the
Multicurrency Lenders ratably in accordance with their respective Multicurrency
Loans comprising such Multicurrency Borrowing). Upon any event specified in
clause (ii) above, the Multicurrency Commitments shall be permanently
terminated. The obligations of the Lenders to acquire and pay for participations
in Multicurrency Borrowings pursuant to this
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34
paragraph shall be absolute and unconditional under any and all circumstances.
SECTION 2.02. Loans and Borrowings. (a) Each Revolving Loan (other
than a Multicurrency Loan) shall be made as part of a Borrowing consisting of
Revolving Loans denominated in dollars and made by the Lenders ratably in
accordance with their respective Commitments. Each Multicurrency Loan shall be
made as part of a Borrowing consisting of Multicurrency Loans denominated in the
same Committed Currency and made by the Multicurrency Lenders ratably in
accordance with their Multicurrency Commitments. Each Competitive Loan shall be
made in accordance with the procedures set forth in Section 2.04. The failure of
any Lender to make any Loan required to be made by it shall not relieve any
other Lender of its obligations hereunder; provided that the Commitments of the
Lenders and the Multicurrency Commitments of the Multicurrency Lenders are
several and no Lender shall be responsible for any other Lender's failure to
make Loans as required.
(b) Subject to Section 2.13, (i) each Revolving Borrowing (other
than a Multicurrency Borrowing) shall be comprised entirely of Eurocurrency
Loans or ABR Loans as the applicable Borrower may request in accordance
herewith, (ii) each Multicurrency Borrowing shall be comprised of Eurocurrency
Loans and (iii) each Competitive Borrowing shall be comprised entirely of
Eurocurrency Competitive Loans or Fixed Rate Loans as the applicable Borrower
may request in accordance herewith. Each Swingline Loan shall be an ABR Loan.
Each Lender at its option may make any Eurocurrency Loan by causing any domestic
or foreign branch or Affiliate of such Lender to make such Loan; provided that
any exercise of such option shall not affect the obligation of any Borrower to
repay such Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurocurrency
Revolving Borrowing, such Borrowing shall be in an aggregate amount that is at
least $1,000,000 (or the Dollar Equivalent thereof) and, in the case of a
Borrowing denominated in dollars, an integral multiple of
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35
$1,000,000. At the time that each ABR Revolving Borrowing is made, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000; provided that an ABR Revolving Borrowing may be in an aggregate
amount that is equal to the entire unused balance of the total Commitments. Each
Competitive Borrowing shall be in an aggregate amount that is at least
$5,000,000 and an integral multiple of $1,000,000. Each Swingline Loan shall be
in an amount that is an integral multiple of $500,000. Borrowings of more than
one Type and Class may be outstanding at the same time; provided that there
shall not at any time be more than a total of 10 Eurocurrency Revolving
Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, no
Borrower shall be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Maturity Date.
SECTION 2.03. Requests for Revolving Borrowings. To request a
Revolving Borrowing, a Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurocurrency Borrowing (other than a
Multicurrency Borrowing), not later than 11:00 a.m., New York City time, three
Business Days before the date of the proposed Borrowing, (b) in the case of a
Multicurrency Borrowing, not later than 10:00 a.m., London time, three Business
Days before the date of the proposed Borrowing (or at such other time as shall
be specified in the Alternate Procedures) or (c) in the case of an ABR
Borrowing, not later than 11:00 a.m., New York City time, one Business Day
before the date of the proposed Borrowing. Each such telephonic Borrowing
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request in a form
approved by the Administrative Agent and signed by the applicable Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
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36
(ii) the date of such Borrowing, which shall be a Business
Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurocurrency Borrowing;
(iv) in the case of a Eurocurrency Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by
the definition of the term "Interest Period", and the currency of such
Borrowing, which shall be dollars or a Committed Currency; and
(v) the location and number of the relevant Borrower's account to
which funds are to be disbursed, which shall comply with the requirements
of Section 2.06.
If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no currency is
specified with respect to any requested Eurocurrency Revolving Borrowing, then
the relevant Borrower shall be deemed to have selected dollars. If no Interest
Period is specified with respect to any requested Eurocurrency Revolving
Borrowing, then the relevant Borrower shall be deemed to have selected an
Interest Period of one month's duration. Promptly following receipt of a
Borrowing Request in accordance with this Section , the Administrative Agent
shall advise each Lender of the details thereof and of the amount of such
Lender's Loan to be made as part of the requested Borrowing.
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SECTION 2.04. Competitive Bid Procedure. (a) Subject to the terms
and conditions set forth herein, from time to time during the Availability
Period any Borrower may request Competitive Bids for Competitive Loans
denominated in dollars and may (but shall not have any obligation to) accept
Competitive Bids and borrow Competitive Loans; provided that the sum of the
Revolving Credit Exposures and the Competitive Loan Exposures at any time shall
not exceed the aggregate amount of the Lenders' Commitments. To request
Competitive Bids, a Borrower shall notify the Administrative Agent of such
request by telephone, in the case of a Eurocurrency Borrowing, not later than
11:00 a.m., New York City time, four Business Days before the date of the
proposed Borrowing and, in the case of a Fixed Rate Borrowing, not later than
10:00 a.m., New York City time, one Business Day before the date of the proposed
Borrowing; provided that the Borrowers may submit jointly up to (but not more
than) three Competitive Bid Requests on the same day, but a Competitive Bid
Request shall not be made within five Business Days after the date of any
previous Competitive Bid Request, unless any and all such previous Competitive
Bid Requests shall have been withdrawn or all Competitive Bids received in
response thereto rejected. Each such telephonic Competitive Bid Request shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written Competitive Bid Request in a form approved by the Administrative Agent
and signed by the applicable Borrower. Each such telephonic and written
Competitive Bid Request shall specify the following information in compliance
with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business
Day;
(iii) whether such Borrowing is to be a Eurocurrency
Borrowing or a Fixed Rate Borrowing;
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38
(iv) the Interest Period to be applicable to such Borrowing, which
shall be a period contemplated by the definition of the term "Interest
Period"; and
(v) the location and number of the relevant Borrower's account to
which funds are to be disbursed, which shall comply with the requirements
of Section 2.06.
Promptly following receipt of a Competitive Bid Request in accordance with this
Section , the Administrative Agent shall notify the Lenders of the details
thereof by telecopy, inviting the Lenders to submit Competitive Bids.
(b) Each Lender may (but shall not have any obligation to) make one
or more Competitive Bids to any Borrower in response to a Competitive Bid
Request. Each Competitive Bid by a Lender must be in a form approved by the
Administrative Agent and must be received by the Administrative Agent by
telecopy, in the case of a Eurocurrency Competitive Borrowing, not later than
9:30 a.m., New York City time, three Business Days before the proposed date of
such Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later
than 9:30 a.m., New York City time, on the proposed date of such Competitive
Borrowing. Competitive Bids that do not conform substantially to the form
approved by the Administrative Agent may be rejected by the Administrative
Agent, and the Administrative Agent shall notify the applicable Lender as
promptly as practicable. Each Competitive Bid shall specify (i) the principal
amount (which shall be a minimum of $5,000,000 and which may equal the entire
principal amount of the Competitive Borrowing requested by the applicable
Borrower) of the Competitive Loan or Loans that the Lender is willing to make,
(ii) the Competitive Bid Rate or Rates at which the Lender is prepared to make
such Loan or Loans (expressed as a percentage rate per annum in the form of a
decimal to no more than four decimal places) and (iii) the Interest Period
applicable to each such Loan and the last day thereof.
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(c) The Administrative Agent shall promptly notify the relevant
Borrower by telecopy of the Competitive Bid Rate and the principal amount
specified in each Competitive Bid and the identity of the Lender that shall have
made such Competitive Bid.
(d) Subject only to the provisions of this paragraph, a Borrower may
accept or reject any Competitive Bid. The relevant Borrower shall notify the
Administrative Agent by telephone, confirmed by telecopy in a form approved by
the Administrative Agent, whether and to what extent it has decided to accept or
reject each Competitive Bid, in the case of a Eurocurrency Competitive
Borrowing, not later than 10:30 a.m., New York City time, three Business Days
before the date of the proposed Competitive Borrowing, and in the case of a
Fixed Rate Borrowing, not later than 10:30 a.m., New York City time, on the
proposed date of the Competitive Borrowing; provided that (i) the failure of
such Borrower to give such notice shall be deemed to be a rejection of each
Competitive Bid, (ii) such Borrower shall not accept a Competitive Bid made at a
particular Competitive Bid Rate if such Borrower rejects a Competitive Bid made
at a lower Competitive Bid Rate, (iii) the aggregate amount of the Competitive
Bids accepted by such Borrower shall not exceed the aggregate amount of the
requested Competitive Borrowing specified in the related Competitive Bid
Request, (iv) to the extent necessary to comply with clause (iii) above, such
Borrower may accept Competitive Bids at the same Competitive Bid Rate in part,
which acceptance, in the case of multiple Competitive Bids at such Competitive
Bid Rate, shall be made pro rata in accordance with the amount of each such
Competitive Bid, and (v) except pursuant to clause (iv) above, no Competitive
Bid shall be accepted for a Competitive Loan unless such Competitive Loan is in
a minimum principal amount of $5,000,000; provided further that if a Competitive
Loan must be in an amount less than $5,000,000 because of the provisions of
clause (iv) above, such Competitive Loan may be for a minimum of $1,000,000, and
in calculating the pro rata allocation of acceptances of portions of multiple
Competitive Bids at a particular Competitive Bid Rate pursuant to clause (iv)
the amounts shall be rounded to integral multiples of $1,000,000 in a
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40
manner determined by such Borrower. A notice given by any Borrower pursuant to
this paragraph shall be irrevocable.
(e) The Administrative Agent shall promptly notify each bidding
Lender by telecopy whether or not its Competitive Bid has been accepted (and, if
so, the amount and Competitive Bid Rate so accepted), and each successful bidder
will thereupon become bound, subject to the terms and conditions hereof, to make
the Competitive Loan in respect of which its Competitive Bid has been accepted.
(f) If the Administrative Agent shall elect to submit a Competitive
Bid in its capacity as a Lender, it shall submit such Competitive Bid directly
to the relevant Borrower at least one quarter of an hour earlier than the time
by which the other Lenders are required to submit their Competitive Bids to the
Administrative Agent pursuant to paragraph (b) of this Section .
SECTION 2.05. Swingline Loans. (a) Subject to the terms and
conditions set forth herein, the Swingline Lender agrees to make Swingline Loans
in dollars to the Company from time to time during the Availability Period, in
an aggregate principal amount at any time outstanding that will not result in
(i) the aggregate principal amount of outstanding Swingline Loans exceeding
$5,000,000 or (ii) the aggregate Revolving Credit Exposures and Competitive Loan
Exposures exceeding the aggregate amount of the Lenders' Commitments; provided
that the Swingline Lender shall not be required to make a Swingline Loan to
refinance an outstanding Swingline Loan. Within the foregoing limits and subject
to the terms and conditions set forth herein, the Company may borrow, prepay and
reborrow Swingline Loans.
(b) To request a Swingline Loan, the Company shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 12:00 noon, New York City time, on the day of a proposed Swingline
Loan. Each such notice shall be irrevocable and shall specify the requested date
(which shall be a Business Day) and amount of the requested Swingline Loan. The
Administrative Agent will promptly advise the Swingline
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41
Lender of any such notice received from the Company. The Swingline Lender shall
make each Swingline Loan available to the Company by means of a credit to the
general deposit account of the Company with the Swingline Lender by 3:00 p.m.,
New York City time, on the requested date of such Swingline Loan or to such
other account as may be specified in the applicable Borrowing Request.
(c) The Swingline Lender may by written notice given to the
Administrative Agent not later than 10:00 a.m., New York City time, on any
Business Day require the Lenders to acquire participations on such Business Day
in all or a portion of the Swingline Loans outstanding. Such notice shall
specify the aggregate amount of Swingline Loans in which Lenders will
participate. Promptly upon receipt of such notice, the Administrative Agent will
give notice thereof to each Lender, specifying in such notice such Lender's
Applicable Percentage of such Swingline Loan or Loans. Each Lender hereby
absolutely and unconditionally agrees, upon receipt of notice as provided above,
to pay to the Administrative Agent, for the account of the Swingline Lender,
such Lender's Applicable Percentage of such Swingline Loan or Loans. Each Lender
acknowledges and agrees that its obligation to acquire participations in
Swingline Loans pursuant to this paragraph is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including the occurrence
and continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever. Each Lender shall comply with its obligation under this
paragraph by wire transfer of immediately available funds, in the same manner as
provided in Section 2.06 with respect to Loans made by such Lender (and Section
2.06 shall apply, mutatis mutandis, to the payment obligations of the Lenders),
and the Administrative Agent shall promptly pay to the Swingline Lender the
amounts so received by it from the Lenders. The Administrative Agent shall
notify the Company of any participations in any Swingline Loan acquired pursuant
to this paragraph, and thereafter payments in respect of such Swingline Loan
shall be made to the Administrative Agent and not to the Swingline Lender. Any
amounts received by the
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Swingline Lender from the Company (or other party on behalf of the Company) in
respect of a Swingline Loan after receipt by the Swingline Lender of the
proceeds of a sale of participations therein shall be promptly remitted to the
Administrative Agent; any such amounts received by the Administrative Agent
shall be promptly remitted by the Administrative Agent to the Lenders that shall
have made their payments pursuant to this paragraph and to the Swingline Lender,
as their interests may appear. The purchase of participations in a Swingline
Loan pursuant to this paragraph shall not relieve the Company of any default in
the payment thereof.
SECTION 2.06. Funding of Borrowings. (a) Each Lender shall make each
Loan (other than a Multicurrency Loan) to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds by 12:00
noon, New York City time, to the account of the Administrative Agent most
recently designated by it for such purpose by notice to the Lenders; provided
that Swingline Loans shall be made as provided in Section 2.05. The
Administrative Agent will make such Loans available to the relevant Borrower by
promptly crediting the amounts so received, in like funds, to an account of the
Company maintained with the Administrative Agent in New York City and designated
by such Borrower in the applicable Borrowing Request or Competitive Bid Request
or to such other account as may be specified in the applicable Borrowing Request
or Competitive Bid Request. Each Multicurrency Lender shall make each
Multicurrency Loan to be made by it hereunder on the proposed date thereof by
wire transfer of such immediately available funds as may then be customary for
the settlement of international transactions in the applicable Committed
Currency, by 11:00 a.m., London time, to the account of the Administrative Agent
most recently designated by it for such purpose by notice to the Multicurrency
Lenders (or by such other time and to such other account as shall be specified
in the Alternate Procedures). The Administrative Agent will make such
Multicurrency Loans available to the relevant Borrower by promptly crediting the
amounts so received, in like funds, to an account of the Company maintained with
the Administrative Agent in London
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(or, in the case of any Multicurrency Loan, in each other city as shall be
designated in the Alternate Procedures) and designated by such Borrower in the
applicable Borrowing Request or Competitive Bid Request or to such other account
as may be specified in the applicable Borrowing Request or Competitive Bid
Request.
(b) Unless the Administrative Agent shall have received notice from
a Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the relevant
Borrower a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Borrowing available to the Administrative Agent,
then the applicable Lender and each Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the relevant Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, (x) the Federal Funds
Effective Rate (in the case of a Borrowing in dollars) and (y) the rate
reasonably determined by the Administrative Agent to be the cost to it of
funding such amount (in the case of a Borrowing in a Committed Currency) or (ii)
in the case of such Borrower, the interest rate applicable to the subject Loan.
If such Lender pays such amount to the Administrative Agent, then such amount
shall constitute such Lender's Loan included in such Borrowing and the
Administrative Agent shall return to any Borrower any amount (including
interest) paid by such Borrower to the Administrative Agent pursuant to this
paragraph.
SECTION 2.07. Interest Elections. (a) Each Revolving Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurocurrency Revolving Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request.
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Thereafter, the relevant Borrower may elect to convert such Borrowing to a
different Type or to continue such Borrowing and, in the case of a Eurocurrency
Revolving Borrowing, may elect Interest Periods therefor, all as provided in
this Section . A Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such Borrowing,
and the Loans comprising each such portion shall be considered a separate
Borrowing. This Section shall not apply to Competitive Borrowings or Swingline
Borrowings, which may not be converted or continued. Notwithstanding any
contrary provision herein, this Section shall not be construed to permit any
Borrower to (i) change the currency of any Borrowing or (ii) convert any
Multicurrency Borrowing to an ABR Borrowing.
(b) To make an election pursuant to this Section , a Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if such Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
relevant Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to
clauses (iii) and (iv) below shall be specified for each resulting
Borrowing);
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(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurocurrency Borrowing; and
(iv) if the resulting Borrowing is a Eurocurrency Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurocurrency Borrowing but does
not specify an Interest Period, then such Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the relevant Borrower fails to deliver a timely Interest
Election Request with respect to a Eurocurrency Revolving Borrowing prior to the
end of the Interest Period applicable thereto, then, unless such Borrowing is
repaid as provided herein, at the end of such Interest Period such Borrowing
shall be converted to an ABR Borrowing (unless such Borrowing is a Multicurrency
Borrowing, in which case such Borrowing shall become due and payable on the last
day of such Interest Period). Notwithstanding any contrary provision hereof, if
an Event of Default has occurred and is continuing and the Administrative Agent,
at the request of the Required Lenders, so notifies the Company, then, so long
as an Event of Default is continuing (i) no outstanding Revolving Borrowing may
be converted to or continued as a Eurocurrency Borrowing, (ii) unless repaid,
each Eurocurrency Revolving Borrowing (other than a Multicurrency Borrowing)
shall be converted to an ABR Borrowing at the end of the Interest Period
applicable thereto and (iii) each Multicurrency
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Borrowing shall be converted into an ABR Loan at the Exchange Rate determined by
the Administrative Agent on the last day of the Interest Period applicable
thereto.
SECTION 2.08. Termination and Reduction of Commitments.
(a) Unless previously terminated, the Commitments and the
Multicurrency Commitments shall terminate on the Maturity Date.
(b) The Company may at any time terminate, or from time to time
reduce, the Commitments or the Multicurrency Commitments; provided that (i) each
reduction of the Commitments or the Multicurrency Commitments shall be in an
amount that is an integral multiple of $1,000,000 and (ii) the Company shall not
terminate or reduce the Commitments if, after giving effect to any concurrent
prepayment of the Loans in accordance with Section 2.10, the aggregate Revolving
Credit Exposures and Competitive Loan Exposures would exceed the aggregate
amount of the Lenders' Commitments.
(c) The Company shall notify the Administrative Agent of any
election to terminate or reduce the Commitments or the Multicurrency Commitments
under paragraph (b) of this Section at least three Business Days prior to the
effective date of such termination or reduction, specifying such election and
the effective date thereof. Promptly following receipt of any notice, the
Administrative Agent shall advise the Lenders of the contents thereof. Each
notice delivered by the Company pursuant to this Section shall be irrevocable;
provided that a notice of termination of the Commitments delivered by the
Company may state that such notice is conditioned upon the effectiveness of
other credit facilities, in which case such notice may be revoked by the Company
(by notice to the Administrative Agent on or prior to the specified effective
date) if such condition is not satisfied. Any termination or reduction of the
Commitments or the Multicurrency Commitments shall be permanent. Each reduction
of the Commitments or the Multicurrency Commitments shall be made ratably among
the Lenders or the Multicurrency Lenders, as the case may be, in accordance
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with their respective Commitments or Multicurrency Commitments.
SECTION 2.09. Repayment of Loans; Evidence of Debt. (a) Each
Borrower hereby unconditionally promises to pay (i) to the Administrative Agent
for the account of each Lender or Multicurrency Lender, as applicable, the then
unpaid principal amount of each Revolving Loan of such Borrower on the Maturity
Date, (ii) to the Administrative Agent for the account of each Lender the then
unpaid principal amount of each Competitive Loan of such Lender made to such
Borrower on the last day of the Interest Period applicable to such Loan and
(iii) to the Swingline Lender the then unpaid principal amount of each Swingline
Loan of such Borrower on the earlier of the Maturity Date and the first date
after such Swingline Loan is made that is the 15th or last day of a calendar
month and is at least two Business Days after the day such Swingline Loan is
made; provided that on each date that a Revolving Borrowing in dollars is made
by a Borrower, such Borrower shall repay all Swingline Loans of such Borrower
then outstanding.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of each Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder, the Class and Type
(and, in the case of a Multicurrency Loan, the currency) thereof and the
Interest Period (if any) applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from each Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be
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48
prima facie evidence of the existence and amounts of the obligations recorded
therein; provided that the failure of any Lender or the Administrative Agent to
maintain such accounts or any error therein shall not in any manner affect the
obligation of any Borrower to repay the Loans in accordance with the terms of
this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, each Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent and the Company. Thereafter, the Loans
evidenced by each such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 10.04) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and its
registered assigns).
SECTION 2.10. Prepayment of Loans. (a) Any Borrower shall have the
right at any time and from time to time to prepay any Borrowing of such Borrower
in whole or in part, subject to prior notice in accordance with paragraph (d) of
this Section ; provided that no Borrower shall have the right to prepay any
Competitive Loan without the prior consent of the Lender thereof.
(b) If, on the last day of any Interest Period for any Borrowing,
the aggregate amount of the Revolving Credit Exposures and Competitive Loan
Exposures exceeds the aggregate amount of the Lenders' Commitments, the relevant
Borrower shall, on such day, prepay Revolving Loans in an amount equal to the
lesser of (i) such excess and (ii) the amount of such Borrowing. If, on any
Reset Date, the aggregate amount of the Revolving Credit Exposures and
Competitive Loan Exposures exceeds 105% of the aggregate amount of the Lenders'
Commitments, then the Borrowers shall, not later than the next Business Day,
prepay one or more Revolving Borrowings in an aggregate principal amount equal
to the excess, if any, of the aggregate amount of the
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49
Revolving Credit Exposures and Competitive Loan Exposures (as of such Reset
Date) over the aggregate amount of the Lenders' Commitments.
(c) If, on the last day of any Interest Period for any Multicurrency
Borrowing, the Dollar Equivalent of the aggregate principal amount of
outstanding Multicurrency Loans exceeds $30,000,000, the relevant Borrower
shall, on such day, prepay such Multicurrency Borrowing in an amount equal to
the lesser of (i) such excess and (ii) the amount of such Borrowing.
(d) The relevant Borrower shall notify the Administrative Agent
(and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurocurrency Revolving Borrowing (other than a Multicurrency
Borrowing), not later than 11:00 a.m., New York City time, three Business Days
before the date of prepayment, (ii) in the case of prepayment of a Multicurrency
Borrowing, not later than 2:00 p.m., London time, three Business Days before the
date of prepayment (or such other applicable time as shall be set forth in the
Applicable Procedures), (iii) in the case of prepayment of an ABR Revolving
Borrowing, not later than 11:00 a.m., New York City time, one Business Day
before the date of prepayment or (iv) in the case of prepayment of a Swingline
Loan, not later than 12:00 noon, New York City time, on the date of prepayment.
Each such notice shall be irrevocable and shall specify the prepayment date and
the principal amount of each Borrowing or portion thereof to be prepaid;
provided that, if a notice of prepayment is given in connection with a
conditional notice of termination of the Commitments as contemplated by Section
2.08, then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.08. Promptly following
receipt of any such notice relating to a Revolving Borrowing, the Administrative
Agent shall advise the Lenders of the contents thereof. Each partial prepayment
of any Revolving Borrowing shall be in an amount that would be permitted in the
case of an advance of a Revolving Borrowing of the same Type as provided in
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Section 2.02. Each prepayment of a Revolving Borrowing shall be applied ratably
to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied
by accrued interest to the extent required by Section 2.12.
SECTION 2.11. Fees. (a) The Company agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the Applicable Rate on the daily unused amount of the Commitment
of such Lender during the period from and including the date hereof to but
excluding the date on which such Commitment terminates; provided that, solely
for purposes of this paragraph (a), Competitive Loans and Swingline Loans will
not be deemed to utilize the Commitments. Accrued commitment fees shall be
payable in arrears on the last day of March, June, September and December of
each year and on the date on which the Commitments terminate, commencing on the
first such date to occur after the date hereof.
(b) The Company agrees to pay to the Administrative Agent for the
account of each Lender a utilization fee which shall accrue at a rate of .250%
per annum on such Lender's Applicable Percentage of the amount (or Dollar
Equivalent of the amount) of the Loans outstanding hereunder on and in respect
of each day on which the aggregate Loans outstanding (or Dollar Equivalent
thereof) exceeds $75,000,000. The utilization fee shall be payable in arrears on
the last day of March, June, September and December of each year and on the date
on which the Commitments have been terminated and all outstanding Loans repaid,
commencing on the first such date to occur after the date hereof.
(c) The Company agrees to pay to the Administrative Agent for the
account of each Multicurrency Lender a fronting fee which shall accrue at .125%
per annum on the Dollar Equivalent of the daily amount of the outstanding
Multicurrency Loans of such Lender. Accrued fronting fees shall be payable in
arrears on the last day of March, June, September and December of each year and
on the date on which the Commitments have been terminated and all
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outstanding Loans repaid, commencing on the first such date to occur after the
date hereof.
(d) The Company agrees to pay to the Administrative Agent for the
account of each Lender a Participation Fee which shall accrue at the Applicable
Rate on such Lender's Applicable Percentage of the Dollar Equivalent of the
daily amount of outstanding Multicurrency Loans. Accrued participation fees
shall be payable in arrears on the last day of March, June, September and
December of each year and on the date on which the Commitments have been
terminated and all outstanding Loans repaid, commencing on the first such date
to occur after the date hereof.
(e) All fees payable hereunder shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
(f) The Company agrees to pay to the Administrative Agent, for its
own account, fees in the amounts and payable at the times separately agreed upon
between the Company and the Administrative Agent.
(g) All fees payable under paragraphs (a) through (d) and paragraph
(f) above shall be paid on the dates due, in immediately available funds, to the
Administrative Agent for distribution (i) in the case of commitment fees,
utilization fees and participation fees, to the Lenders and (ii) in the case of
fronting fees, to the Multicurrency Lenders. Fees paid shall not be refundable
under any circumstances.
SECTION 2.12. Interest. (a) The Loans comprising each
ABR Borrowing (including each Swingline Loan) shall bear interest at a
rate per annum equal to the Alternate Base Rate.
(b) The Loans comprising each Eurocurrency Borrowing shall bear
interest at a rate per annum equal to the LIBO Rate for the Interest Period in
effect for such
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52
Borrowing plus, in the case of Loans other than Multicurrency Loans, the
Applicable Rate. Each Multicurrency Loan that is not a Eurocurrency Loan shall
bear interest at a rate specified in the Alternate Procedures.
(c) Each Fixed Rate Loan shall bear interest at a rate per annum
equal to the Fixed Rate applicable to such Loan.
(d) Notwithstanding the foregoing, if any principal of or interest
on any Loan or any fee or other amount payable by any Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable (or most recently applicable) to such Loan as provided
above or (ii) in the case of any other amount, 2% plus the rate applicable to
ABR Loans as provided above.
(e) Accrued interest on each Loan shall be payable in arrears on
each Interest Payment Date for such Loan; provided that (i) interest accrued
pursuant to paragraph (d) of this Section shall be payable on demand, (ii) in
the event of any repayment or prepayment of any Loan (other than a prepayment of
an ABR Revolving Loan prior to the end of the Availability Period), accrued
interest on the principal amount repaid or prepaid shall be payable on the date
of such repayment or prepayment, (iii) in the event of any conversion of any
Eurocurrency Revolving Loan prior to the end of the current Interest Period
therefor, accrued interest on such Loan shall be payable on the effective date
of such conversion and (iv) all accrued interest shall be payable upon
termination of the Commitments.
(f) All interest hereunder shall be computed on the basis of a year
of 360 days, except that interest computed by reference to the Alternate Base
Rate at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or
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53
366 days in a leap year), and in each case shall be payable for the actual
number of days elapsed (including the first day but excluding the last day). The
applicable Alternate Base Rate or LIBO Rate shall be determined by the
Administrative Agent, and such determination shall be presumed correct absent
manifest error.
SECTION 2.13. Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurocurrency Borrowing:
(a) the Administrative Agent determines (which determination shall
be conclusive absent manifest error) that adequate and reasonable means do
not exist for ascertaining the LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders (or,
in the case of a Eurocurrency Competitive Loan, the Lender that is
required to make such Loan) that the LIBO Rate for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (or
Lender) of making or maintaining their Loans (or its Loan) included in
such Borrowing for such Interest Period; or
(c) in the case of a Multicurrency Borrowing, the Administrative
Agent determines (which determination shall be presumed correct absent
manifest error) that deposits in the applicable Committed Currency are not
generally available, or cannot be obtained by the Multicurrency Lenders,
in the London interbank market;
then the Administrative Agent shall give notice thereof to the Company and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Company and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Revolving Borrowing to, or
continuation of any Revolving Borrowing as, a Eurocurrency Borrowing shall be
ineffective, and any Eurocurrency Borrowing so requested
<PAGE> 61
54
to be continued shall, at the option of the Company, be repaid on the last day
of the then current Interest Period with respect thereto or shall be converted
to an ABR Borrowing denominated in dollars at the Exchange Rate determined by
the Administrative Agent in accordance with this Agreement on the last day of
the then current Interest Period with respect thereto, (ii) if any Borrowing
Request requests a Eurocurrency Revolving Borrowing (other than a Multicurrency
Borrowing), such Borrowing shall be made as an ABR Borrowing and (iii) any
request by any Borrower for a Eurocurrency Competitive Borrowing or a
Multicurrency Borrowing shall be ineffective; provided that if the circumstances
giving rise to such notice do not affect all the Lenders, then requests for
Eurocurrency Competitive Borrowings may be made to Lenders that are not affected
thereby and, if the circumstances giving rise to such notice do not affect all
applicable currencies, then requests for Eurocurrency Borrowings may be made in
the currencies that are not affected thereby.
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SECTION 2.14. Increased Costs; Illegality
(a) If any Governmental Authority in the jurisdiction of any
currency shall have in effect any reserve, liquid asset or similar requirement
with respect to any category of deposits or liabilities customarily used to fund
loans in such currency, or by reference to which interest rates applicable to
Loans in such currency are determined, and the result of such requirement shall
be to increase the cost to such Lender of making or maintaining any Eurocurrency
Revolving Loan in such currency by an amount deemed by such Lender to be
material, and such Lender shall deliver to the Company a notice requesting
compensation under this paragraph and setting forth the applicable Statutory
Reserve Rate, then the Company will pay or cause the applicable Borrower to pay
to such Lender on each Interest Payment Date with respect to each affected Loan
an amount equal to the difference between (i) the interest payable on such Loan
or such date and (ii) the interest that would have been payable had such Loan
borne interest at a rate equal to (A) the LIBO Rate for the applicable Interest
Period multiplied by the applicable Statutory Reserve Rate plus (B) the
Applicable Rate or Margin applicable to such Loan.
(b) If any Change in Law shall impose on any Lender or the London
interbank market (or any other market in which the funding operations of such
Lender shall be conducted with respect to any Committed Currency) any condition
affecting this Agreement or Eurocurrency Loans made by such Lender (other than
any reserve, liquid asset or similar requirement referred to in paragraph (a)
above), and the result thereof shall be to increase the cost to such Lender of
making or maintaining any Eurocurrency Loan or to reduce the amount of any sum
received or receivable by such Lender in respect thereof by an amount deemed by
such Lender to be material, then the Company will pay or cause the applicable
Borrower to pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.
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(c) If any Lender determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of return
on such Lender's capital or on the capital of such Lender's holding company, if
any, as a consequence of this Agreement or the Loans made by such Lender to a
level below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Company will pay to such Lender
such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.
(d) A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company, as the case may be,
as specified in paragraph (a), (b) or (c) of this Section shall be delivered to
the Company and shall be presumed correct absent manifest error. The Company
shall pay such Lender the amount shown as due on any such certificate within 10
days after receipt thereof.
(e) Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender's right to demand such compensation; provided that the Company shall not
be required to compensate a Lender pursuant to this Section for any increased
costs or reductions incurred more than six months prior to the date that such
Lender notifies the Company of the Change in Law giving rise to such increased
costs or reductions and of such Lender's intention to claim compensation
therefor; provided further that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the six-month period referred
to above shall be extended to include the period of retroactive effect thereof.
(f) Notwithstanding the foregoing provisions of this Section , a
Lender shall not be entitled to compensation pursuant to this Section in respect
of any Competitive Loan if the Change in Law that would otherwise entitle it to
such
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57
compensation shall have been publicly announced or be otherwise known to it
prior to submission of the Competitive Bid pursuant to which such Loan was made.
<PAGE> 65
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(g) Notwithstanding any other provision of this Agreement, if, after
the date hereof, (i) any Change in Law shall make it unlawful for any Lender to
make or maintain any Eurocurrency Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurocurrency Loan, or (ii) there shall
have occurred any change in national or international financial, political or
economic conditions (including the imposition of or any change in exchange
controls) or currency exchange rates which would make it impracticable for the
Multicurrency Lenders holding a majority in interest of the outstanding
Multicurrency Loans denominated in the affected Committed Currency to make or
maintain Multicurrency Loans denominated in such Committed Currency to, or for
the account of, the Borrower, then, by written notice to the Company and to the
Administrative Agent:
(i) such Lender may declare that Eurocurrency Loans (in the affected
currency or currencies) will not thereafter (for the duration of such
unlawfulness) be made by such Lender hereunder (or be continued for
additional Interest Periods and ABR Loans will not thereafter (for such
duration) be converted into Eurocurrency Loans), whereupon any request for
a Eurocurrency Borrowing (in the affected currency or currencies) (or to
convert an ABR Borrowing to a Eurocurrency Borrowing or to continue a
Eurocurrency Borrowing (in the affected currency or currencies), as the
case may be, for an additional Interest Period) shall, as to such Lender
only, be deemed a request for an ABR Loan or a Loan denominated in
dollars, as the case may be (or a request to continue an ABR Loan as such
or to convert a Eurocurrency Loan into an ABR Loan, as the case may be, on
the last day of the then current Interest Period with respect thereto),
unless such declaration shall be subsequently withdrawn; provided that
upon any such request by any such Lender, the Company may repay any
Eurocurrency Loan on the last day of the then current Interest Period with
respect thereto in lieu of converting any such Eurocurrency Loan into an
ABR Loan; and
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(ii) such Lender may require that all outstanding Eurocurrency Loans
(in the affected currency or currencies), made by it be converted to ABR
Loans or Loans denominated in dollars, as the case may be, in which event
all such Eurocurrency Loans (in the affected currency or currencies) shall
be converted to ABR Loans or Loans denominated in dollars, as the case may
be, as of the effective date of such notice as provided in paragraph (h)
below and at the Exchange Rate on the date of such conversion or, at the
option of the Company, repaid on the last day of the then current Interest
Period with respect thereto.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurocurrency Loans that would have been made by such Lender or the
converted Eurocurrency Loans of such Lender shall instead be applied to repay
the ABR Loans or Loans denominated in dollars, as the case may be, made by such
Lender in lieu of, or resulting from the conversion of, such Eurocurrency Loans
or Loans denominated in dollars, as the case may be.
(h) For purposes of this Section 2.14, a notice to the Company by any
Lender shall be effective as to each Eurocurrency Loan made by such Lender, if
lawful, on the last day of the Interest Period currently applicable to such
Eurocurrency Loan; in all other cases such notice shall be effective on the date
of receipt thereof by the Company.
SECTION 2.15. Break Funding Payments. In the event of (a) the
payment of any principal of any Eurocurrency Loan or Fixed Rate Loan other than
on the last day of an Interest Period applicable thereto (including as a result
of an Event of Default), (b) the conversion of any Eurocurrency Loan other than
on the last day of the Interest Period applicable thereto, (c) the conversion of
any Multicurrency Loan to a dollar denominated Loan pursuant to Section 2.01(d),
Section 2.13(i) or Section 2.14(g)(ii), (d) the failure to borrow, convert,
continue or prepay any Eurocurrency Loan on the date specified in any notice
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delivered pursuant hereto (regardless of whether such notice is permitted to be
revocable under Section 2.10(d) and is revoked in accordance herewith), (e) the
failure to borrow any Eurocurrency Competitive Loan after accepting the
Competitive Bid to make such Loan, or (f) the assignment of any Eurocurrency
Loan or Fixed Rate Loan other than on the last day of the Interest Period
applicable thereto as a result of a request by the Company pursuant to Section
2.18, then, in any such event, the Company shall compensate each Lender for the
loss, cost and expense attributable to such event (and in the case of any
conversion of Multicurrency Loans to dollar denominated Loans, such loss, cost
or expense shall also include any loss, cost or expense sustained by a
Multicurrency Lender as a result of such conversion). In the case of a
Eurocurrency Loan, the loss to any Lender attributable to any such event shall
be equal, except as otherwise provided in the preceding sentence, to an amount
determined by such Lender to be equal to the excess, if any, of (i) the amount
of interest that such Lender would pay for a deposit equal to the principal
amount of such Loan (and in the same currency as such Loan) for the period from
the date of such payment, conversion, failure or assignment to the last day of
the then current Interest Period for such Loan (or, in the case of a failure to
borrow, convert or continue, the duration of the Interest Period that would have
resulted from such borrowing, conversion or continuation) if the interest rate
payable on such deposit were equal to the LIBO Rate for such Interest Period,
over (ii) the amount of interest that such Lender would earn on such principal
amount for such period if such Lender were to invest such principal amount for
such period at the interest rate that would be bid by such Lender (or an
affiliate of such Lender) for deposits in the same currency from other banks in
the eurodollar market at the commencement of such period. A certificate of any
Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section shall be delivered to the Company and shall be
presumed correct absent manifest error. The Company shall pay such Lender the
amount shown as due on any such certificate within 10 days after receipt
thereof.
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SECTION 2.16. Taxes. (a) Any and all payments by or an account of
any obligation of any Borrower hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if any
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section ) the Administrative Agent or Lender
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) such Borrower shall make such deductions
and (iii) such Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrowers shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The relevant Borrower shall indemnify the Administrative Agent
and each Lender, within 10 days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent
or such Lender, as the case may be, on or with respect to any payment by or on
account of any obligation of any Borrower hereunder (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section ), and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Company by a Lender, or by the Administrative Agent
on its own behalf or on behalf of a Lender, shall be conclusive absent manifest
error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by any Borrower to a Governmental Authority, such Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
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receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax with respect to payments under this Agreement
pursuant to the law of the Relevant Jurisdiction or any treaty to which the
Relevant Jurisdiction is a party shall deliver to the Company (with a copy to
the Administrative Agent), at the time or times prescribed by applicable law,
such properly completed and executed documentation prescribed by applicable law
or reasonably requested by the Company as will permit such payments to be made
without withholding or at a reduced rate.
(f) If the Company and a Lender (or, in the case of a payment to the
Administrative Agent, the Administrative Agent) (each, a "Payee") agree that an
Indemnified Tax paid by a Borrower under Section 2.16(a) or (c) with respect to
payments by such Borrower to such Payee should more likely than not be refunded
by the relevant Governmental Authority under applicable law, such Payee shall,
at the request of the Company and at its expense, take such steps as are
necessary or appropriate to obtain a refund of such Indemnified Tax. If any
Payee receives a refund of any Indemnified Tax paid by any Borrower under
Section 2.16(a) or (c) (including, without limitation, a refund received
pursuant to the preceding sentence), the amount of such refund (together with
any interest received from the Governmental Authority thereon) shall be paid to
such Borrower.
SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. (a) Each Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest or fees or under Section 2.14, 2.15 or
2.16, or otherwise) from a Payment Location in the United States or the United
Kingdom prior to 1:00 p.m., New York City time (or 1:00 p.m., London time, in
respect of principal of or interest on any Multicurrency
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Loan) (or, in the case of any Multicurrency Loan, from such other Payment
Location or by such other time as shall be specified in the Alternate
Procedures), on the date when due, in immediately available funds, without
setoff or counterclaim. Any amounts received after such time on any date may, in
the discretion of the Administrative Agent, be deemed to have been received on
the next succeeding Business Day for purposes of calculating interest thereon.
All such payments shall be made in dollars to the Administrative Agent at its
offices at 270 Park Avenue, New York, New York (or, in the applicable Committed
Currency to the Administrative Agent at its offices at Trinity Tower, 9 Thomas
Moore Street, London, or at such other offices as shall be specified in the
Alternate Procedures), except payments to be made directly to the Swingline
Lender as expressly provided herein and except that payments pursuant to
Sections 2.14, 2.15, 2.16 and 10.03 shall be made directly to the Persons
entitled thereto. The Administrative Agent shall distribute any such payments
received by it for the account of any other Person to the appropriate recipient
promptly following receipt thereof. If any payment hereunder shall be due on a
day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension at the same
rate then in effect with respect thereto. All Loans hereunder shall be
denominated and made, and all payments hereunder (whether of principal, interest
or otherwise) shall be made, in dollars, except that Eurocurrency Revolving
Loans may be denominated and made in Committed Currencies as expressly provided
herein and principal of and interest on any Eurocurrency Revolving Loan made in
a Committed Currency shall be paid in such Committed Currency and the fronting
fees payable under paragraph (c) of Section 2.11 shall be paid in dollars or as
shall be specified in the Alternate Procedures.
(b) If at any time insufficient funds are received by and available
to the Administrative Agent to pay fully all amounts of principal, interest and
fees then due hereunder, such funds shall be applied (i) first, to pay interest
and fees then due hereunder, ratably among the
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parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (ii) second, to pay principal then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal then due to such parties.
(c) If any Lender shall, by exercising any right of setoff or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans or participations in Swingline Loans or
in Multicurrency Loans resulting in such Lender obtaining a proportionately
greater reduction of its Revolving Credit Exposure than the reduction obtained
by any other Lender, then the Lender obtaining such greater reduction shall
purchase (for cash at face value) participations in the Revolving Loans or
participations in Swingline Loans or Multicurrency Loans, as the case may be, of
other Lenders to the extent necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with their Revolving Credit
Exposures; provided that (i) if any such participations are purchased and all or
any portion of the payment giving rise thereto is recovered, such participations
shall be rescinded and the purchase price restored to the extent of such
recovery, without interest, and (ii) the provisions of this paragraph shall not
be construed to apply to any payment made by any Borrower pursuant to and in
accordance with the express terms of this Agreement or any payment obtained by a
Lender as consideration for the assignment of or sale of a participation in any
of its Loans to any assignee or participant, other than to any Borrower or any
Subsidiary or Affiliate thereof (as to which the provisions of this paragraph
shall apply). Each Borrower consents to the foregoing and agrees, to the extent
it may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Borrower rights of setoff and counterclaim with respect to such participation as
fully as if such Lender were a direct creditor of such Borrower in the amount of
such participation.
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(d) Unless the Administrative Agent shall have received notice from
the Company or the relevant Borrower prior to the date on which any payment is
due to the Administrative Agent for the account of the Lenders hereunder that
such Borrower will not make such payment, the Administrative Agent may assume
that such Borrower has made such payment on such date in accordance herewith and
may, in reliance upon such assumption, distribute to the Lenders the amount due.
In such event, if such Borrower has not in fact made such payment, then each of
the Lenders severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender with interest thereon, for each
day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, (i) in the case of a
Borrowing in dollars, at the Federal Funds Effective Rate and (ii) in the case
of a Borrowing in a Committed Currency, at the rate reasonably determined by the
Administrative Agent to be the cost to it of funding such amount.
(e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.05(c), 2.06(b) or 2.17(d), then the Administrative
Agent may, in its discretion (notwithstanding any contrary provision hereof),
apply any amounts thereafter received by the Administrative Agent for the
account of such Lender to satisfy such Lender's obligations under such Sections
until all such unsatisfied obligations are fully paid.
SECTION 2.18. Mitigation Obligations; Replacement of Lenders. (a) If
any Lender requests compensation or delivers a notice under Section 2.14 (other
than paragraph (a) of such Section ), or if any Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 2.16, then such Lender shall use reasonable
efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 2.14 or 2.16, as the
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case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Company hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
(b) If any Lender requests compensation or delivers a notice under
Section 2.14, or if any Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 2.16, or if any Lender defaults in its obligation to fund Loans
hereunder, or if any Lender does not approve any currency as a Committed
Currency, then the Company may, at its sole expense and effort, upon notice to
such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 10.04), all its interests, rights and obligations under
this Agreement (other than any outstanding Competitive Loans held by it) to an
assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) if the assignee
is not a Lender, the Company shall have received the prior written consent of
the Administrative Agent (and, if a Commitment is being assigned, the Swingline
Lender and each Multicurrency Lender), which consent shall not unreasonably be
withheld, (ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans (other than Competitive Loans) and
participations in Swingline Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Company (in the
case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.14 or payments required
to be made pursuant to Section 2.16, such assignment will result in a reduction
in such compensation or payments. A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or
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otherwise, the circumstances entitling such Borrower to require such assignment
and delegation cease to apply.
SECTION 2.19. Borrowing Subsidiaries. On or after the Effective
Date, the Company may designate any Subsidiary of the Company (of which the
Company owns or Controls at least 95% of the ordinary voting power) as a
Borrowing Subsidiary by delivery to the Administrative Agent of a Borrowing
Subsidiary Agreement executed by such Subsidiary and the Company, and upon such
delivery such Subsidiary shall for all purposes of this Agreement be a Borrowing
Subsidiary and a party to this Agreement until the Company shall have executed
and delivered to the Administrative Agent a Borrowing Subsidiary Termination
with respect to such Subsidiary, whereupon such Subsidiary shall cease to be a
Borrowing Subsidiary and a party to this Agreement. Notwithstanding the
preceding sentence, no Borrowing Subsidiary Termination will become effective as
to any Borrowing Subsidiary at a time when any principal of or interest on any
Loan to such Borrowing Subsidiary shall be outstanding hereunder, provided that
such Borrowing Subsidiary Termination shall be effective to terminate such
Borrowing Subsidiary's right to make further Borrowings under this Agreement. As
soon as practicable upon receipt of a Borrowing Subsidiary Agreement, the
Administrative Agent shall send a copy thereof to each Lender.
SECTION 2.20. Adjustment of Applicable Rate. In the event that the
Applicable Rate should have been based on a higher Category but for the fact
that the Company failed to deliver on time the consolidated financial statements
required to be delivered by it pursuant to Sections 5.01(a) or (b), (a) the
Administrative Agent shall determine the higher Applicable Rate and shall apply
such higher Applicable Rate (or if Category 1 applies in accordance with the
definition of Applicable Rate, Category 1) retroactively to the due date of
delivery of such financial statements and shall notify the Company and the
Lenders thereof and of the difference between (i) the amount paid by the Company
prior to such determination and (ii) the amounts that would have been so paid if
such adjustment had been made on the due date of delivery of said financial
statements (the
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Administrative Agent's determinations thereof being presumed correct absent
manifest error) and (b) promptly following receipt of such notice, the Company
shall make payment to the Administrative Agent for the accounts of the Lenders
of an amount equal to such difference, without interest.
ARTICLE III
Representations and Warranties
The Company represents and warrants to the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Company and its
Material Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has all requisite power
and authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. Authorization; Enforceability. The Transactions are
within the Company's (and, as applicable, each Borrowing Subsidiary's) corporate
powers and have been duly authorized by all necessary corporate and, if
required, stockholder action. This Agreement has been duly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company, and each Borrowing Subsidiary Agreement with respect to any
Borrowing Subsidiary (as to which a Borrowing Subsidiary Termination has not
become effective) has been duly executed and delivered by the Company and such
Borrowing Subsidiary and constitutes a legal, valid and binding obligation of
the Borrowing Subsidiary thereunder, in each case enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law. Until such time as the
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resolutions contemplated by Section 5.01(f) shall have been delivered to the
Administrative Agent, after giving effect to each Borrowing, the total of all
notes, credit arrangements and/or other instruments of indebtedness issued by
the Company and/or any subsidiary and/or affiliate (within the meaning of the
most recent resolutions of the Board of Directors) and outstanding will not
exceed the amount duly authorized by the resolutions of the Board of Directors
of the Company at the time of such Borrowing.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect and except for such consents,
approvals, registrations, filings and other actions the failure to obtain or
make could not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect, (b) will not violate any applicable law or
regulation or the charter, by-laws or other organizational documents of the
Company or any of its Subsidiaries or any order of any Governmental Authority,
except for such violations which, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, (c) will not
violate or result in a default under any indenture, agreement or other
instrument binding upon the Company or any of its Subsidiaries or its assets, or
give rise to a right thereunder to require any payment to be made by the Company
or any of its Subsidiaries, except for such violations and defaults which,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, and (d) will not result in the creation or imposition
of any Lien on any asset of the Company or any of its Material Subsidiaries.
Neither any party to the IJDA nor any Governmental Authority has claimed in
writing that the IJDA is not valid or is not in full force or effect.
SECTION 3.04. Financial Condition; No Material Adverse Change. (a)
The Company has heretofore furnished to the Lenders its combined statement of
financial position and combined statements of operations, divisional equity and
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cash flows (i) as of and for the fiscal years ended December 31, 1993, 1994 and
1995, respectively, reported on by Coopers & Lybrand L.L.P., independent public
accountants, and included in the Information Statement, and (ii) as of and for
the fiscal quarter and the portion of the fiscal year ended September 30, 1996,
certified by its chief financial officer, and included in the Company's Form
10-Q. Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Company and
its consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of the statements referred to in clause (ii) above.
(b) The Company has heretofore furnished to the Lenders (i) its
unaudited pro forma combined statements of financial position and combined
statements of operations as of and for the fiscal years 1993-1995 on a
stand-alone basis, and (ii) its projections (including income statements,
balance sheets and cash flow projections of the Company and Subsidiaries for
fiscal years 1996 through 2001, in each case included in the Confidential
Information Memorandum dated November 1996 (the "Confidential Information
Memorandum") as supplemented on November 15, 1996. Such pro forma financial
statements have been prepared in good faith by the Company, based on assumptions
believed by the management of the Company to be reasonable at the time made, as
described in and subject to the Confidential Information Memorandum, and
presents fairly on a pro forma basis the estimated financial position and
operations of the Company and Subsidiaries as of the dates and for the periods
set forth in the immediately preceding sentence. Such projections have been
prepared in good faith by the Company, based on assumptions believed by the
management of the Company to be reasonable at the time made.
(c) Since December 31, 1995, there has been no material adverse
change in the financial condition of the Company and its Subsidiaries, taken as
a whole, as reflected in the financial statements referred to in Section
3.04(a)(i). Since November 1, 1996, there has been
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no material adverse change in the business, assets, operations or financial
condition, of the Company and its Subsidiaries, taken as a whole.
SECTION 3.05. Properties. (a) Each of the Company and its
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to the business of the Company and its
Subsidiaries, taken as a whole, except for minor defects in title that do not
interfere with its ability to conduct its business as currently conducted or to
utilize such properties for their intended purposes.
(b) Each of the Company and its Subsidiaries owns, or is licensed to
use, all trademarks, tradenames, copyrights, patents and other intellectual
property material to the business of the Company and its Subsidiaries taken as a
whole, and the use thereof by the Company and its Subsidiaries does not infringe
upon the rights of any other Person, except for any such infringements that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
SECTION 3.06. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Agreement, any Borrowing Subsidiary Agreement
or the Transactions.
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither the Company nor any of
its Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any
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permit, license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability, (iii) has received notice of any
claim with respect to any Environmental Liability or (iv) knows of any basis for
any Environmental Liability.
(c) Since the date of this Agreement, there has been no change in
the status of the Disclosed Matters that, individually or in the aggregate, has
resulted in a Material Adverse Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of the
Company and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. No Default has
occurred and is continuing.
SECTION 3.08. Investment and Holding Company Status. Neither the
Company nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of the Company and each of its
Subsidiaries has timely filed or caused to be filed all Tax returns and reports
required to have been filed and has paid or caused to be paid all Taxes required
to have been paid by it, except (a) Taxes that are being contested in good faith
by appropriate proceedings and for which the Company or such Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is
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reasonably expected to occur, could reasonably be expected to result in a
Material Adverse Effect. The present value of all accumulated benefit
obligations under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the date of
the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan by an amount that could reasonably be
expected to result in a Material Adverse Effect, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards No.
87) did not, as of the date of the most recent financial statements reflecting
such amounts, exceed the fair market value of the assets of all such underfunded
Plans by an amount that could reasonably be expected to result in a Material
Adverse Effect.
SECTION 3.11. Disclosure. None of the reports, financial statements,
certificates or other information furnished by or on behalf of any Borrower to
the Administrative Agent or any Lender in connection with the negotiation of
this Agreement or any Borrowing Subsidiary Agreement or delivered hereunder or
thereunder (as modified or supplemented by other information so furnished),
taken as a whole, contains any material misstatement of fact or omits to state
any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, the Company represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.
SECTION 3.12. Subsidiaries. Schedule 3.12 sets forth as of the
Effective Date a list of all Subsidiaries and Material Subsidiaries and the
percentage ownership interest of the Company therein. As of the Effective Date,
the shares of capital stock of such Subsidiaries will be fully paid and
non-assessable and such shares and other ownership interests so indicated by
Schedule 3.12 will be owned by the Company, directly or indirectly, free and
clear of all Liens other than as permitted under Section 6.02.
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SECTION 3.13. Solvency. After the consummation of the Spin-Off and
the other Transactions to occur on or prior to the Effective Date (including the
making of the Loans to be made on the Effective Date and the application of the
proceeds of such Loans), (a) the fair value of the assets of the Company will
exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the
present fair saleable value of the property of the Company will be greater than
the amount that will be required to pay the probable liability of its debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (c) the Company will be able to
pay its debts and liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured; and (d) the Company will not
have unreasonably small capital with which to conduct the business in which it
is engaged as such business is now conducted and is proposed to be conducted
following the Effective Date.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders to make
Loans hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 10.02):
(a) The Administrative Agent (or its counsel) shall have received
from each party hereto either (i) a counterpart of this Agreement signed
on behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart
of this Agreement.
(b) The Administrative Agent shall have received favorable written
opinions (addressed to the
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Administrative Agent and the Lenders and dated the Effective Date) of
Ellenore O'Hanrahan, deputy general counsel of the Company, and Simpson
Thacher & Bartlett, counsel for the Company, substantially in the form of
Exhibit B-1 and B-2, respectively, and covering such other matters
relating to the Company, this Agreement or the Transactions as the
Required Lenders shall reasonably request. The Company hereby requests
such counsel to deliver such opinions.
(c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of the
Company, the authorization of the Transactions and any other legal matters
relating to the Company, this Agreement or the Transactions, all in form
and substance reasonably satisfactory to the Administrative Agent and its
counsel.
(d) The Administrative Agent shall have received a certificate,
dated the Effective Date and signed by the Chairman, the President, a Vice
President or a Financial Officer of the Company, confirming (i) compliance
with the conditions set forth in paragraphs (a) and (b) of Section 4.02,
(ii) that the Spin-Off shall have been consummated in all material
respects with respect to the Company in accordance with the Spin-Off
Information and all applicable laws and (iii) that as of the date of and
after giving effect to the Spin-Off the Company's Net Cash shall have been
greater than $60,000,000, together with a Schedule demonstrating the
calculation of such amount.
(e) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to
the extent invoiced, reimbursement or payment of all out-of-pocket
expenses required to be reimbursed or paid by the Company hereunder.
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The Administrative Agent shall notify the Company and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans hereunder shall not
become effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 10.02) at or prior to 3:00 p.m., New York City time, on
December 20, 1996 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of each
Lender to make a Loan on the occasion of any Borrowing is subject to
the satisfaction of the following conditions:
(a) The representations and warranties of the Company set forth in
this Agreement and, in the case of a Borrowing by a Borrowing Subsidiary,
the representations and warranties of such Borrowing Subsidiary in its
Borrowing Subsidiary Agreement shall be true and correct on and as of the
date of such Borrowing except to the extent such representations and
warranties expressly relate to an earlier date in which case such
representations and warranties shall be true and correct on and as of such
earlier date.
(b) At the time of and immediately after giving effect to such
Borrowing, no Default shall have occurred and be continuing.
(c) Unless and until the Administrative Agent shall have received a
satisfactory copy of the resolutions contemplated by Section 5.01(f), the
Administrative Agent shall have received a certificate, dated the date of
such Borrowing and signed by a Financial Officer of the Company,
confirming that after giving effect to such Borrowing, the total of all
notes, credit arrangements, and/or other instruments of indebtedness
issued by the Company and/or any subsidiary and/or affiliate (within the
meaning of the most recent resolutions of the Board of Directors of the
Company) and outstanding will not exceed the amount
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duly authorized by the resolutions of the Board of Directors of the
Company at the time of such Borrowing.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Company and, if applicable, the relevant Borrowing Subsidiary on the date
thereof as to the matters specified in paragraphs (a) and (b) of this Section .
SECTION 4.03. First Credit Event. The obligation of each Lender to
make a Loan on the occasion of the initial Borrowing is subject to receipt by
the Administrative Agent of a certificate, dated the date of such initial
Borrowing and signed by a Financial Officer of the Company, confirming that (i)
the Company's existing credit agreements (other than the agreements set forth in
Schedule 4.03) have been terminated and all loans and obligations thereunder
have been paid in full and (ii) no other Indebtedness (other than intercompany
Indebtedness and Indebtedness permitted under Section 6.01) is outstanding on
the date of such Borrowing.
SECTION 4.04. Each Borrowing Subsidiary Credit Event. The
obligation of each Lender to make Loans hereunder to any Borrowing
Subsidiary is subject to the satisfaction of the following conditions:
(a) The Administrative Agent (or its counsel) shall have received
from each party thereto either (i) a counterpart of such Borrowing
Subsidiary's Borrowing Subsidiary Agreement or (ii) written evidence
satisfactory to the Administrative Agent (which may include telecopy
transmission of a signed signature page thereof) that such party has
signed a counterpart of such Borrowing Subsidiary Agreement.
(b) The Administrative Agent shall have received a favorable written
opinion of counsel for such Borrowing Subsidiary (which counsel shall be
reasonably acceptable to the Administrative Agent), substantially in the
form of Exhibit C, and covering such other matters relating to such
Borrowing Subsidiary or its
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Borrowing Subsidiary Agreement as the Required Lenders shall reasonably
request.
(c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of such
Borrowing Subsidiary, the authorization of the Transactions relating to
such Borrowing Subsidiary and any other legal matters relating to such
Borrowing Subsidiary, its Borrowing Subsidiary Agreement or such
Transactions, all in form and substance satisfactory to the Administrative
Agent and its counsel.
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ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full, the Company covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information.
The Company will furnish to the Administrative Agent (with a copy for
each Lender):
(a) within 90 days after the end of each fiscal year of the Company,
its audited consolidated statement of financial position and related
statements of operations, shareholders' equity and cash flows as of the
end of and for such year, setting forth in each case in comparative form
the figures for the previous fiscal year, all reported on by Arthur
Andersen or other independent public accountants of recognized national
standing (without a "going concern" or like qualification or exception and
without any qualification or exception as to the scope of such audit) to
the effect that such consolidated financial statements present fairly in
all material respects the financial condition and results of operations of
the Company and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Company, its consolidated statements
of financial position and related statements of operations, shareholders'
equity and cash flows as of the end of and for such fiscal quarter and the
then elapsed portion of the fiscal year, setting forth in each case in
comparative form the figures for the corresponding period or periods of
(or, in the case of the balance sheet, as of the end of) the previous
fiscal year, all certified by one of its Financial Officers as
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presenting fairly in all material respects the financial condition and
results of operations of the Company and its consolidated Subsidiaries on
a consolidated basis in accordance with GAAP consistently applied, subject
to normal year-end audit adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the
Company (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken
or proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations demonstrating compliance with Sections
6.11, 6.12 and 6.13, (iii) stating whether any material change in GAAP or
in the application thereof has occurred since the date of the audited
financial statements referred to in Section 3.04 affecting the Company
and, if any such change has occurred, specifying the effect of such change
on the financial statements accompanying such certificate and (iv)
identifying all Material Subsidiaries; provided that the information
described in this clause (iv) shall only be furnished concurrently with
any delivery of financial statements under clause (a) above for fiscal
year 1996 and thereafter to the extent that any material change to
Schedule 3.06 shall have occurred;
(d) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during
the course of their examination of such financial statements of any
Default (which certificate may be limited to the extent required by
accounting rules or guidelines);
(e) promptly after the same become publicly available, copies of all
periodic and other material reports, proxy statements and other materials
filed by the Company or any Subsidiary with the Securities and
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Exchange Commission, or any Governmental Authority succeeding to any or
all of the functions of said Commission, or with any national securities
exchange, or distributed by the Company to its shareholders generally, as
the case may be, and all material amendments to any of the foregoing;
(f) promptly after the same become effective, a certified copy of
resolutions duly adopted by the Board of Directors of the Company
ratifying the execution, delivery and performance of this Agreement in
form and substance satisfactory to the Agent and its counsel and that said
resolutions have not been amended or revoked and are in full force and
effect on the date thereof; and
(g) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Company or any Subsidiary, or compliance with the terms of this Agreement,
as the Administrative Agent may reasonably request.
SECTION 5.02. Notices of Material Events. The Company
will furnish to the Administrative Agent and each Lender prompt written
notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by
or before any arbitrator or Governmental Authority against or affecting
the Company or any Subsidiary thereof that could reasonably be expected to
result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Company and its Subsidiaries in an aggregate
amount that could reasonably be expected to result in a Material Adverse
Effect; and
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82
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Company setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. The Company will, and
will cause each of its Material Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of the business of the Company and its Subsidiaries, taken as a
whole; provided that the foregoing shall not prohibit any merger, consolidation,
liquidation or dissolution permitted under Section 6.03.
SECTION 5.04. Payment of Obligations. The Company will, and will
cause each of its Subsidiaries to, pay its obligations, including Tax
liabilities, before the same shall become delinquent or in default, except where
(a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) the Company or such Subsidiary has set aside on its
books adequate reserves with respect thereto in accordance with GAAP and (c) the
failure to make payment could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 5.05. Maintenance of Properties; Insurance. The Company
will, and will cause each of its Subsidiaries to, (a) keep and maintain all
property material to the conduct of the business of the Company and its
Subsidiaries, taken as a whole, in good working order and condition, ordinary
wear and tear excepted, and (b) maintain, with financially sound and reputable
insurance companies, insurance in such amounts and against such risks as are
customarily maintained by companies engaged in the same or similar businesses
operating in the same or similar
<PAGE> 90
83
locations; provided that any such insurance may be maintained through a program
of self-insurance to the extent consistent with prudent business practice.
SECTION 5.06. Books and Records; Inspection Rights. The Company
will, and will cause each of its Material Subsidiaries to, keep proper books of
record and account in accordance with GAAP (or, in the case of a foreign
Subsidiary, generally accepted accounting principles in the jurisdiction of
organization of such Foreign Subsidiary). The Company will, and will cause each
of its Subsidiaries to, permit any representatives designated by the
Administrative Agent or, if a Default shall have occurred and be continuing, any
Lender, upon reasonable prior notice, to visit and inspect its properties, to
examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants,
all at such reasonable times and as often as reasonably requested.
SECTION 5.07. Compliance with Laws. The Company will, and will cause
each of its Subsidiaries to, comply with all laws, rules, regulations and orders
of any Governmental Authority applicable to it or its property (including
ERISA), except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.08. Use of Proceeds. The proceeds of the Loans will be
used only for general corporate purposes. No part of the proceeds of any Loan
will be used, whether directly or indirectly, for any purpose that entails a
violation of any of the Regulations of the Board, including Regulations G, U and
X.
<PAGE> 91
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ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the principal
of and interest on each Loan and all fees payable hereunder have been paid in
full, the Company covenants and agrees with the Lenders that:
SECTION 6.01. Indebtedness. The Company will not, and
will not permit any Subsidiary to, create, incur, assume or permit to
exist any Indebtedness, except:
(a) Indebtedness created hereunder;
(b) Indebtedness under the Brazilian Facility, but not any
extension, renewal or replacement of such Indebtedness;
(c) Indebtedness of the Company to any Subsidiary and of any
Subsidiary to the Company or any other Subsidiary; provided, that any
Indebtedness permitted by this clause (c) shall be (x) evidenced by a
promissory note or any other evidence of such Indebtedness, which shall
have been duly authorized by and constitute a legal, valid and binding
obligation of the obligor, in accordance with its terms, and (y) not
subordinated to any Indebtedness of the obligor);
(d) Guarantees by any Subsidiary of Indebtedness of the
Company or any other Subsidiary;
(e) Indebtedness of the Borrower or any Subsidiary incurred to
finance the acquisition, construction or improvement of any fixed or
capital assets, including Capital Lease Obligations and any Indebtedness
assumed in connection with the acquisition of any such assets or secured
by a Lien on any such assets prior to the acquisition thereof, and
extensions, renewals and replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof; provided that (A) such
<PAGE> 92
85
Indebtedness is incurred prior to or within 90 days after such acquisition
or the completion of such construction or improvement and (B) the
aggregate principal amount of Indebtedness permitted by this clause (e)
shall not exceed $25,000,000 at any time outstanding;
(f) Indebtedness of any Person that becomes a Subsidiary after the
date hereof; provided that (i) such Indebtedness exists at the time such
Person becomes a Subsidiary and is not created in contemplation of or in
connection with such Person becoming a Subsidiary and (ii) the aggregate
principal amount of Indebtedness permitted by this clause (f) shall not
exceed $10,000,000 at any time outstanding; and
(g) (i) Guarantees by the Company of Indebtedness of any Foreign
Subsidiary permitted by this Section 6.01 in an aggregate principal amount
not exceeding $15,000,000 at any time outstanding, (ii) other unsecured
Indebtedness of Foreign Subsidiaries and (iii) Guarantees by the Company
existing on the date hereof of loans and advances to officers of the
Company in connection with stock purchases by such officers of shares of
the Company in an aggregate principal amount not exceeding $1,600,000;
provided that the aggregate principal amount of Indebtedness permitted by
this subclause (iii) plus Guarantees permitted by subclauses (i) and (ii)
above, without duplication, shall not at any time exceed $25,000,000.
<PAGE> 93
86
SECTION 6.02. Liens. The Company will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it (including any capital stock or
Indebtedness of a Subsidiary), or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of the Company or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02;
provided that (i) such Lien shall not apply to any other property or asset
of the Company or any Subsidiary and (ii) such Lien shall secure only
those obligations which it secures on the date hereof and extensions,
renewals, refinancings and replacements thereof that do not increase the
outstanding principal amount thereof (other than by an amount equal to any
costs and expenses incurred in connection with such extension, renewal,
refinancing or replacement);
(c) any Lien existing on any property or asset prior to the
acquisition thereof by the Company or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary after the date
hereof prior to the time such Person becomes a Subsidiary or any Lien on
any asset of any Person existing at the time such Person is merged into or
consolidated with the Company or a Subsidiary; provided that (i) such Lien
is not created in contemplation of or in connection with such acquisition
or such Person becoming a Subsidiary or such merger, as the case may be,
(ii) such Lien shall not apply to any other property or assets of the
Company or any Subsidiary and (iii) such Lien shall secure only those
obligations which it secures on the date of such acquisition or the date
such Person becomes a Subsidiary or the date of such merger, as the case
may be, and extensions, renewals, refinancings and replacements thereof
that do not increase the outstanding principal amount thereof
<PAGE> 94
87
(other than by an amount equal to any costs and expenses incurred in
connection with such extension, renewal, refinancing or replacement); and
(d) Liens on fixed or capital assets acquired, constructed or
improved by the Borrower or any Subsidiary; provided that (A) such
security interests secure only Indebtedness permitted by clause (e) of
Section 6.01, (B) such security interests and the Indebtedness secured
thereby are incurred prior to or within 90 days after such acquisition or
the completion of such construction or improvement, (C) the Indebtedness
secured thereby does not exceed 100% of the cost of acquiring,
constructing or improving such fixed or capital assets and (D) such
security interests shall not apply to any other property or assets of the
Borrower or any Subsidiary;
(e) any Lien deemed to exist as a result of any transaction
permitted under Section 6.07; and
(f) any Lien to secure Indebtedness or other obligations if, the sum
(without duplication) of all amounts secured by Liens which would not be
permitted but for this clause (f) does not exceed $5,000,000.
SECTION 6.03. Fundamental Changes. (a) The Company will not, and
will not permit any of its Subsidiaries to, merge into or consolidate with any
other Person, or permit any other Person to merge into or consolidate with it,
or sell, transfer, lease or otherwise dispose of (in one transaction or in a
series of transactions) any of its assets, or any capital stock or Indebtedness
of any of its Subsidiaries (in each case, whether now owned or hereafter
acquired), or liquidate or dissolve, except that, (i) the Company and its
Subsidiaries may sell inventory and surplus or obsolete equipment in the
ordinary course of business, (ii) if at the time thereof and immediately after
giving effect thereto no Default shall have occurred and be continuing, the
Company and its Subsidiaries may sell or dispose of assets or property (A) not
having a value in the aggregate from the date hereof
<PAGE> 95
88
through the Maturity Date in excess of 5% of Consolidated Tangible Assets at the
time of the most recent such sale or disposition or (B) in connection with any
transaction permitted under Section 6.07, (iii) the sale or discount for fair
value without recourse of accounts receivable arising in the ordinary course of
business in connection with the compromise or collection thereof and (iv) if at
the time thereof and immediately after giving effect thereto no Default shall
have occurred and be continuing (w) any Subsidiary may merge into the Company in
a transaction in which the Company is the surviving corporation, (x) any
Subsidiary may merge into any Wholly Owned Subsidiary in a transaction in which
the surviving entity is a Wholly Owned Subsidiary or any non Wholly Owned
Subsidiary may merge into any non Wholly Owned Subsidiary of which the Company
owns, directly or indirectly, at least the same percentage of the equity, (y)
any Wholly Owned Subsidiary may sell, transfer, lease or otherwise dispose of
its assets to the Company or to another Wholly Owned Subsidiary and (z) any
Subsidiary may liquidate or dissolve if the Company determines in good faith
that such liquidation or dissolution is in the best interests of the Company and
would not result in a Material Adverse Effect; provided that a Borrowing
Subsidiary may not merge, consolidate, liquidate or dissolve unless, in addition
to the foregoing conditions, the surviving entity, or the entity into which such
Borrowing Subsidiary liquidates or dissolves, is a Borrower and assumes all
Obligations of such Borrowing Subsidiary.
(b) The Company will not, and will not permit any of its
Subsidiaries to, engage to any material extent in any business other than
businesses of the type conducted by the Company and its Subsidiaries on the date
hereof and businesses reasonably related thereto.
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions; Hedging Agreements. (a) The Company will not, and will not permit
any of its Subsidiaries to, purchase, hold or acquire (including pursuant to any
merger with any Person that was not a wholly owned Subsidiary prior to such
merger) any capital stock, evidences of indebtedness or other securities
(including any
<PAGE> 96
89
option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, Guarantee any obligations of, or make
or permit to exist any investment or any other interest in, any other Person, or
purchase or otherwise acquire (in one transaction or a series of transactions)
any assets of any other Person constituting a business unit (an "Investment"),
except:
(i) extensions of trade credit and endorsements of negotiable
instruments and other negotiable documents in the ordinary course of
business;
(ii) loans and advances to employees and directors of the Company
and its Subsidiaries for travel, entertainment and relocation expenses in
the ordinary course of business in an aggregate amount for the Company and
its Subsidiaries not to exceed $10,000,000 at any time outstanding;
(iii) Permitted Investments;
(iv) Investments by the Company existing on the date hereof in its
Subsidiaries;
(v) equity Investments in Subsidiaries in an aggregate amount not in
excess of $10,000,000; any initial equity Investments in any Subsidiary
created after the date hereof or in any Subsidiary that is dormant on the
date hereof;
(vi) Investments consisting of loans made by the Company or any
Subsidiary in or to the Company or any other Subsidiary;
(vii) (x) Guarantees constituting Indebtedness permitted by Section
6.01 and (y) Guarantees by the Company in the ordinary course of its
business; provided that the aggregate amount of Guarantees permitted by
this subclause (y) plus the aggregate amount of all Guarantees permitted
by subclause (i) of Section 6.01(g) shall not exceed in the aggregate
$50,000,000 at any time outstanding;
<PAGE> 97
90
(viii) Investments existing or contemplated on the date hereof and
set forth on Schedule 6.04(a);
(ix) Investments contemplated under "Intercompany Transactions:
Asset Purchases Post Spin," as set forth on Schedule 1.01(a); provided
that the aggregate amount of Investments permitted by this clause (ix)
shall not exceed $7,000,000 on a cumulative basis; and
(x) Permitted Acquisitions.
(b) The Company will not, and will not permit any of its
Subsidiaries to, enter into any Hedging Agreement, other than Hedging Agreements
entered into in the ordinary course of business to hedge or mitigate risks to
which the Company or any Subsidiary is exposed in the conduct of its business or
the management of its liabilities.
SECTION 6.05. Restricted Payments and Issuances. The Company will
not declare or make, or agree to declare or make, directly or indirectly, any
Restricted Payment, except that (a) the Company may declare and pay dividends or
other distributions with respect to its capital stock payable solely in
additional shares of its common stock, (b) the Company may make Restricted
Payments to provide shares of common stock of the Company for issuance pursuant
to and in accordance with stock option plans or other benefit plans for
management or employees of the Company and its Subsidiaries, (c) the Company may
buy back up to 267,000 of its shares from Cognizant Corporation as contemplated
by the Spin-Off Information and (d) the Company may repay the Brazilian Facility
and the other credit agreements, existing on the date of this Agreement and set
forth on Schedule 4.03.
(b) The Company will not permit any of its Subsidiaries to issue any
shares of capital stock (other than (x) to the Company and, to the extent
permitted by Section 6.04, to any of its Subsidiaries, (y) issuance of shares on
a pro rata basis to the shareholders of the
<PAGE> 98
91
relevant Subsidiary or (z) any other issuance that is otherwise permitted by
Section 6.03).
SECTION 6.06. Transactions with Affiliates. The Company will not,
and will not permit any of its Subsidiaries to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except (a) in the ordinary course of business at prices and
on terms and conditions not less favorable to the Company or such Subsidiary
than could be obtained on an arm's-length basis from unrelated third parties,
(b) transactions between or among the Company and its wholly owned Subsidiaries
not involving any other Affiliate and (c) transactions described in the Spin-Off
Information.
SECTION 6.07. Sale and Lease-Back Transactions. The Company will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
enter into any arrangement with any Person (other than a Subsidiary) whereby it
shall sell or transfer any property used or useful in its business, whether now
owned or hereafter acquired, and thereafter rent or lease such property or other
property which it intends to use for substantially the same purpose or purposes
as the property being sold or transferred, except for any such arrangements with
respect to the vehicles owned by the Borrower and the Subsidiaries.
SECTION 6.08. Restrictive Agreements. The Company will not, and will
not permit any of its Subsidiaries to, directly or indirectly, enter into, incur
or permit to exist any agreement or other arrangement that prohibits, restricts
or imposes any condition upon (a) the ability of the Company or any Subsidiary
to create, incur or permit to exist any Lien upon any of its property or assets,
or (b) the ability of any Subsidiary to pay dividends or other distributions
with respect to any shares of its capital stock or to make or repay loans or
advances to the Company or any other Subsidiary or to Guarantee Indebtedness of
the Company or any other Subsidiary; provided that (i) the foregoing shall not
apply to restrictions and
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92
conditions imposed by law or by this Agreement, (ii) the foregoing shall not
apply to restrictions and conditions existing on the date hereof and identified
on Schedule 6.08 (but shall apply to any extension or renewal of, or any
amendment or modification expanding the scope of, any such restriction or
condition), (iii) the foregoing shall not apply to customary restrictions and
conditions contained in agreements relating to the sale of a Subsidiary pending
such sale, provided such restrictions and conditions apply only to the
Subsidiary that is to be sold and such sale is permitted hereunder, (iv) clause
(a) of the foregoing shall not apply to restrictions or conditions imposed by
any agreement relating to secured Indebtedness permitted by this Agreement if
such restrictions or conditions apply only to the property or assets securing
such Indebtedness and (v) clause (a) of the foregoing shall not apply to (x)
customary provisions in leases and other contracts restricting the assignment
thereof and (y) customary transfer restrictions and right of first refusal in
shareholders' agreements in existence on the date hereof or consistent with past
practice.
SECTION 6.09. Certain Agreements. The Company will not, and will not
permit any of its Subsidiaries to, amend, waive or modify the "Distribution
Agreement", the "Tax Allocation Agreement", the "Employee Benefits Agreement",
the "Indemnity and Joint Defense Agreement", the "TAM Master Agreement", the
"Intellectual Property Agreement", the "Shared Transactions Services
Agreements", the "Data Services Agreements" or the "Transition Services
Agreements", in each case as filed with the Securities Exchange Commission as an
Exhibit to the Registration Statement on Form 10, of which the Information
Statement constitutes a part thereof, or any other material agreement,
(including any agreement related to the Brazilian Facility in any manner, if
such amendment, waiver or modification (individually or in combination with
other amendments, waivers and modifications) could reasonably be expected to
result in a material adverse effect on (i) the business, assets, operations or
financial condition of the Company or (ii) the rights of or remedies of the
Lenders under this Agreement.
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93
SECTION 6.10. Borrowing Subsidiaries. The Company will
not own or Control less than 95% of the ordinary voting power of any
Borrowing Subsidiary.
SECTION 6.11. Leverage Ratio. The Leverage Ratio will not
exceed 2.00 to 1.00 at any time.
SECTION 6.12. Fixed Charge Coverage Ratio. The Fixed Charge Coverage
Ratio for any period of four consecutive fiscal quarters of the Company will not
be less than (i) 1.00 to 1.00 through March 31, 1998, or (ii) 1.10 to 1.00
thereafter.
SECTION 6.13. Minimum EBITDA. EBITDA for any period of four
consecutive fiscal quarters of the Company ending during any of the periods set
forth below will not be less than the amount set forth opposite such period:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
Any period ending on or prior $115,000,000
to March 31, 1997
Any period ending after March $120,000,000
31, 1997, and on or prior to
December 31, 1997
Any period ending thereafter $125,000,000
</TABLE>
<PAGE> 101
94
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall occur and
be continuing:
(a) any Borrower shall fail to pay any principal of any Loan of such
Borrower when and as the same shall become due and payable, whether at the
due date thereof or at a date fixed for prepayment thereof or otherwise;
(b) any Borrower shall fail to pay any interest on any Loan of such
Borrower or any fee or any other amount (other than an amount referred to
in clause (a) of this Article) payable by such Borrower under this
Agreement, when and as the same shall become due and payable, and such
failure shall continue unremedied for a period of three Business Days;
(c) any representation or warranty made or deemed made by or on
behalf of the Company or any Subsidiary in or in connection with this
Agreement, any Borrowing Subsidiary Agreement or any amendment or
modification hereof or thereof, or in any report, certificate, financial
statement or other document furnished pursuant to or in connection with
this Agreement, any Borrowing Subsidiary Agreement or any amendment or
modification hereof or thereof, shall prove to have been incorrect when
made or deemed made;
(d) the Company shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02(a), 5.03 (with respect to
the Company's existence) or 5.08 or in Article VI;
(e) the Company shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement or any Borrowing
Subsidiary Agreement (other than those specified in clause (a), (b), (c),
(d) or (m) of this Article), and such failure shall continue unremedied
for a period of 30 days after notice thereof
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95
from the Administrative Agent (given at the request of any Lender) to the
Company;
(f) the Company or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of
any Material Indebtedness, when and as the same shall become due and
payable;
(g) any event or condition shall occur that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables
or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of any Material Indebtedness or any trustee or
agent on its or their behalf to cause any Material Indebtedness to become
due, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity; provided that this clause (g)
shall not apply to secured Indebtedness that becomes due solely as a
result of the voluntary sale or transfer of the property or assets
securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of the Company or any Material Subsidiary or its debts,
or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Company
or any Material Subsidiary or for a substantial part of its assets, and,
in any such case, such proceeding or petition shall continue undismissed
for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered;
(i) the Company or any Material Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other
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96
relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to
the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (h) of this Article, (iii)
apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Company or any
Material Subsidiary or for a substantial part of its assets, (iv) file an
answer admitting the material allegations of a petition filed against it
in any such proceeding, (v) make a general assignment for the benefit of
creditors or (vi) take any action for the purpose of effecting any of the
foregoing;
(j) the Company or any Material Subsidiary shall become unable,
admit in writing its inability or fail generally to pay its debts as they
become due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $10,000,000 shall be rendered against the Company, any
Subsidiary or any combination thereof and the same shall remain unpaid or
undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of the Company or any
Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that
have occurred, could reasonably be expected to result in liability of the
Company and its Subsidiaries in an aggregate amount that could reasonably
be expected to result in a Material Adverse Effect;
(m) the Company shall fail to observe or perform any covenant,
condition or agreement contained in Article IX, or the guarantee of the
Company hereunder shall not be (or shall be claimed by any Person not to
be) valid or in full force and effect;
<PAGE> 104
97
(n) the Company shall fail to observe or perform any material
covenant, condition or agreement contained in the IJDA, or the IJDA shall
not be valid or in full force and effect; or
(o) a Change in Control shall occur;
then, and in every such event (other than an event with respect to any Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Company, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrowers accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by each Borrower; and in case of any
event with respect to the Company described in clause (h) or (i) of this
Article, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrowers accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by each Borrower; and in the case of any
event with respect to any Borrowing Subsidiary described in clause (h) or (i) of
this Article, (i) the eligibility of such Borrowing Subsidiary or any other
Borrowing Subsidiary or the Company to borrow shall thereupon terminate and (ii)
the Loans of such Borrowing Subsidiary shall become immediately due and payable,
together with accrued interest thereon and all fees and other obligations
thereunder of such Borrowing Subsidiary
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98
accrued thereunder, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by each Borrowing Subsidiary.
ARTICLE VIII
The Administrative Agent
Each of the Lenders hereby irrevocably appoints the Administrative
Agent as its agent and authorizes the Administrative Agent to take such actions
on its behalf and to exercise such powers as are delegated to the Administrative
Agent by the terms hereof, together with such actions and powers as are
reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not the Administrative Agent, and such
bank and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Company or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent is
required to exercise in writing by the Required Lenders, and (c) except as
expressly set forth herein, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to the Company or any of its Subsidiaries that is communicated to or
obtained by the bank serving as Administrative Agent or any of its Affiliates in
any capacity. The Administrative Agent shall
<PAGE> 106
99
not be liable for any action taken or not taken by it with the consent or at the
request of the Required Lenders or in the absence of its own gross negligence or
wilful misconduct. The Administrative Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is given to the
Administrative Agent by a Borrower or a Lender, and the Administrative Agent
shall not be responsible for or have any duty to ascertain or inquire into (i)
any statement, warranty or representation made in or in connection with this
Agreement or any Borrowing Subsidiary Agreement, (ii) the contents of any
certificate, report or other document delivered hereunder or thereunder or in
connection herewith or therewith, (iii) the performance or observance of any of
the covenants, agreements or other terms or conditions set forth herein, (iv)
the validity, enforceability, effectiveness or genuineness of this Agreement or
any Borrowing Subsidiary Agreement or any other agreement, instrument or
document, or (v) the satisfaction of any condition set forth in Article IV or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall
not incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing believed by it to be
genuine and to have been signed or sent by the proper Person. The Administrative
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon. The Administrative Agent may consult with legal
counsel (who may be counsel for any Borrower), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel, accountants or
experts.
The Administrative Agent may perform any and all of its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
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sub-agent may perform any and all of its duties and exercise its rights and
powers through their respective Related Parties. The exculpatory provisions of
the preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders and the Company. Upon any such
resignation, the Required Lenders shall have the right, in consultation with the
Company, to appoint a successor (and, at any time when no Default shall have
occurred and is continuing, with the prior written consent of the Company, which
consent shall not be unreasonably withheld). If no successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent which shall be a bank with an
office in New York, New York, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Company to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Company and such successor. After the Administrative Agent's
resignation hereunder, the provisions of this Article and Section 10.03 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Administrative Agent.
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Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.
ARTICLE IX
Guarantee
In order to induce the Lenders to extend credit hereunder, the
Company hereby irrevocably and unconditionally guarantees, as a primary obligor
and not merely as a surety, the Obligations. The Company further agrees that the
due and punctual payment of the Obligations may be extended or renewed, in whole
or in part, without notice to or further assent from it, and that it will remain
bound upon its Guarantee hereunder notwithstanding any such extension or renewal
of any Obligation.
The Company waives presentment to, demand of payment from and
protest to any Borrowing Subsidiary of any of the Obligations, and also waives
notice of acceptance of its obligations and notice of protest for nonpayment.
The obligations of the Company hereunder shall not be affected by (a) the
failure of any Lender or the Administrative Agent to assert any claim or demand
or to enforce any right or remedy against any Borrowing Subsidiary under the
provisions of this Agreement or otherwise; (b) any rescission, waiver, amendment
or modification of any of the terms or provisions of this Agreement, any
Borrowing Subsidiary Agreement or any other agreement; or (c) the failure of any
Lender to exercise any right or remedy against any Borrowing Subsidiary.
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102
The Company further agrees that its agreement hereunder constitutes
a promise of payment when due (whether or not any bankruptcy or similar
proceeding shall have stayed the accrual or collection of any of the Obligations
or operated as a discharge thereof) and not merely of collection, and waives any
right to require that any resort be had by any Lender to any balance of any
deposit account or credit on the books of any Lender in favor of any Borrower or
any other person.
The obligations of the Company hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, and shall not
be subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever, by reason of the invalidity, illegality or unenforceability of the
Obligations, any impossibility in the performance of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
the Company hereunder shall not be discharged or impaired or otherwise affected
by the failure of the Administrative Agent or any Lender to assert any claim or
demand or to enforce any remedy under this Agreement or any other agreement, by
any waiver or modification in respect of any thereof, by any default, failure or
delay, wilful or otherwise, in the performance of the Obligations, or by any
other act or omission which may or might in any manner or to any extent vary the
risk of the Company or otherwise operate as a discharge of the Company or any
other Borrower as a matter of law or equity.
The Company further agrees that its obligations hereunder shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or must otherwise
be restored by the Administrative Agent or any Lender upon the bankruptcy or
reorganization of any Borrower or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which the Administrative Agent or any Lender may have at law or in equity
against the Company by virtue hereof, upon the failure of any Borrowing
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Subsidiary to pay any Obligation when and as the same shall become due, whether
at maturity, by acceleration, after notice of prepayment or otherwise, the
Company hereby promises to and will, upon receipt of written demand by the
Administrative Agent, forthwith pay, or cause to be paid, in cash the amount of
such unpaid Obligation. The Company further agrees that if payment in respect of
any Obligation shall be due in a currency other than dollars and/or at a place
of payment other than New York and if, by reason of any Change in Law,
disruption of currency or foreign exchange markets, war or civil disturbance or
similar event, payment of such Obligation in such currency or at such place of
payment shall be impossible or, in the judgment of any applicable Lender, not
consistent with the protection of its rights or interests, then, at the election
of any applicable Lender, the Company shall make payment of such Obligation in
dollars (based upon the applicable Exchange Rate in effect on the date of
payment) and/or in New York, and shall indemnify such Lender against any losses
or expenses that it shall sustain as a result of such alternative payment.
Upon payment by the Company of any Obligation, each Lender shall, in
a reasonable manner, assign the amount of such Obligation owed to it and so paid
to the Company, such assignment to be pro tanto to the extent to which the
Obligation in question was discharged by the Company, or make such disposition
thereof as the Company shall direct (all without recourse to any Lender and
without any representation or warranty by any Lender).
Upon payment by the Company of any sums as provided above, all
rights of Company against any Borrowing Subsidiary arising as a result thereof
by way of right of subrogation or otherwise shall in all respects be
subordinated and junior in right of payment to the prior indefeasible payment in
full of all the Obligations owed by such Borrowing Subsidiary to the Lenders.
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ARTICLE X
Miscellaneous
SECTION 10.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to any Borrower, to it in care of the Company at 177
Broad Street, Stamford, CT 60901, Attention of Frank Martell
(Telecopy No. (203) 961-3177;
(b) if to the Administrative Agent, to The Chase Manhattan Bank,
Agent Bank Services Group, One Chase Manhattan Plaza, 8th Floor, New York,
New York 10081, Attention of Janet Belden (Telecopy No. (212) 552-5658),
with a copy to The Chase Manhattan Bank, One Chase Manhattan Plaza, New
York 10081, Attention of Bruce Langenkamp (Telecopy No. (212) 552-0259),
and to any other applicable address specified in the Alternate Procedures;
(c) if to the Swingline Lender, to The Chase Manhattan Bank, Agent
Bank Services Group, One Chase Manhattan Plaza, 8th Floor, New York, New
York 10081, Attention of Janet Belden (Telecopy No. (212) 552-5658), with
a copy to The Chase Manhattan Bank, One Chase Manhattan Plaza, New York
10081, Attention of Bruce Langenkamp (Telecopy No. (212) 552-0259); and
(d) if to any other Lender, to it at its address (or
telecopy number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to
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the other parties hereto. All notices and other communications given to any
party hereto in accordance with the provisions of this Agreement shall be deemed
to have been given on the date of receipt.
SECTION 10.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure by any Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section , and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent or any Lender may have had notice or knowledge of such
Default at the time.
(b) Neither this Agreement nor any Borrowing Subsidiary Agreement
nor any provision hereof or thereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Company
and the Required Lenders or by the Company and the Administrative Agent with the
consent of the Required Lenders (and, in the case of a Borrowing Subsidiary
Agreement, the applicable Borrowing Subsidiary); provided that no such agreement
shall (i) increase the Commitment of any Lender without the written consent of
such Lender, (ii) reduce the principal amount of any Loan or reduce the rate of
interest thereon, or reduce any fees payable hereunder, without the written
consent of each Lender affected thereby (including in connection with any
Multicurrency Loan any reduction described in this subclause (ii) that would
affect such
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106
Lender given such Lender's obligation to acquire a participation therein
pursuant to Section 2.01(d)), (iii) postpone the scheduled date of payment of
the principal amount of any Loan, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender affected thereby (including in connection with any
Multicurrency Loan any postponement, reduction or waiver described in this
subclause (iii) that would affect such Lender given such Lender's obligation to
acquire a participation therein pursuant to Section 2.01(d)), (iv) change
Section 2.17(b) or (c) in a manner that would alter the pro rata sharing of
payments required thereby, without the written consent of each Lender, (v)
change any of the provisions of this Section or the definition of "Required
Lenders" or any other provision hereof specifying the number or percentage of
Lenders required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender or (vi) release the Company from, or limit or condition, its
obligations under Article IX, without the written consent of each Lender;
provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Administrative Agent or the Swingline Lender
hereunder without the prior written consent of the Administrative Agent or the
Swingline Lender, as the case may be.
SECTION 10.03. Expenses; Indemnity; Damage Waiver. (a) The Company
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent, in connection with
the syndication of the credit facilities provided for herein, the preparation
and administration of this Agreement or any Borrowing Subsidiary Agreement or
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated) and (ii) all reasonable out-of-pocket expenses incurred by the
Administrative Agent or any Lender, including the fees, charges and
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disbursements of any counsel for the Administrative Agent or any Lender, in
connection with the enforcement or protection of its rights in connection with
this Agreement or any Borrowing Subsidiary Agreement, including its rights under
this Section , or in connection with the Loans made hereunder, including in
connection with any workout, restructuring or negotiations in respect thereof.
(b) The Company shall indemnify the Administrative Agent and each
Lender, and each Related Party of any of the foregoing Persons (each such Person
being called an "Indemnitee") against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses, including
the fees, charges and disbursements of any counsel for any Indemnitee, incurred
by or asserted against any Indemnitee arising out of, in connection with, or as
a result of (i) the execution or delivery of this Agreement or any Borrowing
Subsidiary Agreement or any agreement or instrument contemplated hereby or
thereby, the performance by the parties hereto or thereto of their respective
obligations hereunder or thereunder or the consummation of the Transactions or
any other transactions contemplated hereby, (ii) any Loan or the use of the
proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by the Company or any of its
Subsidiaries, or any Environmental Liability related in any way to the Company
or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses resulted from the gross negligence or wilful misconduct of such
Indemnitee.
(c) To the extent that the Company fails to pay any amount required
to be paid by it to the Administrative Agent or the Swingline Lender under
paragraph (a) or (b) of this Section , each Lender severally agrees to pay to
the Administrative Agent or the Swingline Lender, as the case
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may be, such Lender's Applicable Percentage (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount; provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent or the Swingline Lender in its
capacity as such.
(d) To the extent permitted by applicable law, no Borrower shall
assert, and each Borrower hereby waives, any claim against any Indemnitee, on
any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement or any Borrowing Subsidiary Agreement or
any agreement or instrument contemplated hereby or thereby, the Transactions,
any Loan or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly
after written demand therefor.
SECTION 10.04. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
(including any Borrowing Subsidiaries) and their respective successors and
assigns permitted hereby, except that no Borrower may assign or otherwise
transfer any of its rights or obligations hereunder or under any Borrowing
Subsidiary Agreement without the prior written consent of each Lender (and any
attempted assignment or transfer by any Borrower without such consent shall be
null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its
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Commitment and the Loans at the time owing to it); provided that (i) except in
the case of an assignment to a Lender or an Affiliate of a Lender, each of the
Company and the Administrative Agent (and, in the case of an assignment of all
or a portion of a Commitment or any Lender's obligations in respect of its
Swingline Exposure or Multicurrency Loan Exposure, the Swingline Lender and each
Multicurrency Lender, as applicable; provided that, in the case of an assignment
of a Lender's obligations in respect of its Multicurrency Commitment such Lender
will not assign such obligations to any Lender that to the knowledge of the
assigning Lender would be entitled, immediately following such assignment, to
claim a greater amount than such assigning Lender under Section 2.14, 2.15 or
2.16 if another Lender or another financial institution that would not be
entitled to claim such greater amount shall have offered to assume such
obligations; it being understood that such assigning Lender must give a 30-day
prior written notice to the Company of any assignment if such assigning Lender
shall have knowledge that such assignment would entitle the assignee to claim a
greater amount as described in this proviso) must give their prior written
consent to such assignment (which consent shall not be unreasonably withheld),
(ii) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an assignment of the entire remaining amount of the assigning Lender's
Commitment, the amount of the Commitment of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $5,000,000 unless each of the Company and the Administrative Agent
otherwise consent, (iii) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender's rights and obligations
under this Agreement, except that this clause (iii) shall not apply to rights in
respect of outstanding Competitive Loans, (iv) the parties to each assignment
shall execute and deliver to the Administrative Agent an Assignment and
Acceptance, together with a processing and recordation fee of $3,500, and (v)
the assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire; pro-
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vided further that any consent of the Company otherwise required under this
paragraph shall not be required if an Event of Default under clause (h) or (i)
of Article VII has occurred and is continuing with respect to the Company. Upon
acceptance and recording pursuant to paragraph (d) of this Section , from and
after the effective date specified in each Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.14, 2.15, 2.16 and 10.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section .
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrowers shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive, and the Borrowers, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary. The Register shall be available for inspection by the
Company and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.
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(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section , the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of any Borrower, the
Administrative Agent or the Swingline Lender, sell participations to one or more
banks or other entities (a "Participant") in all or a portion of such Lender's
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrowers, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
10.02(b) that affects such Participant. Subject to paragraph (f) of this
Section , each Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.14, 2.15 and 2.16 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section .
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(f) A Participant shall not be entitled to receive any greater
payment under Section 2.15 or 2.16 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Company's prior written consent. A Participant that would be a Foreign Lender if
it were a Lender shall not be entitled to the benefits of Section 2.16 unless
the Company is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrowers, to comply with Section
2.16(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any such pledge or assignment to a Federal Reserve
Bank, and this Section shall not apply to any such pledge or assignment of a
security interest; provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such assignee for such Lender as a party hereto.
SECTION 10.05. Survival. All covenants, agreements, representations
and warranties made by the Borrowers herein and in the Borrowing Subsidiary
Agreements and the certificates or other instruments delivered in connection
with or pursuant to this Agreement shall be considered to have been relied upon
by the other parties hereto and shall survive the execution and delivery of this
Agreement and the making of any Loans, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid and so long as the
Commitments have not expired or terminated. The provisions of Sections 2.14,
2.15, 2.16 and 10.03 and Article VIII shall survive and remain in full force and
effect regardless of the consumma-
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tion of the transactions contemplated hereby, the repayment of the Loans, the
expiration or termination of the Commitments or the termination of this
Agreement or any provision hereof.
SECTION 10.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement and
any separate letter agreements with respect to fees payable to the
Administrative Agent constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto (excluding any Borrowing
Subsidiaries), and thereafter shall be binding upon and inure to the benefit of
the parties hereto (including any Borrowing Subsidiaries) and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 10.07. Severability. Any provision of this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 10.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to
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the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender to or for the credit or the
account of any Borrower against any of and all the obligations of such Borrower
now or hereafter existing under this Agreement held by such Lender, irrespective
of whether or not such Lender shall have made any demand under this Agreement
and although such obligations may be unmatured. The rights of each Lender under
this Section are in addition to other rights and remedies (including other
rights of setoff) which such Lender may have.
SECTION 10.09. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) Each Borrower hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of the Supreme
Court of the State of New York sitting in New York County and of the United
States District Court of the Southern District of New York, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement, or for recognition or enforcement of any judgment, and each
of the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement against any Borrower or its properties in the courts of any
jurisdiction.
(c) Each Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or here-
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after have to the laying of venue of any suit, action or proceeding arising out
of or relating to this Agreement in any court referred to in paragraph (b) of
this Section . Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement (including any Borrowing
Subsidiaries) irrevocably consents to service of process in the manner provided
for notices in Section 10.01. Nothing in this Agreement will affect the right of
any party to this Agreement to serve process in any other manner permitted by
law.
SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 10.11. Headings. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 10.12. Confidentiality. Each of the Administrative Agent and
the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it
<PAGE> 123
116
being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section , to any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement, (g) with the consent of the Company or (h) to the extent
such Information (i) becomes publicly available other than as a result of a
breach of this Section or (ii) becomes available to the Administrative Agent or
any Lender on a nonconfidential basis from a source other than the Company. For
the purposes of this Section , "Information" means all information received from
the Company relating to the Company or its business, other than any such
information that is available to the Administrative Agent or any Lender on a
nonconfidential basis prior to disclosure by the Company; provided that, in the
case of information received from the Company after the date hereof, such
information is identified at the time of delivery as confidential. Any Person
required to maintain the confidentiality of Information as provided in this
Section shall be considered to have complied with its obligation to do so if
such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
SECTION 10.13. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in
<PAGE> 124
117
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated amount,
together with interest thereon at the Federal Funds Effective Rate to the date
of repayment, shall have been received by such Lender.
SECTION 10.14. Conversion of Currencies. (a) If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum owing
hereunder in one currency into another currency, each party hereto (including
any Borrowing Subsidiary) agrees, to the fullest extent that it may effectively
do so, that the rate of exchange used shall be that at which in accordance with
normal banking procedures in the relevant jurisdiction the first currency could
be purchased with such other currency on the Business Day immediately preceding
the day on which final judgment is given.
(b) The obligations of each Borrower in respect of any sum due to
any party hereto or any holder of the obligations owing hereunder (the
"Applicable Creditor") shall, notwithstanding any judgment in a currency (the
"Judgment Currency") other than the currency in which such sum is stated to be
due hereunder (the "Agreement Currency"), be discharged only to the extent that,
on the Business Day following receipt by the Applicable Creditor of any sum
adjudged to be so due in the Judgment Currency, the Applicable Creditor may in
accordance with normal banking procedures in the relevant jurisdiction purchase
the Agreement Currency with the Judgment Currency; if the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, such Borrower agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the
<PAGE> 125
118
Applicable Creditor against such loss. The obligations of the Borrowers
contained in this Section 10.14 shall survive the termination of this Agreement
and the payment of all other amounts owing hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
ACNIELSEN CORPORATION,
by
-------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
individually and as Administrative
Agent,
by
-------------------------------
Name:
Title:
THE NORTHERN TRUST COMPANY,
individually and as
Co-Agent,
by
-------------------------------
Name:
Title:
<PAGE> 126
119
ABN AMRO BANK N.V., NEW YORK BRANCH,
by
-------------------------------
Name:
Title:
by
-------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
-------------------------------
Name:
Title:
CORESTATES BANK, N.A.,
by
-------------------------------
Name:
Title:
CREDITO ITALIANO,
by
-------------------------------
Name:
Title:
<PAGE> 127
120
THE FIRST NATIONAL BANK OF BOSTON,
by
-------------------------------
Name:
Title:
MIDLAND BANK PLC, NEW YORK BRANCH,
by
-------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
by
-------------------------------
Name:
Title:
THE SANWA BANK LIMITED,
by
-------------------------------
Name:
Title:
TORONTO DOMINION (NEW YORK), INC.,
by
-------------------------------
Name:
Title:
<PAGE> 128
121
SOCIETE GENERALE,
by
-------------------------------
Name:
Title:
<PAGE> 1
Exhibit 10(a)
DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT is dated as of October 28, 1996,
among THE DUN & BRADSTREET CORPORATION, a Delaware corporation ("D&B"),
COGNIZANT CORPORATION, a Delaware corporation ("Cognizant"), and ACNIELSEN
CORPORATION, a Delaware corporation ("ACNielsen").
WHEREAS, D&B, acting through its direct and indirect
subsidiaries, currently conducts a number of businesses, including, without
limitation, (i) providing information and decision support services to the
pharmaceutical and healthcare industries, and providing sales automation
solutions and developing, installing and supporting networked systems for
pharmaceutical, healthcare and consumer packaged goods organizations (the "IMS
Business"), (ii) measuring television audiences and Internet usage and reporting
of the results thereof and related information to advertisers, advertising
agencies, syndicators, broadcast networks, cable networks, cable operators,
television stations and/or station representatives, both in the United States
and Canada (the "Nielsen Media Research Business") and elsewhere (the "Non-U.S.
Media Business"), (iii) providing research and analysis of the computer
hardware, software, communications and related technology industries (the
"Gartner Group Business"), (iv) providing client/server decision support
solutions for medium and large scale enterprises (the "Pilot Business"), (v)
developing and marketing proprietary software applications and services used
primarily in the administration of health care benefits and the support of
managed care services (the "Erisco Business"), (vi) developing other software
(the "Saytam Software Business"), (vii) providing information and analytic
support services focusing on healthcare providers (the "DBHC Business"), (viii)
providing financial application software products and services to the Japanese
markets (the "DBTA Business"), (ix) delivering market research, information and
analysis to the consumer products services industry (the "Nielsen Marketing
Business"), and (x) investing in emerging and established businesses in the
information industry (the "Cognizant Enterprises Business");
WHEREAS, the Board of Directors of D&B has determined that it
is appropriate, desirable and in the best interests of the holders of shares of
common stock, par value $1.00 per share, of D&B (the "D&B Common Stock") to
reorganize D&B to separate from D&B (i) the IMS Business, the Nielsen Media
Research Business, the Gartner Group Business, the Pilot Business, the Erisco
Business, the Saytam Software Business, the DBHC Business, the DBTA Business and
the Cognizant Enterprises Business, and to cause such businesses to be owned and
conducted, directly or indirectly, by Cognizant, and (ii) the Nielsen Marketing
Business and the Non-U.S. Media Business and to cause such businesses to be
owned and conducted, directly or indirectly, by ACNielsen;
WHEREAS, in order to effect such separations, the Board of
Directors of D&B has determined that it is appropriate, desirable and in the
best interests of the holders of D&B Common Stock to take certain steps to
reorganize D&B's Subsidiaries and businesses and then to distribute to the
holders of the D&B Common Stock all the outstanding shares of common stock
<PAGE> 2
2
of Cognizant, together with the appurtenant share purchase rights (the
"Cognizant Common Shares"), and all the outstanding shares of common stock of
ACNielsen, together with the appurtenant share purchase rights (the "ACNielsen
Common Shares");
WHEREAS, each of D&B, Cognizant and ACNielsen has determined
that it is necessary and desirable, on or prior to the Distribution Date (as
defined herein), to allocate and transfer those assets and to allocate and
assign responsibility for those liabilities in respect of the activities of the
businesses of such entities and those assets and liabilities in respect of other
businesses and activities of D&B and its current and former Subsidiaries and
other matters; and
WHEREAS, each of D&B, Cognizant and ACNielsen has determined
that it is necessary and desirable to set forth the principal corporate
transactions required to effect such Distribution and to set forth other
agreements that will govern certain other matters following the Distribution.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereby agree
as follows:
I. DEFINITIONS
I.1. General. As used in this Agreement, the following terms shall have
the following meanings:
(a) "ACNielsen" shall mean ACNielsen Corporation, a Delaware
corporation.
(b) "ACNielsen Assets" shall mean:
(i) any and all Assets that are expressly contemplated by this
Agreement, including the list of pre-Distribution
reorganization steps attached as Schedule 1.1(b)(i)(1) hereto,
or any Ancillary Agreement (or included on Schedule
1.1(b)(i)(2) or any other Schedule hereto or thereto) as
Assets which have been or are to be transferred to ACNielsen
or any other member of the ACNielsen Group;
(ii) the ownership interests in those Business Entities listed
on Schedule 1.1(b)(ii);
(iii) subject to Article VII, any rights of any member of the
ACNielsen Group under any of the Policies, including any
rights thereunder arising after the Distribution Date in
respect of any Policies that are occurrence policies;
<PAGE> 3
3
(iv) any ACNielsen Contracts, any rights or claims arising
thereunder, and any other rights or claims or contingent
rights or claims primarily relating to or arising from any
ACNielsen Asset or the ACNielsen Business;
(v) any Assets reflected on the ACNielsen Balance Sheet or the
accounting records supporting such balance sheet and any
Assets acquired by or for ACNielsen or any member of the
ACNielsen Group subsequent to the date of such balance sheet
which, had they been so acquired on or before such date and
owned as of such date, would have been reflected on such
balance sheet if prepared on a consistent basis, subject to
any dispositions of any of such Assets subsequent to the date
of such balance sheet; and
(vi) any and all Assets owned or held immediately prior to the
Distribution Date by D&B or any of its Subsidiaries (including
Cognizant or any of its Subsidiaries) primarily relating to or
used in the ACNielsen Business. The intention of this clause
(vi) is only to rectify any inadvertent omission of transfer
or conveyance of any Asset that, had the parties given
specific consideration to such Asset as of the date hereof,
would have otherwise been classified as an ACNielsen Asset. No
Asset shall be deemed to be an ACNielsen Asset solely as a
result of this clause (vi) if such Asset is within the
category or type of Asset expressly covered by the subject
matter of an Ancillary Agreement. In addition, no Asset shall
be deemed an ACNielsen Asset solely as a result of this clause
(vi) unless a claim with respect thereto is made by ACNielsen
on or prior to the first anniversary of the Distribution Date.
Notwithstanding the foregoing, the ACNielsen Assets
shall not in any event include:
(x) the Assets listed or described on Schedule 1.1(b)(x);
or
(y) any Assets primarily relating to or used in any
terminated or divested Business Entity, business or
operation formerly owned or managed by or associated
with ACNielsen or any ACNielsen Business, except for
those Assets primarily relating to or used in those
Business Entities, businesses or operations listed on
Schedule 1.1(b)(y); or
(z) any and all Assets that are expressly contemplated by
this Agreement or any Ancillary Agreement (or the
Schedules hereto or thereto) as Assets to be retained
by any member of the D&B Group or the Cognizant
Group.
<PAGE> 4
4
In the event of any inconsistency or conflict which
may arise in the application or interpretation of any
of the foregoing provisions, for the purpose of
determining what is and is not an ACNielsen Asset,
any item explicitly included on a Schedule referred
to in this Section 1.1(b) shall take priority over
any provision of the text hereof, and clause (i)
shall take priority over clause (v) of this paragraph
(b) and over clause (v) of paragraph (w) of this
Section 1.1.
(c) "ACNielsen Balance Sheet" shall mean the combined balance sheet of
the ACNielsen Group, including the notes thereto, as of June 30, 1996, set forth
as Schedule 1.1(c) hereto.
(d) "ACNielsen Business" shall mean (i) the Nielsen Marketing Business
and the Non-U.S. Media Business, (ii) the businesses of the members of the
ACNielsen Group, (iii) any other business conducted primarily through the use of
the ACNielsen Assets, and (iv) the businesses of Business Entities acquired or
established by or for ACNielsen or any of its Subsidiaries after the date of
this Agreement.
(e) "ACNielsen Common Shares" shall have the meaning as defined in the
recitals hereto.
(f) "ACNielsen Contracts" shall mean the following contracts and
agreements to which D&B or any of its Affiliates is a party or by which it or
any of its Affiliates or any of their respective Assets is bound, whether or not
in writing, except for any such contract or agreement (i) that is not expressly
contemplated to be transferred or assigned by any member of the D&B Group or
(ii) that is expressly contemplated to be transferred or assigned to any member
of the Cognizant Group, in each case, pursuant to any provision of this
Agreement or any Ancillary Agreement:
(i) any contracts or agreements listed or described on
Schedule 1.1(f)(i);
(ii) any contract or agreement entered into in the name of, or
expressly on behalf of, any division, business unit or member
of the ACNielsen Group;
(iii) any contract or agreement that relates primarily to the
ACNielsen Business;
(iv) federal, state and local government and other contracts
and agreements that are listed or described on Schedule
1.1(f)(iv) and any other government contracts or agreements
entered into after the date
<PAGE> 5
5
hereof and prior to the Distribution Date that relate
primarily to the ACNielsen Business;
(v) any contract or agreement representing capital or
operating equipment lease obligations reflected on the
ACNielsen Balance Sheet, including obligations as lessee under
those contracts or agreements listed on Schedule 1.1(f)(v);
(vi) any contract or agreement that is otherwise expressly
contemplated pursuant to this Agreement or any of the
Ancillary Agreements to be assigned to any member of the
ACNielsen Group; and
(vii) any guarantee, indemnity, representation or warranty of
the ACNielsen Group.
(g) "ACNielsen Group" shall mean ACNielsen and each Business Entity
which is contemplated to remain or become a Subsidiary of ACNielsen hereunder,
which shall include those identified as such on Schedule 1.1(g) hereto, which
Schedule shall also indicate the amount of ACNielsen's direct or indirect
ownership interest therein.
(h) "ACNielsen Indemnitees" shall mean each member of the ACNielsen
Group, each of their respective directors, officers, employees and agents and
each of the heirs, executors, successors and assigns of any of the foregoing.
(i) "ACNielsen Liabilities" shall mean:
(i) any and all Liabilities that are expressly contemplated by
this Agreement or any Ancillary Agreement (or the Schedules
hereto or thereto, including Schedule 1.1(i)(i) hereto) as
Liabilities to be assumed by any member of the ACNielsen
Group, and all agreements, obligations and Liabilities of any
member of the ACNielsen Group under this Agreement or any of
the Ancillary Agreements;
(ii) all Liabilities (other than Taxes and any
employee-related Liabilities), primarily relating to, arising
out of or resulting from:
(A) the operation of the ACNielsen Business, as
conducted at any time prior to, on or after the Distribution
Date (including any Liability relating to, arising out of or
resulting from any act or failure to act by any director,
officer, employee, agent or representative (whether or not
such act or failure to act is or was within such person's
authority));
(B) the operation of any business conducted by any
member of the ACNielsen Group at any time after the
Distribution Date (including
<PAGE> 6
6
any Liability relating to, arising out of or resulting from
any act or failure to act by any director, officer, employee,
agent or representative (whether or not such act or failure to
act is or was within such person's authority)); or
(C) any ACNielsen Assets;
whether arising before, on or after the Distribution Date;
(iii) all Liabilities reflected as liabilities or obligations
on the ACNielsen Balance Sheet or the accounting records
supporting such balance sheet, and all Liabilities arising or
assumed after the date of such balance sheet which, had they
arisen or been assumed on or before such date and been
retained as of such date, would have been reflected on such
balance sheet if prepared on a consistent basis, subject to
any discharge of such Liabilities subsequent to the date of
the ACNielsen Balance Sheet.
Notwithstanding the foregoing, the ACNielsen Liabilities shall not
include:
(x) any Liabilities that are expressly contemplated by this
Agreement or any Ancillary Agreement (or the Schedules hereto
or thereto) as Liabilities to be retained or assumed by any
member of the D&B Group or by any member of the Cognizant
Group, including any Liabilities set forth on Schedule
1.1(i)(x);
(y) any Liabilities primarily relating to, arising out of or
resulting from any terminated or divested Business Entity,
business or operation formerly owned or managed by or
associated with ACNielsen or any ACNielsen Business (except
for Liabilities primarily relating to, arising out of or
resulting from those Business Entities, businesses or
operations listed on Schedule 1.1(i)(y)); any Liabilities
which are excluded by this clause (y) from the ACN Liabilities
shall be deemed to be D&B Liabilities; or
(z) all agreements and obligations of any member of the D&B Group
or the Cognizant Group under this Agreement or any of the
Ancillary Agreements.
(j) "ACNielsen Policies" shall mean all Policies, current or past,
which are owned or maintained by or on behalf of D&B or any Subsidiary of D&B,
which relate to the ACNielsen Business but do not relate to the D&B Business or
the Cognizant Business, and which Policies are either maintained by ACNielsen or
a member of the ACNielsen Group or assignable to ACNielsen or a member of the
ACNielsen Group.
<PAGE> 7
7
(k) "ACNielsen Shared Policies" shall mean all Policies, current or
past, which are owned or maintained by or on behalf of D&B or any Subsidiary of
D&B which relate to the ACNielsen Business, other than ACNielsen Policies.
(l) "Action" shall mean any action, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any governmental or other
regulatory or administrative agency, body or commission or any arbitration
tribunal.
(m) "Affiliate" shall mean, when used with respect to a specified
person, another person that controls, is controlled by, or is under common
control with the person specified. As used herein, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of voting securities or other interests, by contract or otherwise.
(n) "Agent" shall have the meaning as defined in Section 2.1(b).
(o) "Agreement Disputes" shall have the meaning as defined in Section
6.1.
(p) "Ancillary Agreements" shall mean all of the written agreements,
instruments, assignments or other arrangements (other than this Agreement)
entered into in connection with the transactions contemplated hereby, including,
without limitation, the Conveyancing and Assumption Instruments, the Data
Services Agreements, the Employee Benefits Agreement, the Indemnity and Joint
Defense Agreement, the Intellectual Property Agreement, the Shared Transaction
Services Agreements, the TAM Master Agreement, the Tax Allocation Agreement and
the Transition Services Agreement.
(q) "Assets" shall mean assets, properties and rights (including
goodwill), wherever located (including in the possession of vendors or other
third parties or elsewhere), whether real, personal or mixed, tangible,
intangible or contingent, in each case whether or not recorded or reflected or
required to be recorded or reflected on the books and records or financial
statements of any person, including, without limitation, the following:
(i) all accounting and other books, records and files whether
in paper, microfilm, microfiche, computer tape or disc,
magnetic tape or any other form;
(ii) all apparatus, computers and other electronic data
processing equipment, fixtures, machinery, equipment,
furniture, office equipment, automobiles, trucks, aircraft and
other transportation equipment, special and general tools,
test devices, prototypes and models and other tangible
personal property;
(iii) all inventories of materials, parts, raw materials,
supplies, work-in-process and finished goods and products;
<PAGE> 8
8
(iv) all interests in real property of whatever nature,
including easements, whether as owner, mortgagee or holder of
a Security Interest in real property, lessor, sublessor,
lessee, sublessee or otherwise;
(v) all interests in any capital stock or other equity
interests of any Subsidiary or any other person, all bonds,
notes, debentures or other securities issued by any Subsidiary
or any other person, all loans, advances or other extensions
of credit or capital contributions to any Subsidiary or any
other person and all other investments in securities of any
person;
(vi) all license agreements, leases of personal property, open
purchase orders for raw materials, supplies, parts or
services, unfilled orders for the manufacture and sale of
products and other contracts, agreements or commitments;
(vii) all deposits, letters of credit and performance and
surety bonds;
(viii) all written technical information, data,
specifications, research and development information,
engineering drawings, operating and maintenance manuals, and
materials and analyses prepared by consultants and other third
parties;
(ix) all domestic and foreign patents, copyrights, trade
names, trademarks, service marks and registrations and
applications for any of the foregoing, mask works, trade
secrets, inventions, data bases, other proprietary information
and licenses from third persons granting the right to use any
of the foregoing;
(x) all computer applications, programs and other software,
including operating software, network software, firmware,
middleware, design software, design tools, systems
documentation and instructions;
(xi) all cost information, sales and pricing data, customer
prospect lists, supplier records, customer and supplier lists,
customer and vendor data, correspondence and lists, product
literature, artwork, design, development and manufacturing
files, vendor and customer drawings, formulations and
specifications, quality records and reports and other books,
records, studies, surveys, reports, plans and documents;
(xii) all prepaid expenses, trade accounts and other accounts
and notes receivables;
<PAGE> 9
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(xiii) all rights under contracts or agreements, all claims or
rights against any person arising from the ownership of any
asset, all rights in connection with any bids or offers and
all claims, chooses in action or similar rights, whether
accrued or contingent;
(xiv) all rights under insurance policies and all rights in
the nature of insurance, indemnification or contribution;
(xv) all licenses (including radio and similar licenses),
permits, approvals and authorizations which have been issued
by any Governmental Authority;
(xvi) cash or cash equivalents, bank accounts, lock boxes and
other deposit arrangements; and
(xvii) interest rate, currency, commodity or other swap,
collar, cap or other hedging or similar agreements or
arrangements.
(r) "Assignee" shall have the meaning as defined in Section 2.1(f).
(s) "Business Entity" shall mean any corporation, partnership, limited
liability company or other entity which may legally hold title to Assets.
(t) "Claims Administration" shall mean the processing of claims made
under the Shared Policies, including, without limitation, the reporting of
claims to the insurance carriers, management and defense of claims and providing
for appropriate releases upon settlement of claims.
(u) "Code" shall mean the Internal Revenue Code of 1986, as amended,
and the Treasury regulations promulgated thereunder, including any successor
legislation.
(v) "Cognizant" shall mean Cognizant Corporation, a Delaware
corporation.
(w) "Cognizant Assets" shall mean:
(i) any and all Assets that are expressly contemplated by this
Agreement, including the list of pre-Distribution
reorganization steps attached as Schedule 1.1(b)(i)(1) hereto,
or any Ancillary Agreement (or included on Schedule 1.1(w)(i)
or any other Schedule hereto or thereto) as Assets which have
been or are to be transferred to Cognizant or any other member
of the Cognizant Group;
(ii) the ownership interests in those Business Entities listed
on Schedule 1.1(w)(ii);
<PAGE> 10
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(iii) subject to Article VII, any rights of any member of the
Cognizant Group under any of the Policies, including any
rights thereunder arising after the Distribution Date in
respect of any Policies that are occurrence policies;
(iv) any Cognizant Contracts, any rights or claims arising
thereunder, and any other rights or claims or contingent
rights or claims primarily relating to or arising from any
Cognizant Asset or the Cognizant Business;
(v) any Assets reflected on the Cognizant Balance Sheet or the
accounting records supporting such balance sheet and any
Assets acquired by or for Cognizant or any member of the
Cognizant Group subsequent to the date of such balance sheet
which, had they been so acquired on or before such date and
owned as of such date, would have been reflected on such
balance sheet if prepared on a consistent basis, subject to
any dispositions of any of such Assets subsequent to the date
of such balance sheet; and
(vi) any and all Assets owned or held immediately prior to the
Distribution Date by D&B or any of its Subsidiaries (including
ACNielsen or any of its Subsidiaries) primarily relating to or
used in the Cognizant Business. The intention of this clause
(vi) is only to rectify any inadvertent omission of transfer
or conveyance of any Asset that, had the parties given
specific consideration to such Asset as of the date hereof,
would have otherwise been classified as a Cognizant Asset. No
Asset shall be deemed to be a Cognizant Asset solely as a
result of this clause (vi) if such Asset is within the
category or type of Asset expressly covered by the subject
matter of an Ancillary Agreement. In addition, no Asset shall
be deemed a Cognizant Asset solely as a result of this clause
(vi) unless a claim with respect thereto is made by Cognizant
on or prior to the first anniversary of the Distribution Date.
Notwithstanding the foregoing, the Cognizant Assets
shall not in any event include:
(x) the Assets listed or described on Schedule 1.1(w)(x);
or
(y) any Assets primarily relating to or used in any
terminated or divested Business Entity, business or
operation formerly owned or managed by or associated
with Cognizant or any Cognizant Business, except for
those Assets primarily relating to or used in those
Business Entities, businesses or operations listed on
Schedule 1.1(w)(y); or
<PAGE> 11
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(z) any and all Assets that are expressly
contemplated by this Agreement or any
Ancillary Agreement (or the Schedules hereto
or thereto) as Assets to be retained by any
member of the D&B Group or the ACNielsen
Group.
In the event of any inconsistency or conflict which
may arise in the application or interpretation of any
of the foregoing provisions, for the purpose of
determining what is and is not a Cognizant Asset, any
item explicitly included on a Schedule referred to in
this Section 1.1(w) shall take priority over any
provision of the text hereof, and clause (i) shall
take priority over clause (v) hereof of this
paragraph (w) and over clause (v) of paragraph (b) of
this section 1.1.
(x) "Cognizant Balance Sheet" shall mean the combined
balance sheet of the Cognizant Group, including the
notes thereto, as of June 30, 1996, set forth as
Schedule 1.1(x) hereto.
(y) "Cognizant Business" shall mean (i) the IMS Business,
the Nielsen Media Research Business, the Gartner
Business, the Pilot Business, the Erisco Business,
the Saytam Software Business, the DBHC Business, the
DBTA Business and the Cognizant Enterprises Business,
(ii) the businesses of the members of the Cognizant
Group, (iii) any other business conducted primarily
through the use of the Cognizant Assets, and (iv) the
businesses of Business Entities acquired or
established by or for Cognizant or any of its
Subsidiaries after the date of this Agreement.
(z) "Cognizant Common Shares" shall have the meaning as
defined in the recitals hereto.
(aa) "Cognizant Contracts" shall mean the following contracts
and agreements to which D&B or any of its Affiliates is a party or by which it
or any of its Affiliates or any of their respective Assets is bound, whether or
not in writing, except for any such contract or agreement (i) that is not
expressly contemplated to be transferred or assigned by any member of the D&B
Group or (ii) that is expressly contemplated to be transferred or assigned to
any member of the ACNielsen Group, in each case, pursuant to any provision of
this Agreement or any Ancillary Agreement:
(i) any contracts or agreements listed or described
on Schedule 1.1(aa)(i);
(ii) any contract or agreement entered into in the
name of, or expressly on behalf of, any division,
business unit or member of the Cognizant Group;
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(iii) any contract or agreement that relates primarily to the
Cognizant Business;
(iv) federal, state and local government and other contracts
and agreements that are listed or described on Schedule
1.1(aa)(iv) and any other government contracts or agreements
entered into after the date hereof and prior to the
Distribution Date that relate primarily to the Cognizant
Business;
(v) any contract or agreement representing capital or
operating equipment lease obligations reflected on the
Cognizant Balance Sheet, including obligations as lessee under
those contracts or agreements listed on Schedule 1.1(aa)(v);
(vi) any contract or agreement that is otherwise expressly
contemplated pursuant to this Agreement or any of the
Ancillary Agreements to be assigned to Cognizant or any member
of the Cognizant Group; and
(vii) any guarantee, indemnity, representation or warranty of
any member of the Cognizant Group.
(bb) "Cognizant Enterprises Business" shall have the meaning as defined
in the recitals hereto.
(cc) "Cognizant Group" shall mean Cognizant and each Business Entity
which is contemplated to remain or become a Subsidiary of Cognizant hereunder,
which shall include those identified as such on Schedule 1.1(ac) hereto, which
Schedule shall also indicate the amount of Cognizant's direct or indirect
ownership interest therein.
(dd) "Cognizant Indemnitees" shall mean Cognizant, each member of the
Cognizant Group, each of their respective directors, officers, employees and
agents and each of the heirs, executors, successors and assigns of any of the
foregoing.
(ee) "Cognizant Liabilities" shall mean:
(i) any and all Liabilities that are expressly contemplated by
this Agreement or any Ancillary Agreement (or the Schedules
hereto or thereto, including Schedule 1.1(ae)(i) hereto) as
Liabilities to be assumed by Cognizant or any member of the
Cognizant Group, and all agreements, obligations and
Liabilities of any member of the Cognizant Group under this
Agreement or any of the Ancillary Agreements;
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(ii) all Liabilities (other than Taxes and any
employee-related Liabilities), primarily relating to, arising
out of or resulting from:
(A) the operation of the Cognizant Business, as
conducted at any time prior to, on or after the Distribution
Date (including any Liability relating to, arising out of or
resulting from any act or failure to act by any director,
officer, employee, agent or representative (whether or not
such act or failure to act is or was within such person's
authority));
(B) the operation of any business conducted by
Cognizant or any Subsidiary of Cognizant at any time after the
Distribution Date (including any Liability relating to,
arising out of or resulting from any act or failure to act by
any director, officer, employee, agent or representative
(whether or not such act or failure to act is or was within
such person's authority)); or
(C) any Cognizant Assets;
whether arising before, on or after the Distribution Date;
(iii) all Liabilities reflected as liabilities or obligations
on the Cognizant Balance Sheet or the accounting records
supporting such balance sheet, and all Liabilities arising or
assumed after the date of such balance sheet which, had they
arisen or been assumed on or before such date and been
retained as of such date, would have been reflected on such
balance sheet, subject to any discharge of such Liabilities
subsequent to the date of the Cognizant Balance Sheet.
Notwithstanding the foregoing, the Cognizant Liabilities shall
not include:
(x) any Liabilities that are expressly contemplated by
this Agreement or any Ancillary Agreement (or the
Schedules hereto or thereto) as Liabilities to be
retained or assumed by D&B or any member of the D&B
Group or by ACNielsen or any member of the ACNielsen
Group, including any Liabilities set forth in
Schedule 1.1(ae)(x);
(y) any Liabilities primarily relating to, arising out of
or resulting from any terminated or divested Business
Entity, business or operation formerly owned or
managed by or associated with Cognizant or any
Cognizant Business (except for Liabilities primarily
relating to, arising out of or resulting from those
Business Entities, businesses or operations listed in
Schedule 1.1(ae)(y)); any Liabilities which are
excluded by this clause (y) from the definition of
Cognizant Liabilities shall be deemed to be D&B
Liabilities; or
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(z) all agreements and obligations of any member of the
D&B Group or the ACNielsen Group under this Agreement
or any of the Ancillary Agreements.
(ff) "Cognizant Policies" shall mean all Policies, current or
past, which are owned or maintained by or on behalf of D&B or any Subsidiary of
D&B, which relate to the Cognizant Business but do not relate to the D&B
Business or the ACNielsen Business, and which Policies are either maintained by
Cognizant or a member of the Cognizant Group or assignable to Cognizant or a
member of the Group.
(gg) "Cognizant Shared Policies" shall mean all Policies,
current or past, which are owned or maintained by or on behalf of D&B or any
Subsidiary of D&B which relate to the Cognizant Business, other than Cognizant
Policies.
(hh) "Commission" shall have the meaning as defined in Section
4.2(b).
(ii) "Conveyancing and Assumption Instruments" shall mean,
collectively, the various agreements, instruments and other documents heretofore
entered into and to be entered into to effect the transfer of Assets and the
assumption of Liabilities in the manner contemplated by this Agreement, or
otherwise arising out of or relating to the transactions contemplated by this
Agreement, which shall be in substantially the forms attached hereto as Schedule
1.1(ai) for transfers to be effected pursuant to New York law or the laws of one
of the other states of the United States, or, if not appropriate for a given
transfer, and for transfers to be effected pursuant to non-U.S. laws, shall be
in such other form or forms as the parties agree and as may be required by the
laws of such non-U.S. jurisdictions.
(jj) "Data Services Agreements" shall mean the Data Services
Agreements between and among D&B, Cognizant and ACNielsen.
(kk) "D&B" shall mean The Dun & Bradstreet Corporation, a
Delaware corporation.
(ll) "D&B Assets" shall mean, collectively, all the rights and
Assets owned or held by D&B or any Subsidiary of D&B, except the Cognizant
Assets and ACNielsen Assets.
(mm) "D&B Business" shall mean each and every business
conducted at any time by D&B or any Subsidiary of D&B except a Cognizant
Business or an ACNielsen Business.
(nn) "D&B Common Stock" shall have the meaning as defined in
the recitals hereto.
<PAGE> 15
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(oo) "D&B Contracts" shall mean all the contracts and
agreements to which D&B or any of its Affiliates is a party or by which it or
any of its Affiliates is bound, except the Cognizant Contracts and the ACNielsen
Contracts.
(pp) "D&B Group" shall mean D&B and each person (other than
any member of the Cognizant Group or the ACNielsen Group) that is a Subsidiary
of D&B.
(qq) "D&B Indemnitees" shall mean D&B, each member of the D&B
Group, each of their respective directors, officers, employees and agents and
each of the heirs, executors, successors and assigns of any of the foregoing,
except the Cognizant Indemnitees and ACNielsen Indemnitees.
(rr) "D&B Liabilities" shall mean collectively, all
obligations and Liabilities of D&B or any Subsidiary of D&B, except the
Cognizant Liabilities and ACNielsen Liabilities.
(ss) "D&B Policies" shall mean all Policies, current or past,
which are owned or maintained by or on behalf of D&B or any Subsidiary of D&B
which do not relate to the Cognizant Business or the ACNielsen Business.
(tt) "DBHC Business" shall have the meaning as defined in the
recitals hereto.
(uu) "DBTA Business" shall have the meaning as defined in the
recitals hereto.
(vv) "Distribution" shall mean the distribution on the
Distribution Date to holders of record of shares of D&B Common Stock as of the
Distribution Record Date of (i) the Cognizant Common Shares owned by D&B on the
basis of one Cognizant Common Share for each outstanding share of D&B Common
Stock and (ii) the ACNielsen Common Shares owned by D&B on the basis of one
ACNielsen Common Share for each three outstanding shares of D&B Common Stock.
(ww) "Distribution Date" shall mean November 1, 1996.
(xx) "Distribution Record Date" shall mean such date as may be
determined by D&B's Board of Directors as the record date for the Distribution.
(yy) "Effective Time" shall mean immediately after the
midnight, New York time, ending the 24-hour period comprising October 31, 1996.
(zz) "Employee Benefits Agreement" shall mean the Employee
Benefits Agreement among D&B, Cognizant and ACNielsen.
(aaa) "Erisco Business" shall have the meaning as defined in
the recitals hereto.
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(bbb) "Gartner Group Business" shall have the meaning as
defined in the recitals hereto.
(ccc) "Governmental Authority" shall mean any federal, state,
local, foreign or international court, government, department, commission,
board, bureau, agency, official or other regulatory, administrative or
governmental authority.
(ddd) "IMS Business" shall have the meaning as defined in the
recitals hereto.
(eee) "Indemnifiable Losses" shall mean any and all losses,
liabilities, claims, damages, demands, costs or expenses (including, without
limitation, reasonable attorneys' fees and any and all out-of-pocket expenses)
reasonably incurred in investigating, preparing for or defending against any
Actions or potential Actions or in settling any Action or potential Action or in
satisfying any judgment, fine or penalty rendered in or resulting from any
Action.
(fff) "Indemnifying Party" shall have the meaning as defined
in Section 3.4.
(ggg) "Indemnitee" shall have the meaning as defined in
Section 3.4.
(hhh) "Indemnity and Joint Defense Agreement" shall mean the
Indemnity and Joint Defense Agreement by and among D&B, Cognizant and ACNielsen.
(iii) "Information Statement" shall mean the Information
Statement sent to the holders of shares of D&B Common Stock in connection with
the Distribution, including any amendment or supplement thereto.
(jjj) "Insurance Administration" shall mean, with respect to
each Shared Policy, the accounting for premiums, retrospectively-rated premiums,
defense costs, indemnity payments, deductibles and retentions, as appropriate,
under the terms and conditions of each of the Shared Policies; and the reporting
to excess insurance carriers of any losses or claims which may cause the
per-occurrence, per claim or aggregate limits of any Shared Policy to be
exceeded, and the distribution of Insurance Proceeds as contemplated by this
Agreement.
(kkk) "Insurance Proceeds" shall mean those monies (i)
received by an insured from an insurance carrier or (ii) paid by an insurance
carrier on behalf of an insured, in either case net of any applicable premium
adjustment, retrospectively-rated premium, deductible, retention, or cost of
reserve paid or held by or for the benefit of such insured.
(lll) "Insured Claims" shall mean those Liabilities that,
individually or in the aggregate, are covered within the terms and conditions of
any of the Shared Policies, whether or not subject to deductibles, co-insurance,
uncollectibility or retrospectively-rated premium adjustments.
<PAGE> 17
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(mmm) "Intellectual Property Agreement" shall mean the
Intellectual Property Agreement among D&B, Cognizant and ACNielsen.
(nnn) "Liabilities" shall mean any and all losses, claims,
charges, debts, demands, actions, causes of action, suits, damages, obligations,
payments, costs and expenses, sums of money, accounts, reckonings, bonds,
specialties, indemnities and similar obligations, exonerations, covenants,
contracts, controversies, agreements, promises, doings, omissions, variances,
guarantees, make whole agreements and similar obligations, and other
liabilities, including all contractual obligations, whether absolute or
contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising, and including those arising under
any law, rule, regulation, Action, threatened or contemplated Action (including
the costs and expenses of demands, assessments, judgments, settlements and
compromises relating thereto and attorneys' fees and any and all costs and
expenses, whatsoever reasonably incurred in investigating, preparing or
defending against any such Actions or threatened or contemplated Actions), order
or consent decree of any governmental or other regulatory or administrative
agency, body or commission or any award of any arbitrator or mediator of any
kind, and those arising under any contract, commitment or undertaking, including
those arising under this Agreement or any Ancillary Agreement, in each case,
whether or not recorded or reflected or required to be recorded or reflected on
the books and records or financial statements of any person.
(ooo) "Nielsen Marketing Business" shall have the meaning as
defined in the recitals hereto.
(ppp) "Nielsen Media Research Business" shall have the meaning
as defined in the recitals hereto.
(qqq) "Non-U.S. Media Business" shall have the meaning as
defined in the recitals hereto.
(rrr) "person" shall mean any natural person, corporation,
business trust, joint venture, association, company, partnership or government,
or any agency or political subdivision thereof.
(sss) "Pilot Business" shall have the meaning as defined in
the recitals hereto.
(ttt) "Policies" shall mean insurance policies and insurance
contracts of any kind (other than life and benefits policies or contracts),
including, without limitation, primary, excess and umbrella policies,
comprehensive general liability policies, director and officer liability,
fiduciary liability, automobile, aircraft, property and casualty, workers'
compensation and employee dishonesty insurance policies, bonds and
self-insurance and captive insurance company arrangements, together with the
rights, benefits and privileges thereunder.
(uuu) "Provider" shall have the meaning as defined in Section
5.1.
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(vvv) "Recipient" shall have the meaning as defined in Section
5.1.
(www) "Records" shall have the meaning as defined in Section
4.1.
(xxx) "Rules" shall have the meaning as defined in Section
6.2.
(yyy) "Security Interest" shall mean any mortgage, security
interest, pledge, lien, charge, claim, option, right to acquire, voting or other
restriction, right-of-way, covenant, condition, easement, encroachment,
restriction on transfer, or other encumbrance of any nature whatsoever.
(zzz) "Shared Policies" shall mean all Policies, current or
past, which are owned or maintained by or on behalf of D&B or any of its
Subsidiaries which relate to one or more of the D&B Business, the Cognizant
Business or the ACNielsen Business.
(aaaa) "Shared Transaction Services Agreements" shall mean the
Shared Transaction Services Agreements among D&B, Cognizant and ACNielsen or
Subsidiaries thereof.
(bbbb) "Subsidiary" shall mean any corporation, partnership or
other entity of which another entity (i) owns, directly or indirectly, ownership
interests sufficient to elect a majority of the Board of Directors (or persons
performing similar functions) (irrespective of whether at the time any other
class or classes of ownership interests of such corporation, partnership or
other entity shall or might have such voting power upon the occurrence of any
contingency) or (ii) is a general partner or an entity performing similar
functions (e.g., a trustee).
(cccc) "TAM Master Agreement" shall mean the master agreement
between Cognizant and ACNielsen, including any agreements ancillary thereto,
relating to the conduct of the television audience measurement business after
the Distribution.
(dddd) "Tax" shall have the meaning set forth in the Tax
Allocation Agreement.
(eeee) "Tax Allocation Agreement" shall mean the Tax
Allocation Agreement among D&B, Cognizant and ACNielsen.
(ffff) "Third Party Claim" shall have the meaning as defined
in Section 3.5.
(gggg) "Transition Services Agreement" shall mean the
Transition Services Agreement among D&B, Cognizant and ACNielsen.
<PAGE> 19
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I.2. References; Interpretation. References in this Agreement to any
gender include references to all genders, and references to the singular include
references to the plural and vice versa. The words "include", "includes" and
"including" when used in this Agreement shall be deemed to be followed by the
phrase "without limitation". Unless the context otherwise requires, references
in this Agreement to Articles, Sections, Exhibits and Schedules shall be deemed
references to Articles and Sections of, and Exhibits and Schedules to, such
Agreement. Unless the context otherwise requires, the words "hereof", "hereby"
and "herein" and words of similar meaning when used in this Agreement refer to
this Agreement in its entirety and not to any particular Article, Section or
provision of this Agreement.
II. DISTRIBUTION AND OTHER TRANSACTIONS; CERTAIN COVENANTS
II.1. The Distribution and Other Transactions.
(a) Certain Transactions. On or prior to the Distribution Date:
(i) D&B shall, on behalf of itself and its Subsidiaries,
transfer or cause to be transferred to Cognizant or another member of the
Cognizant Group effective prior to or as of the Effective Time all of D&B's and
its Subsidiaries' right, title and interest in the Cognizant Assets. D&B shall,
on behalf of itself and its Subsidiaries, transfer or cause to be transferred to
ACNielsen or another member of the ACNielsen Group effective prior to or as of
the Effective Time all of D&B's and its Subsidiaries' right, title and interest
in the ACNielsen Assets.
(ii) Cognizant shall, on behalf of itself and its
Subsidiaries, transfer or cause to be transferred to D&B or another member of
the D&B Group effective prior to or as of the Effective Time all of Cognizant's
and its Subsidiaries' right, title and interest in the D&B Assets. Cognizant
shall, on behalf of itself and its Subsidiaries, transfer or cause to be
transferred to ACNielsen or another member of the ACNielsen Group effective
prior to or as of the Effective Time all of Cognizant's and its Subsidiaries'
right, title and interest in the ACNielsen Assets.
(iii) ACNielsen shall, on behalf of itself and its
Subsidiaries, transfer or cause to be transferred to Cognizant or another member
of the Cognizant Group effective prior to or as of the Effective Time all of
ACNielsen's and its Subsidiaries' right, title and interest in the Cognizant
Assets. ACNielsen shall, on behalf of itself and its Subsidiaries, transfer or
cause to be transferred to D&B or another member of the D&B Group effective
prior to or as of the Effective Time all of ACNielsen's and its Subsidiaries'
right, title and interest in the D&B Assets.
(iv) To the extent not indicated by Schedule 1.1(b)(i)(1) or
otherwise agreed by the parties hereto, D&B, Cognizant or ACNielsen, as
applicable, shall be
<PAGE> 20
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entitled to designate the Business Entity within such party's respective Group
to which any Assets are to be transferred pursuant to this Section 2.1(a).
(b) Stock Dividends to D&B. On or prior to the Distribution Date:
(i) Cognizant shall issue to D&B as a stock dividend such
number of Cognizant Common Shares as will be required to effect the
Distribution, as certified by D&B's stock transfer agent (the "Agent").
In connection therewith D&B shall deliver to Cognizant for cancellation
the share certificate held by it representing Cognizant Common Shares
and shall receive a new certificate representing the total number of
Cognizant Common Shares to be owned by D&B after giving effect to such
stock dividend.
(ii) ACNielsen shall issue to D&B as a stock dividend such
number of ACNielsen Common Shares as will be required to effect the
Distribution, as certified by the Agent. In connection therewith D&B
shall deliver to ACNielsen for cancellation the share certificate held
by it representing ACNielsen Common Shares and shall receive a new
certificate representing the total number of ACNielsen Common Shares to
be owned by D&B after giving effect to such stock dividend.
(c) Charters; By-laws; Rights Plans. On or prior to the Distribution
Date:
(i) All necessary actions shall have been taken to provide for
the adoption of the form of Certificate of Incorporation and By-laws
and the execution and delivery of the form of Rights Agreement filed by
Cognizant with the Commission as exhibits to Cognizant's Registration
Statement on Form 10.
(ii) All necessary actions shall have been taken to provide
for the adoption of the form of Certificate of Incorporation, By-laws
and the execution and delivery of the form of Rights Agreement filed by
ACNielsen with the Commission as exhibits to ACNielsen's Registration
Statement on Form 10.
(d) Directors. On or prior to the Distribution Date, D&B, as the sole
stockholder of Cognizant and ACNielsen, shall have taken all necessary action on
or prior to the Distribution Date to cause the Board of Directors of Cognizant
and the Board of Directors of ACNielsen to consist of the individuals identified
in the Information Statement as directors of Cognizant and ACNielsen,
respectively.
(e) Certain Licenses and Permits. Without limiting the generality of
the obligations set forth in Section 2.1(a), on or prior to the Distribution
Date or as soon as reasonably practicable thereafter:
(i) all transferable licenses, permits and authorizations
issued by any Governmental Authority which relate primarily to the
Cognizant Business or the
<PAGE> 21
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ACNielsen Business but which are held in the name of any member of the
D&B Group, or in the name of any employee, officer, director,
stockholder or agent of any such member, or otherwise, on behalf of a
member of the Cognizant Group or the ACNielsen Group, as applicable,
shall be duly and validly transferred or caused to be transferred by
D&B to the appropriate member of the Cognizant Group or the ACNielsen
Group, as applicable;
(ii) all transferable licenses, permits and authorizations
issued by Governmental Authorities which relate primarily to the D&B
Business or the ACNielsen Business but which are held in the name of
any member of the Cognizant Group, or in the name of any employee,
officer, director, stockholder, or agent of any such member, or
otherwise, on behalf of a member of the D&B Group or the ACNielsen
Group, as applicable, shall be duly and validly transferred or caused
to be transferred by Cognizant to the appropriate member of the D&B
Group or the ACNielsen Group, as applicable; and
(iii) all transferable licenses, permits and authorizations
issued by Governmental Authorities which relate primarily to the
Cognizant Business or the D&B Business but which are held in the name
any member of the ACNielsen Group, or any employee, officer, director,
stockholder, or agent of any such member, or otherwise, on behalf of a
member of the Cognizant Group or the D&B Group, as applicable, shall be
duly and validly transferred or caused to be transferred by ACNielsen
to the appropriate member of the Cognizant Group or the D&B Group, as
applicable.
(f) Transfer of Agreements. Without limiting the generality of the
obligations set forth in Section 2.1(a):
(i) D&B hereby agrees that on or prior to the Distribution
Date or as soon as reasonably practicable thereafter, subject to the
limitations set forth in this Section 2.1(f), it will, and it will
cause each member of the D&B Group to, assign, transfer and convey (A)
to the appropriate member of the Cognizant Group all of D&B's or such
member of the D&B Group's respective right, title and interest in and
to any and all Cognizant Contracts, and (B) to the appropriate member
of the ACNielsen Group all of D&B's or such member of the D&B Group's
respective right, title and interest in and to any and all ACNielsen
Contracts.
(ii) Cognizant hereby agrees that on or prior to the
Distribution Date or as soon as reasonably practicable thereafter,
subject to the limitations set forth in this Section 2.1(f), it will,
and it will cause each member of the Cognizant Group to, assign,
transfer and convey (A) to the appropriate member of the D&B Group all
of Cognizant's or such member of the Cognizant Group's respective
right, title and interest in and to any and all D&B Contracts, and (B)
to the appropriate member of the ACNielsen Group all of Cognizant's or
such member of the Cognizant Group's respective right, title and
interest in and to any and all ACNielsen Contracts.
<PAGE> 22
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(iii) ACNielsen hereby agrees that on or prior to the
Distribution Date or as soon as reasonably practicable thereafter,
subject to the limitations set forth in this Section 2.1(f), it will,
and it will cause each member of the ACNielsen Group to, assign,
transfer and convey (A) to the appropriate member of the D&B Group all
of ACNielsen's or such member of the ACNielsen Group's respective
right, title and interest in and to any and all D&B Contracts, and (B)
to the appropriate member of the Cognizant Group all of ACNielsen's or
such member of the ACNielsen Group's respective right, title and
interest in and to any and all Cognizant Contracts.
(iv) Subject to the provisions of this Section 2.1(f), any
agreement to which any of the parties hereto or any of their
Subsidiaries is a party that inures to the benefit of more than one of
the D&B Business, Cognizant Business and ACNielsen Business shall be
assigned in part so that each party shall be entitled to the rights and
benefits inuring to its business under such agreement.
(v) The assignee of any agreement assigned, in whole or in
part, hereunder (an "Assignee") shall assume and agree to pay, perform,
and fully discharge all obligations of the assignor under such
agreement or, in the case of a partial assignment under paragraph
(f)(iv), such Assignee's related portion of such obligations as
determined in accordance with the terms of the relevant agreement,
where determinable on the face thereof, and otherwise as determined in
accordance with the practice of the parties prior to the Distribution.
(vi) Notwithstanding anything in this Agreement to the
contrary, this Agreement shall not constitute an agreement to assign
any agreement, in whole or in part, or any rights thereunder if the
agreement to assign or attempt to assign, without the consent of a
third party, would constitute a breach thereof or in any way adversely
affect the rights of the assignor or Assignee thereof. Until such
consent is obtained, or if an attempted assignment thereof would be
ineffective or would adversely affect the rights of any party hereto so
that the intended Assignee would not, in fact, receive all such rights,
the parties will cooperate with each other in any arrangement designed
to provide for the intended Assignee the benefits of, and to permit the
intended Assignee to assume liabilities under, any such agreement.
(g) Consents. The parties hereto shall use their commercially
reasonable efforts to obtain required consents to transfer and/or assignment of
licenses, permits and authorizations of Governmental Authorities and of
agreements hereunder.
(h) Delivery of Shares to Agent. D&B shall deliver to the Agent the
share certificates representing the Cognizant Common Shares and the ACNielsen
Common Shares issued to D&B by Cognizant and ACNielsen, respectively, pursuant
to Section 2.1(b) and shall instruct the Agent to distribute, on or as soon as
practicable following the Distribution Date, such Common Shares to holders of
record of shares of D&B Common Stock on the Distribution
<PAGE> 23
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Record Date as further contemplated by the Information Statement and herein.
Cognizant and ACNielsen shall provide all share certificates that the Agent
shall require in order to effect the Distribution.
(i) Certain Liabilities. For purposes of this Agreement, including
Article III hereof, D&B agrees with each of Cognizant and ACNielsen that any and
all Liabilities arising from or based upon misstatements in or omissions from
the Form 10 filed by either such party shall be deemed to be D&B Liabilities and
not Cognizant Liabilities or ACNielsen Liabilities, as the case may be.
(j) Certain Contingencies.
(i) ACNielsen and Cognizant shall observe and comply with the
provisions of Schedule 2.1(j)(i) pursuant to which, under the
circumstances described therein, certain contributions to the capital
of ACNielsen may be made.
(ii) Cognizant shall be liable for a portion of the
liabilities related to certain prior business transactions to the
extent and in the circumstances described in Schedule 2.1(j)(ii).
(iii) (A) D&B and Cognizant agree that to the extent the
aggregate cash proceeds received by D&B upon the disposition
of the businesses known as Dun & Bradstreet Software, NCH
Promotional Services and American Credit Indemnity are higher
or lower than the aggregate amount set forth on Schedule
2.1(j)(iii)(A), 50% of any such excess shall be deemed to be a
Cognizant Asset and be payable by D&B to Cognizant immediately
upon the consummation of the disposition of the last of such
businesses remaining with D&B, and 50% of any such deficit
shall be deemed to be a Cognizant Liability and be payable by
Cognizant to D&B immediately upon the consummation of the
disposition of the last of such businesses remaining with D&B.
(A) In addition, Cognizant and D&B shall each be
entitled to receive 50% of the aggregate operating cash flow,
if any, of each such business from the Distribution Date to
the date of the disposition of such business (where operating
cash flow shall be determined by the accounting procedures
that had been applied by D&B prior to the Distribution for
determining operating cash flow, applied on a consistent
basis), and shall each be liable for 50% of any liabilities
arising in connection with such disposition to the extent such
liabilities exceed the amount set forth in Schedule
2.1(j)(iii)(B).
(B) Cognizant shall have primary responsibility for
marketing, negotiating and consummating the disposition of the
business known as Dun & Bradstreet Software; Cognizant and
ACNielsen shall have primary responsibility for marketing,
negotiating and consummating the disposition of the business
<PAGE> 24
24
known as NCH Promotional Services; and D&B shall have primary
responsibility for marketing, negotiating and consummating the
disposition of the business known as American Credit Indemnity. D&B
shall enter into an agreement to sell the business known as NCH
Promotional Services on such terms as may be recommended by Cognizant.
(iv) D&B and Cognizant shall be liable for the portions of
certain Liabilities described in Schedule 2.1(j)(iv) to the extent and in
circumstances described in such Schedule.
(v) If ACNielsen Company of Canada Limited ("ACN Canada") does
not receive C$ 13,675,000 from The D&B Companies of Canada, Ltd. ("D&B Canada")
with respect to amounts held in the accounts of D&B Canada pending the final
accounting for the restructuring of D&B's operations in Canada by the Toronto
office of Coopers & Lybrand L.L.P., then D&B will promptly pay ACNielsen an
amount equal to the U.S. dollar equivalent of C$ 13,675,000 less the amount
received by ACN Canada from D&B Canada, and if ACN-Canada receives more than C$
13,675,000 from D&B Canada, then ACNielsen will promptly pay D&B an amount equal
to the U.S. dollar equivalent of the amount received by ACN-Canada in excess of
C$ 13,675,000. For purposes of the foregoing, the U.S. dollar equivalent shall
be based on the rate published by the Wall Street Journal for purchasing U.S.
dollars with Canadian dollars on the date the final accounting is made.
(vi) If D&B is required to pay an aggregate amount to
discharge the several categories of expenses set forth on Schedule 2.1 (j)(vi)
hereto in excess of the total estimated amount of such expenses as set forth on
such Schedule, then Cognizant shall be liable for 50% of any such excess amount,
provided, however, that Cognizant shall not be liable for any expenses incurred
by D&B after June 30, 1997, and shall only share in the responsibility to pay
such expenses if such expenses are incurred in order to consummate the
Distribution or the several transactions contemplated by this Agreement or by
any Ancillary Agreement.
II.(rrrr) Matters Relating to Certain Partnerships.
(i) The interest in Duns Licensing Associates L.P. held by
members of the D&B Group will be retired prior to or as promptly as practicable
after the Distribution in exchange for (x) those assets of Duns Licensing
Associates L.P. that are currently licensed to members of the D&B Group and (y)
the stock of a subsidiary currently held by Duns Licensing Associates L.P. all
as more fully set forth in Schedule 2.1(k)(i). The parties also agree to take
the further actions set forth on Schedule 2.1(k)(i).
(ii) Prior to the Distribution Record Date, IMS America, Ltd.
shall withdraw as a partner of D&B Investors, L.P. (the "Partnership") and, in
connection with such withdrawal, shall receive from the Partnership 800,000
shares of D&B Common Stock
<PAGE> 25
25
from the Partnership and a warrant (the "Warrant") to purchase up to
3,000,000 shares of D&B Common Stock. Cognizant agrees that it will not
sell, and will not permit the sale, to any non-affiliated third-party
of any of the D&B Common Stock so received from the Partnership, the
Warrant, any shares of D&B Common Stock received upon exercise of the
Warrant, or any shares of ACNielsen Common Stock received as a result
of being the holder of record of D&B Common Stock on the Distribution
Record Date. D&B agrees that Cognizant or any of its Subsidiaries may
at any time after the Distribution Date sell any of such D&B Common
Stock or the Warrant to D&B at the market value thereof on such sale
date (calculated as described below) by giving D&B written notice of
such proposed sale five business days in advance thereof. ACNielsen
agrees that Cognizant or any of its Subsidiaries may at any time after
the Distribution Date sell any of such ACNielsen Common Stock to
ACNielsen at the market value thereof on such sale date (calculated as
described below) by giving ACNielsen written notice of such proposed
sale five business days in advance thereof. Any such notice to D&B or
ACNielsen shall be irrevocable. For purposes of the foregoing, the
market value of the D&B Common Stock or the ACNielsen Common stock on
any date on which any such securities are to be sold pursuant hereto
shall be equal to the average of the closing prices therefore on the
New York Stock Exchange on each of the five trading days preceding such
date, and the market value of the Warrant on any date shall be equal to
the amount determined by Merrill Lynch & Co. based upon the
Black-Scholes option-pricing model as the market value of such Warrant.
(l) Other Transactions. On or prior to the Distribution Date,
each of D&B, Cognizant and ACNielsen shall consummate those other transactions
in connection with the Distribution that are contemplated by the ruling request
submissions by D&B to the Internal Revenue Service in respect of the ruling
granted on August 6, 1996, and not specifically referred to in subparagraphs
(a)-(k) above. After the Distribution Date, each of D&B, Cognizant and ACNielsen
will exercise good faith commercially reasonable efforts to consummate as
promptly as practicable all other transactions which must be consummated in
order fully to complete the Distribution and any of the transactions
contemplated hereby or by any of the Ancillary Agreements.
<PAGE> 26
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II.2. Intercompany Accounts.
All intercompany receivables, payables and loans (other than
receivables, payables and loans otherwise specifically provided for hereunder or
under any Ancillary Agreement, including payables created or required hereby or
by any Ancillary Agreement), including, without limitation, in respect of any
cash balances, any cash balances representing deposited checks or drafts for
which only a provisional credit has been allowed or any cash held in any
centralized cash management system, (i) between any member of the Cognizant
Group, on the one hand, and any member of the D&B Group, on the other hand, (ii)
between any member of the ACNielsen Group, on the one hand, and any member of
the D&B Group, on the other hand, or (iii) between any member of the Cognizant
Group, on the one hand, and any member of the ACNielsen Group, on the other
hand, in each case, which exist and are reflected in the accounting records of
the relevant parties as of October 31, 1996 or which arise on or after November
1, 1996 shall be paid or settled in the ordinary course of business in a manner
consistent with the payment or settlement of similar accounts arising from
transactions with third parties.
II.3. Cash balances. In addition to any other obligations
hereunder or under any Ancillary Agreement or otherwise, on the Distribution
Date, D&B shall deliver, in immediately available funds, $62.0 million to
ACNielsen and $200.6 million to Cognizant. If, by October 31, 1996, any business
referred to in Section 2.1(j)(iii) has not been sold, the amount payable to
Cognizant pursuant to the preceding sentence shall be reduced by the amount of
cash expected to be received upon such sale, as set forth on Schedule
2.1(j)(iii)(A), and, if and when such business is actually sold, Cognizant shall
be entitled to the cash proceeds received upon such sale, subject, however, to
the adjustments required by Section 2.1(j)(iii).
II.4. Assumption and Satisfaction of Liabilities. Except as
otherwise specifically set forth in any Ancillary Agreement, and subject to
Section 2.3 hereof, from and after the Effective Time, (i) D&B shall, and shall
cause each member of the D&B Group to, assume, pay, perform and discharge all
D&B Liabilities, (ii) Cognizant shall, and shall cause each member of the
Cognizant Group to, assume, pay, perform and discharge all Cognizant
Liabilities, and (iii) ACNielsen shall, and shall cause each member of the
ACNielsen Group to, assume, pay, perform and discharge all ACNielsen
Liabilities. To the extent reasonably requested to do so by another party
hereto, each party hereto agrees to sign such documents, in a form reasonably
satisfactory to such party, as may be reasonably necessary to evidence the
assumption of any Liabilities hereunder.
II.5. Resignations. (a) Subject to Section 2.5(d), D&B shall
cause all its employees to resign, effective as of the Distribution Date, from
all positions as officers or directors of any member of the Cognizant Group in
which they serve, and Cognizant shall cause all its employees to resign,
effective as of the Effective Time, from all positions as officers or directors
of any members of the D&B Group in which they serve.
<PAGE> 27
27
(a) Subject to Section 2.5(d), D&B shall cause all its
employees to resign, effective as of the Distribution Date, from all positions
as officers or directors of any member of the ACNielsen Group in which they
serve, and ACNielsen shall cause all its employees to resign, effective as of
the Effective Time, from all positions as officers or directors of any members
of the D&B Group in which they serve.
(b) Subject to Section 2.5(d), ACNielsen shall cause all its
employees to resign, effective as of the Distribution Date, from all positions
as officers or directors of any member of the Cognizant Group in which they
serve, and Cognizant shall cause all its employees to resign, effective as of
the Effective Time, from all positions as officers or directors of any member of
the ACNielsen Group in which they serve.
(c) No person shall be required by any party hereto to resign
from any position or office with another party hereto if such person is
disclosed in the Information Statement as the person who is to hold such
position or office following the Distribution.
II.6. Further Assurances. In case at any time after the
Effective Time any further action is reasonably necessary or desirable to carry
out the purposes of this Agreement and the Ancillary Agreements, the proper
officers of each party to this Agreement shall take all such necessary action.
Without limiting the foregoing, D&B, Cognizant and ACNielsen shall use their
commercially reasonable efforts promptly to obtain all consents and approvals,
to enter into all amendatory agreements and to make all filings and applications
that may be required for the consummation of the transactions contemplated by
this Agreement and the Ancillary Agreements, including, without limitation, all
applicable governmental and regulatory filings.
II.7. Limited Representations or Warranties. Each of the
parties hereto agrees that no party hereto is, in this Agreement or in any other
agreement or document contemplated by this Agreement or otherwise, making any
representation or warranty whatsoever, as to title or value of Assets being
transferred. It is also agreed that, notwithstanding anything to the contrary
otherwise expressly provided in the relevant Conveyancing and Assumption
Instrument, all Assets either transferred to or retained by the parties, as the
case may be, shall be "as is, where is" and that (subject to Section 2.6) the
party to which such Assets are to be transferred hereunder shall bear the
economic and legal risk that such party's or any of the Subsidiaries' title to
any such Assets shall be other than good and marketable and free from
encumbrances. Similarly, each party hereto agrees that, except as otherwise
expressly provided in the relevant Conveyancing and Assumption Instrument, no
party hereto is representing or warranting in any way that the obtaining of any
consents or approvals, the execution and delivery of any amendatory agreements
and the making of any filings or applications contemplated by this Agreement
will satisfy the provisions of any or all applicable agreements or the
requirements of any or all applicable laws or judgments, it being agreed that
the party to which any Assets are transferred shall bear the economic and legal
risk that any necessary consents or approvals are not obtained or that any
requirements of laws or judgments are not complied with.
<PAGE> 28
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II.8. Guarantees. (a) Except as otherwise specified in any
Ancillary Agreement, D&B, Cognizant and ACNielsen shall use their commercially
reasonable efforts to have, on or prior to the Distribution Date, or as soon as
practicable thereafter, any member of the D&B Group removed as guarantor of or
obligor for any Cognizant Liability or ACNielsen Liability, including, without
limitation, in respect of those guarantees set forth on Schedule 2.8(a) to the
extent that they relate to Cognizant Liabilities or ACNielsen Liabilities.
(a) Except as otherwise specified in any Ancillary Agreement,
D&B, Cognizant and ACNielsen shall use their commercially reasonable efforts to
have, on or prior to the Distribution Date, or as soon as practicable
thereafter, any member of the Cognizant Group removed as guarantor of or obligor
for any D&B Liability or ACNielsen Liability, including, without limitation, in
respect of those guarantees set forth on Schedule 2.8(b) to the extent that they
relate to D&B Liabilities or ACNielsen Liabilities.
(b) Except as otherwise specified in any Ancillary Agreement,
D&B, Cognizant and ACNielsen shall use their commercially reasonable efforts to
have, on or prior to the Distribution Date, or as soon as practicable
thereafter, any member of the ACNielsen Group removed as guarantor of or obligor
for any D&B Liability or Cognizant Liability, including, without limitation, in
respect of those guarantees set forth on Schedule 2.8(c) to the extent that they
relate to D&B Liabilities or Cognizant Liabilities.
(c) If D&B, Cognizant or ACNielsen is unable to obtain, or to
cause to be obtained, any such required removal as set forth in clauses (a)-(c)
of this Section 2.8, the applicable guarantor or obligor shall continue to be
bound as such and, unless not permitted by law or the terms thereof, the
relevant beneficiary shall or shall cause one of its Subsidiaries, as agent or
subcontractor for such guarantor or obligor to pay, perform and discharge fully
all the obligations or other liabilities of such guarantor or obligor thereunder
from and after the date hereof.
II.9. Witness Services. At all times from and after the
Distribution Date, each of D&B, Cognizant and ACNielsen shall use their
commercially reasonable efforts to make available to the other, upon reasonable
written request, its and its Subsidiaries' officers, directors, employees and
agents as witnesses to the extent that (i) such persons may reasonably be
required in connection with the prosecution or defense of any Action in which
the requesting party may from time to time be involved and (ii) there is no
conflict in the Action between the requesting party and D&B, Cognizant or
ACNielsen, as applicable. A party providing witness services to the other party
under this Section shall be entitled to receive from the recipient of such
services, upon the presentation of invoices therefor, payments for such amounts,
relating to disbursements and other out-of-pocket expenses (which shall be
deemed to exclude the costs of salaries and benefits of employees who are
witnesses), as may be reasonably incurred in providing such witness services.
II.10. Certain Post-Distribution Transactions. (a)(i) D&B
shall comply and shall cause its Subsidiaries to comply with and otherwise not
take action inconsistent with each
<PAGE> 29
29
representation and statement made to the Internal Revenue Service in connection
with the request by D&B for a ruling letter in respect of the Distribution as to
certain tax aspects of the Distribution and (ii) until two years after the
Distribution Date, D&B will maintain its status as a company engaged in the
active conduct of a trade or business, as defined in Section 355(b) of the Code.
(a)(i) Cognizant shall comply and shall cause its
Subsidiaries to comply with and otherwise not take action inconsistent with each
representation and statement made to the Internal Revenue Service in connection
with the request by D&B for a ruling letter in respect of the Distribution as to
certain tax aspects of the Distribution and (ii) until two years after the
Distribution Date, Cognizant will maintain its status as a company engaged in
the active conduct of a trade or business, as defined in Section 355(b) of the
Code.
(b)(i) ACNielsen shall comply and shall cause its
Subsidiaries to comply with and otherwise not take action inconsistent with each
representation and statement made with respect to ACNielsen to the Internal
Revenue Service in connection with the request by D&B for a ruling letter in
respect of the Distribution as to certain tax aspects of the Distribution and
(ii) until two years after the Distribution Date, ACNielsen will maintain its
status as a company engaged in the active conduct of a trade or business, as
defined in Section 355(b) of the Code.
II.11. Transfers Not Effected Prior to the Distribution;
Transfers Deemed Effective as of the Distribution Date. To the extent that any
transfers contemplated by this Article II shall not have been consummated on or
prior to the Distribution Date, the parties shall cooperate to effect such
transfers as promptly following the Distribution Date as shall be practicable.
Nothing herein shall be deemed to require the transfer of any Assets or the
assumption of any Liabilities which by their terms or operation of law cannot be
transferred; provided, however, that the parties hereto and their respective
Subsidiaries shall cooperate to seek to obtain any necessary consents or
approvals for the transfer of all Assets and Liabilities contemplated to be
transferred pursuant to this Article II. In the event that any such transfer of
Assets or Liabilities has not been consummated, from and after the Distribution
Date the party retaining such Asset or Liability shall hold such Asset in trust
for the use and benefit of the party entitled thereto (at the expense of the
party entitled thereto) or retain such Liability for the account of the party by
whom such Liability is to be assumed pursuant hereto, as the case may be, and
take such other action as may be reasonably requested by the party to whom such
Asset is to be transferred, or by whom such Liability is to be assumed, as the
case may be, in order to place such party, insofar as is reasonably possible, in
the same position as would have existed had such Asset or Liability been
transferred as contemplated hereby. As and when any such Asset or Liability
becomes transferable, such transfer shall be effected forthwith. The parties
agree that, as of the Distribution Date, each party hereto shall be deemed to
have acquired complete and sole beneficial ownership over all of the Assets,
together with all rights, powers and privileges incident thereto, and shall be
deemed to have assumed in accordance with the terms of this Agreement all of the
Liabilities, and all duties, obligations and responsibilities incident thereto,
which such party is entitled to acquire or required to assume pursuant to the
terms of this Agreement.
<PAGE> 30
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II.12. Conveyancing and Assumption Instruments. In connection
with the transfers of Assets and the assumptions of Liabilities contemplated by
this Agreement, the parties shall execute or cause to be executed by the
appropriate entities the Conveyancing and Assumption Instruments in
substantially the form contemplated hereby for transfers to be effected pursuant
to New York law or the laws of one of the other states of the United States or,
if not appropriate for a given transfer, and for transfers to be effected
pursuant to non-U.S. laws, in such other form as the parties shall reasonably
agree, including the transfer of real property with deeds as may be appropriate.
The transfer of capital stock shall be effected by means of delivery of stock
certificates and executed stock powers and notation on the stock record books of
the corporation or other legal entities involved, or by such other means as may
be required in any non-U.S. jurisdiction to transfer title to stock and, to the
extent required by applicable law, by notation on public registries.
II.13. Ancillary Agreements. Prior to the Distribution Date,
each of D&B, Cognizant and ACNielsen shall enter into, and/or (where applicable)
shall cause members of their respective Groups to enter into, the Ancillary
Agreements and any other agreements in respect of the Distribution reasonably
necessary or appropriate in connection with the transactions contemplated hereby
and thereby.
II.14. Corporate Names. (a) Except as otherwise specifically
provided in any Ancillary Agreement:
(i) as soon as reasonably practicable after the Distribution
Date but in any event within six months thereafter, Cognizant and
ACNielsen will each, at their own expense, remove (or, if necessary, on
an interim basis, cover up) any and all exterior signs and other
identifiers located on any of their respective property or premises or
on the property or premises used by them or their respective
Subsidiaries (except property or premises to be shared with D&B or its
Subsidiaries after the Distribution) which refer or pertain to D&B or
which include the D&B name, logo or other trademark or other D&B
intellectual property;
(ii) as soon as reasonably practicable after the Distribution
Date but in any event within six months thereafter, Cognizant and
ACNielsen will, and will cause their respective Subsidiaries to, remove
from all letterhead, envelopes, invoices and other communications media
of any kind, all references to D&B, including the "Dun & Bradstreet"
name, logo and any other trademark or other D&B intellectual property
(except that neither Cognizant nor ACNielsen shall be required to take
any such action with respect to materials in the possession of
customers), and neither Cognizant, ACNielsen nor any of their
respective Subsidiaries shall use or display the "Dun & Bradstreet"
name, logo or other trademarks or D&B intellectual property without the
prior written consent of D&B; and
<PAGE> 31
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(iii) as soon as reasonably practicable after the Distribution
Date, but in any event within six months thereafter, Cognizant and
ACNielsen will, and will cause their respective Subsidiaries to, change
their corporate names to the extent necessary to remove and eliminate
any reference to D&B, including the "Dun & Bradstreet" name; provided,
however, that notwithstanding the foregoing requirements of this
Section 2.14(a), if Cognizant or ACNielsen has exercised good faith
efforts to comply with this clause (iii) but is unable, due to
regulatory or other circumstance beyond its control, to effect a
corporate name change in compliance with applicable law, then the
relevant party or its Subsidiary will not be deemed to be in breach
hereof if it continues to exercise good faith efforts to effectuate
such name change and does effectuate such name change within nine
months after the Distribution Date, and, in such circumstances, such
party may continue to include in exterior signs and other identifiers
and in letterhead, envelopes, invoices and other communications
references to the name which includes references to D&B, but only to
the extent necessary to identify such party and only until such party's
corporate name can be changed to remove and eliminate such references.
(b) Except as otherwise specifically provided in any Ancillary
Agreement:
(i) as soon as reasonably practicable after the Distribution
Date but in any event within six months thereafter, D&B and Cognizant
will each, at their own expense, remove (or, if necessary, on an
interim basis, cover up) any and all exterior signs and other
identifiers located on any of their respective property or premises
owned or used by them or their respective Subsidiaries (except property
or premises to be shared with ACNielsen or its Subsidiaries after the
Distribution) which refer or pertain to ACNielsen or which include the
"ACNielsen" or "A.C. Nielsen" name, logo or other trademark or other
ACNielsen intellectual property;
(ii) as soon as reasonably practicable after the Distribution
Date but in any event within six months thereafter, D&B and Cognizant
will each, and will cause their respective Subsidiaries to, remove from
all letterhead, envelopes, invoices and other communications media of
any kind, all references to ACNielsen, including the "ACNielsen" and
"A.C. Nielsen" name, logo and any other trademark or other ACNielsen
intellectual property (except that neither D&B nor Cognizant shall be
required to take any such action with respect to materials in the
possession of customers), and neither D&B nor any of its Subsidiaries
shall use or display the "ACNielsen" or "A.C. Nielsen" name, logo or
other trademarks or ACNielsen intellectual property without the prior
written consent of ACNielsen; and
(iii) as soon as reasonably practicable after the Distribution
Date but in any event within six months thereafter, D&B and Cognizant
will, and will cause their respective Subsidiaries to, change their
corporate names to the extent necessary to remove and eliminate any
reference to ACNielsen, including the "ACNielsen" or "A.C. Nielsen"
name; provided, however, (i) that nothing in this Section 2.14(b) shall
be construed to modify any other agreement of the parties concerning
intellectual property set forth in
<PAGE> 32
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any Ancillary Agreement, including any provision thereof concerning the
use of a name incorporating, referring to or derived from the "Nielsen"
name, and (ii) that notwithstanding the foregoing requirements of this
Section 2.14(b), if D&B or Cognizant has exercised good faith efforts
to comply with this clause (iii) but is unable, due to regulatory or
other circumstance beyond its control, to effect a corporate name
change in compliance with applicable law, then the relevant party or
its Subsidiary will not be deemed to be in breach hereof if it
continues to exercise good faith efforts to effectuate such name change
and does effectuate such name change within nine months after the
Distribution Date, and, in such circumstances, such party may continue
to include in exterior signs and other identifiers and in letterhead,
envelopes, invoices and other communications references to the name
which includes references to ACNielsen, but only to the extent
necessary to identify such party and only until such party's corporate
name can be changed to remove and eliminate such references.
(c) Each of D&B and ACNielsen acknowledges that they have no
interest in nor any right to use or display the Cognizant name or any Cognizant
trademark or intellectual property in any way, except to the extent specifically
set forth in the Intellectual Property Agreement and the TAM Master Agreement.
III. INDEMNIFICATION
III.1. Indemnification by D&B. Except as otherwise
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, D&B shall indemnify, defend and hold harmless the Cognizant
Indemnitees and the ACNielsen Indemnitees from and against any and all
Indemnifiable Losses of the Cognizant Indemnitees and the ACNielsen Indemnitees,
respectively, arising out of, by reason of or otherwise in connection with the
D&B Liabilities or alleged D&B Liabilities, including any breach by D&B of any
provision of this Agreement or any Ancillary Agreement.
III.2. Indemnification by Cognizant. Except as otherwise
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, Cognizant shall indemnify, defend and hold harmless the D&B
Indemnitees and the ACNielsen Indemnitees from and against any and all
Indemnifiable Losses of the D&B Indemnitees and the ACNielsen Indemnitees,
respectively, arising out of, by reason of or otherwise in connection with the
Cognizant Liabilities or alleged Cognizant Liabilities, including any breach by
Cognizant of any provision of this Agreement or any Ancillary Agreement.
III.3. Indemnification by ACNielsen. Except as otherwise
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, ACNielsen shall indemnify, defend and hold harmless the D&B
Indemnitees and the Cognizant Indemnitees from and against any and all
Indemnifiable Losses of the D&B Indemnitees and the Cognizant Indemnitees,
respectively, arising out of, by reason of or otherwise in connection with the
ACNielsen Liabilities or alleged ACNielsen
<PAGE> 33
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Liabilities, including any breach by ACNielsen of any provision of this
Agreement or any Ancillary Agreement.
III.4. Procedures for Indemnification.
(a) Third Party Claims. If a claim or demand is made against
an ACNielsen Indemnitee, a Cognizant Indemnitee or a D&B Indemnitee (each, an
"Indemnitee") by any person who is not a party to this Agreement (a "Third Party
Claim") as to which such Indemnitee is entitled to indemnification pursuant to
this Agreement, such Indemnitee shall notify the party which is or may be
required pursuant to Section 3.1, Section 3.2 or Section 3.3 hereof to make such
indemnification (the "Indemnifying Party") in writing, and in reasonable detail,
of the Third Party Claim promptly (and in any event within 15 business days)
after receipt by such Indemnitee of written notice of the Third Party Claim;
provided, however, that failure to give such notification shall not affect the
indemnification provided hereunder except to the extent the Indemnifying Party
shall have been actually prejudiced as a result of such failure (except that the
Indemnifying Party shall not be liable for any expenses incurred during the
period in which the Indemnitee failed to give such notice). Thereafter, the
Indemnitee shall deliver to the Indemnifying Party, promptly (and in any event
within five business days) after the Indemnitee's receipt thereof, copies of all
notices and documents (including court papers) received by the Indemnitee
relating to the Third Party Claim.
If a Third Party Claim is made against an Indemnitee, the
Indemnifying Party shall be entitled to participate in the defense thereof and,
if it so chooses and acknowledges in writing its obligation to indemnify the
Indemnitee therefor, to assume the defense thereof with counsel selected by the
Indemnifying Party; provided that such counsel is not reasonably objected to by
the Indemnitee. Should the Indemnifying Party so elect to assume the defense of
a Third Party Claim, the Indemnifying Party shall, within 30 days (or sooner if
the nature of the Third Party Claim so requires), notify the Indemnitee of its
intent to do so, and the Indemnifying Party shall thereafter not be liable to
the Indemnitee for legal or other expenses subsequently incurred by the
Indemnitee in connection with the defense thereof; provided, that such
Indemnitee shall have the right to employ counsel to represent such Indemnitee
if, in such Indemnitee's reasonable judgment, a conflict of interest between
such Indemnitee and such Indemnifying Party exists in respect of such claim
which would make representation of both such parties by one counsel
inappropriate, and in such event the fees and expenses of such separate counsel
shall be paid by such Indemnifying Party. If the Indemnifying Party assumes such
defense, the Indemnitee shall have the right to participate in the defense
thereof and to employ counsel, subject to the proviso of the preceding sentence,
at its own expense, separate from the counsel employed by the Indemnifying
Party, it being understood that the Indemnifying Party shall control such
defense. The Indemnifying Party shall be liable for the fees and expenses of
counsel employed by the Indemnitee for any period during which the Indemnifying
Party has failed to assume the defense thereof (other than during the period
prior to the time the Indemnitee shall have given notice of the Third Party
Claim as provided above). If the Indemnifying Party so elects to assume the
defense of any Third Party Claim, all of the Indemnitees shall cooperate with
the Indemnifying Party in the defense or prosecution thereof, including by
providing or
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34
causing to be provided, Records and witnesses as soon as reasonably practicable
after receiving any request therefor from or on behalf of the Indemnifying
Party.
If the Indemnifying Party acknowledges in writing
responsibility for a Third Party Claim, then in no event will the Indemnitee
admit any liability with respect to, or settle, compromise or discharge, any
Third Party Claim without the Indemnifying Party's prior written consent;
provided, however, that the Indemnitee shall have the right to settle,
compromise or discharge such Third Party Claim without the consent of the
Indemnifying Party if the Indemnitee releases the Indemnifying Party from its
indemnification obligation hereunder with respect to such Third Party Claim and
such settlement, compromise or discharge would not otherwise adversely affect
the Indemnifying Party. If the Indemnifying Party acknowledges in writing
liability for a Third Party Claim, the Indemnitee will agree to any settlement,
compromise or discharge of a Third Party Claim that the Indemnifying Party may
recommend and that by its terms obligates the Indemnifying Party to pay the full
amount of the liability in connection with such Third Party Claim and releases
the Indemnitee completely in connection with such Third Party Claim and that
would not otherwise adversely affect the Indemnitee; provided, however, that the
Indemnitee may refuse to agree to any such settlement, compromise or discharge
if the Indemnitee agrees that the Indemnifying Party's indemnification
obligation with respect to such Third Party Claim shall not exceed the amount
that would be required to be paid by or on behalf of the Indemnifying Party in
connection with such settlement, compromise or discharge. If an Indemnifying
Party elects not to assume the defense of a Third Party Claim, or fails to
notify an Indemnitee of its election to do so as provided herein, such
Indemnitee may compromise, settle or defend such Third Party Claim.
Notwithstanding the foregoing, the Indemnifying Party shall
not be entitled to assume the defense of any Third Party Claim (and shall be
liable for the fees and expenses of counsel incurred by the Indemnitee in
defending such Third Party Claim) if the Third Party Claim seeks an order,
injunction or other equitable relief or relief for other than money damages
against the Indemnitee which the Indemnitee reasonably determines, after
conferring with its counsel, cannot be separated from any related claim for
money damages. If such equitable relief or other relief portion of the Third
Party Claim can be so separated from that for money damages, the Indemnifying
Party shall be entitled to assume the defense of the portion relating to money
damages.
(b) In the event of payment by an Indemnifying Party to any
Indemnitee in connection with any Third-Party Claim, such Indemnifying Party
shall be subrogated to and shall stand in the place of such Indemnitee as to any
events or circumstances in respect of which such Indemnitee may have any right
or claim relating to such Third-Party Claim against any claimant or plaintiff
asserting such Third-Party Claim. Such Indemnitee shall cooperate with such
Indemnifying Party in a reasonable manner, and at the cost and expense of such
Indemnifying Party, in prosecuting any subrogated right or claim.
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35
(c) The remedies provided in this Article III shall be
cumulative and shall not preclude assertion by any Indemnitee of any other
rights or the seeking of any and all other remedies against any Indemnifying
Party.
III.5. Indemnification Payments. Indemnification required by
this Article III shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received or
loss, liability, claim, damage or expense is incurred.
IV. ACCESS TO INFORMATION
IV.1. Provision of Corporate Records.
(a) Other than in circumstances in which indemnification is
sought pursuant to Article III (in which event the provisions of such Article
will govern), after the Distribution Date, upon the prior written request by
Cognizant or ACNielsen for specific and identified agreements, documents, books,
records or files (collectively, "Records") which relate to (x) Cognizant or
ACNielsen or the conduct of the Cognizant Business or ACNielsen Business, as the
case may be, up to the Effective Time, or (y) any Ancillary Agreement to which
D&B and Cognizant and/or ACNielsen are parties, as applicable, D&B shall
arrange, as soon as reasonably practicable following the receipt of such
request, for the provision of appropriate copies of such Records (or the
originals thereof if the party making the request has a reasonable need for such
originals) in the possession or control of D&B or any of its Subsidiaries, but
only to the extent such items are not already in the possession or control of
the requesting party.
(b) Other than in circumstances in which indemnification is
sought pursuant to Article III (in which event the provisions of such Article
will govern), after the Distribution Date, upon the prior written request by D&B
or ACNielsen for specific and identified Records which relate to (x) D&B or
ACNielsen or the conduct of the D&B Business or the ACNielsen Business, as the
case may be, up to the Effective Time, or (y) any Ancillary Agreement to which
Cognizant and D&B and/or ACNielsen are parties, as applicable, Cognizant shall
arrange, as soon as reasonably practicable following the receipt of such
request, for the provision of appropriate copies of such Records (or the
originals thereof if the party making the request has a reasonable need for such
originals) in the possession or control of Cognizant or any of its Subsidiaries,
but only to the extent such items are not already in the possession or control
of the requesting party.
(c) Other than in circumstances in which indemnification is
sought pursuant to Article III (in which event the provisions of such Article
will govern), after the Distribution Date, upon the prior written request by D&B
or Cognizant for specific and identified Records which relate to D&B or
Cognizant or the conduct of the D&B Business or the Cognizant Business, as the
case may be, up to the Effective Time, or any Ancillary Agreement to which
ACNielsen and D&B and/or Cognizant are parties, as applicable, ACNielsen shall
arrange, as soon as reasonably practicable following the receipt of such
request, for the provision of
<PAGE> 36
36
appropriate copies of such Records (or the originals thereof if the party making
the request has a reasonable need for such originals) in the possession or
control of ACNielsen or any of its Subsidiaries, but only to the extent such
items are not already in the possession or control of the requesting party.
IV.2. Access to Information. Other than in circumstances in
which indemnification is sought pursuant to Article III (in which event the
provisions of such Article will govern), from and after the Distribution Date,
each of D&B, Cognizant and ACNielsen shall afford to the other and its
authorized accountants, counsel and other designated representatives reasonable
access during normal business hours, subject to appropriate restrictions for
classified, privileged or confidential information, to the personnel,
properties, books and records of such party and its Subsidiaries insofar as such
access is reasonably required by the other party and relates to (x) such other
party or the conduct of its business prior to the Effective Time or (y) any
Ancillary Agreement to which each of the party requesting such access and the
party requested to grant such access are parties.
IV.3. Reimbursement; Other Matters. Except to the extent
otherwise contemplated by any Ancillary Agreement, a party providing Records or
access to information to the other party under this Article IV shall be entitled
to receive from the recipient, upon the presentation of invoices therefor,
payments for such amounts, relating to supplies, disbursements and other
out-of-pocket expenses, as may be reasonably incurred in providing such Records
or access to information.
IV.4. Confidentiality. Each of (i) D&B and its Subsidiaries,
(ii) Cognizant and its Subsidiaries and (iii) ACNielsen and its Subsidiaries
shall not use or permit the use of (without the prior written consent of the
other) and shall keep, and shall cause its consultants and advisors to keep,
confidential all information concerning the other parties in its possession, its
custody or under its control (except to the extent that (A) such information has
been in the public domain through no fault of such party or (B) such information
has been later lawfully acquired from other sources by such party or (C) this
Agreement or any other Ancillary Agreement or any other agreement entered into
pursuant hereto permits the use or disclosure of such information) to the extent
such information (w) relates to or was acquired during the period up to the
Effective Time, (x) relates to any Ancillary Agreement, (y) is obtained in the
course of performing services for the other party pursuant to any Ancillary
Agreement, or (z) is based upon or is derived from information described in the
preceding clauses (w), (x) or (y), and each party shall not (without the prior
written consent of the other) otherwise release or disclose such information to
any other person, except such party's auditors and attorneys, unless compelled
to disclose such information by judicial or administrative process or unless
such disclosure is required by law and such party has used commercially
reasonable efforts to consult with the other affected party or parties prior to
such disclosure.
IV.5. Privileged Matters. The parties hereto recognize that
legal and other professional services that have been and will be provided prior
to the Distribution Date have been and will be rendered for the benefit of each
of the members of the D&B Group, the
<PAGE> 37
37
members of the Cognizant Group, and the members of the ACNielsen Group, and that
each of the members of the D&B Group, the members of the Cognizant Group, and
the members of the ACNielsen Group should be deemed to be the client for the
purposes of asserting all privileges which may be asserted under applicable law.
To allocate the interests of each party in the information as to which any party
is entitled to assert a privilege, the parties agree as follows:
(a) D&B shall be entitled, in perpetuity, to control the
assertion or waiver of all privileges in connection with privileged information
which relates solely to the D&B Business, whether or not the privileged
information is in the possession of or under the control of D&B, Cognizant or
ACNielsen. D&B shall also be entitled, in perpetuity, to control the assertion
or waiver of all privileges in connection with privileged information that
relates solely to the subject matter of any claims constituting D&B Liabilities,
now pending or which may be asserted in the future, in any lawsuits or other
proceedings initiated against or by D&B, whether or not the privileged
information is in the possession of or under the control of D&B, Cognizant or
ACNielsen.
(b) Cognizant shall be entitled, in perpetuity, to control the
assertion or waiver of all privileges in connection with privileged information
which relates solely to the Cognizant Business, whether or not the privileged
information is in the possession of or under the control of D&B, Cognizant or
ACNielsen. Cognizant shall also be entitled, in perpetuity, to control the
assertion or waiver of all privileges in connection with privileged information
which relates solely to the subject matter of any claims constituting Cognizant
Liabilities, now pending or which may be asserted in the future, in any lawsuits
or other proceedings initiated against or by Cognizant, whether or not the
privileged information is in the possession of Cognizant or under the control of
D&B, Cognizant or ACNielsen.
(c) ACNielsen shall be entitled, in perpetuity, to control the
assertion or waiver of all privileges in connection with privileged information
which relates solely to the ACNielsen Business, whether or not the privileged
information is in the possession of or under the control of D&B, Cognizant or
ACNielsen. ACNielsen shall also be entitled, in perpetuity, to control the
assertion or waiver of all privileges in connection with privileged information
which relates solely to the subject matter of any claims constituting ACNielsen
Liabilities, now pending or which may be asserted in the future, in any lawsuits
or other proceedings initiated against or by ACNielsen, whether or not the
privileged information is in the possession of ACNielsen or under the control of
D&B, Cognizant or ACNielsen.
(d) The parties hereto agree that they shall have a shared
privilege, with equal right to assert or waive, subject to the restrictions in
this Section 4.5, with respect to all privileges not allocated pursuant to the
terms of Sections 4.5(a), (b) and (c). All privileges relating to any claims,
proceedings, litigation, disputes, or other matters which involve two or more of
D&B, Cognizant or ACNielsen in respect of which two or more of such parties
retain any responsibility or liability under this Agreement, shall be subject to
a shared privilege among them.
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38
(e) No party hereto may waive any privilege which could be
asserted under any applicable law, and in which any other party hereto has a
shared privilege, without the consent of the other party, except to the extent
reasonably required in connection with any litigation with third-parties or as
provided in subsection (f) below. Consent shall be in writing, or shall be
deemed to be granted unless written objection is made within twenty (20) days
after notice upon the other party requesting such consent.
(f) In the event of any litigation or dispute between or among
any of the parties hereto, any party and a Subsidiary of another party hereto,
or a Subsidiary of one party hereto and a Subsidiary of another party hereto,
either such party may waive a privilege in which the other party has a shared
privilege, without obtaining the consent of the other party, provided that such
waiver of a shared privilege shall be effective only as to the use of
information with respect to the litigation or dispute between the relevant
parties and/or their Subsidiaries, and shall not operate as a waiver of the
shared privilege with respect to third parties.
(g) If a dispute arises between or among the parties hereto or
their respective Subsidiaries regarding whether a privilege should be waived to
protect or advance the interest of any party, each party agrees that it shall
negotiate in good faith, shall endeavor to minimize any prejudice to the rights
of the other parties, and shall not unreasonably withhold consent to any request
for waiver by another party. Each party hereto specifically agrees that it will
not withhold consent to waiver for any purpose except to protect its own
legitimate interests.
(h) Upon receipt by any party hereto or by any Subsidiary
thereof of any subpoena, discovery or other request which arguably calls for the
production or disclosure of information subject to a shared privilege or as to
which another party has the sole right hereunder to assert a privilege, or if
any party obtains knowledge that any of its or any of its Subsidiaries' current
or former directors, officers, agents or employees have received any subpoena,
discovery or other requests which arguably calls for the production or
disclosure of such privileged information, such party shall promptly notify the
other party or parties of the existence of the request and shall provide the
other party or parties a reasonable opportunity to review the information and to
assert any rights it or they may have under this Section 4.5 or otherwise to
prevent the production or disclosure of such privileged information.
(i) The transfer of all Records and other information pursuant
to this Agreement is made in reliance on the agreement of D&B, Cognizant and
ACNielsen, as set forth in Sections 4.4 and 4.5, to maintain the confidentiality
of privileged information and to assert and maintain all applicable privileges.
The access to information being granted pursuant to Sections 4.1 and 4.2 hereof,
the agreement to provide witnesses and individuals pursuant to Sections 2.9 and
3.4 hereof, the furnishing of notices and documents and other cooperative
efforts contemplated by Section 3.4 hereof, and the transfer of privileged
information between and among the parties and their respective Subsidiaries
pursuant to this Agreement shall not be deemed a waiver of any privilege that
has been or may be asserted under this Agreement or otherwise.
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39
IV.6. Ownership of Information. Any information owned by one
party or any of its Subsidiaries that is provided to a requesting party pursuant
to Article III or this Article IV shall be deemed to remain the property of the
providing party. Unless specifically set forth herein, nothing contained in this
Agreement shall be construed as granting or conferring rights of license or
otherwise in any such information.
IV.7. Limitation of Liability. (a) No party shall have any
liability to any other party in the event that any information exchanged or
provided pursuant to this Agreement which is an estimate or forecast, or which
is based on an estimate or forecast, is found to be inaccurate.
(b) No party or any Subsidiary thereof shall have any
liability or claim against any other party or any Subsidiary of any other party
based upon, arising out of or resulting from any agreement, arrangement, course
of dealing or understanding existing on or prior to the Distribution Date (other
than this Agreement or any Ancillary Agreement or any agreement entered into in
connection herewith or in order to consummate the transactions contemplated
hereby or thereby), unless such agreement, arrangement, course of dealing or
understanding is listed on Schedule 4.7(b) hereto, and any such liability or
claim, whether or not in writing, which is not reflected on such Schedule, is
hereby irrevocably cancelled, released and waived.
IV.8. Other Agreements Providing for Exchange of Information.
The rights and obligations granted under this Article IV are subject to any
specific limitations, qualifications or additional provisions on the sharing,
exchange or confidential treatment of information set forth in any Ancillary
Agreement.
V. ADMINISTRATIVE SERVICES
V.1. Performance of Services. Beginning on the Distribution
Date, each party will provide, or cause one or more of its Subsidiaries to
provide, to the other party and its Subsidiaries such services on such terms as
may be set forth in the Transition Services Agreement. Except as otherwise set
forth in the Transition Services Agreement or any Schedule thereto, the party
that is to provide the services (the "Provider") will use (and will cause its
Subsidiaries to use) commercially reasonable efforts to provide such services to
the other party (the "Recipient") and its Subsidiaries in a satisfactory and
timely manner and as further specified in such Transition Services Agreement.
V.2. Independence. Unless otherwise agreed in writing, all
employees and representatives of the Provider providing the scheduled services
to the Recipient will be deemed for purposes of all compensation and employee
benefits matters to be employees or representatives of the Provider and not
employees or representatives of the Recipient. In performing such services, such
employees and representatives will be under the direction, control and
supervision of the Provider (and not the Recipient) and the Provider will have
the sole right to exercise all authority with respect to the employment
(including, without limitation,
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termination of employment), assignment and compensation of such employees and
representatives.
V.3. Non-exclusivity. Nothing in this Agreement precludes any
party from obtaining, in whole or in part, services of any nature that may be
obtainable from the other parties from its own employees or from providers other
than the other parties.
VI. DISPUTE RESOLUTION
VI.1. Negotiation. In the event of a controversy, dispute or
claim arising out of, in connection with, or in relation to the interpretation,
performance, nonperformance, validity or breach of this Agreement or otherwise
arising out of, or in any way related to this Agreement or the transactions
contemplated hereby, including, without limitation, any claim based on contract,
tort, statute or constitution (but excluding any controversy, dispute or claim
arising out of any agreement relating to the use or lease of real property if
any third party is a party to such controversy, dispute or claim) (collectively,
"Agreement Disputes"), the general counsels of the relevant parties shall
negotiate in good faith for a reasonable period of time to settle such Agreement
Dispute, provided such reasonable period shall not, unless otherwise agreed by
the parties in writing, exceed 30 days from the time the relevant parties began
such negotiations; provided further that in the event of any arbitration in
accordance with Section 6.2 hereof, the relevant parties shall not assert the
defenses of statute of limitations and laches arising for the period beginning
after the date the relevant parties began negotiations hereunder, and any
contractual time period or deadline under this Agreement or any Ancillary
Agreement to which such Agreement Dispute relates shall not be deemed to have
passed until such Agreement Dispute has been resolved.
VI.2. Arbitration. If after such reasonable period such
general counsels are unable to settle such Agreement Dispute (and in any event,
unless otherwise agreed in writing by the relevant parties, after 60 days have
elapsed from the time the relevant parties began such negotiations), such
Agreement Dispute shall be determined, at the request of any relevant party, by
arbitration conducted in New York City, before and in accordance with the
then-existing International Arbitration Rules of the American Arbitration
Association (the "Rules"). In any dispute between two of the parties hereto, the
number of arbitrators shall be three, and in any dispute among all three parties
hereto, the number of arbitrators shall be one. Any judgment or award rendered
by the arbitrator shall be final, binding and nonappealable (except upon grounds
specified in 9 U.S.C. Section10(a) as in effect on the date hereof). If the
parties are unable to agree on an arbitrator or arbitrators, the arbitrator or
arbitrators shall be selected in accordance with the Rules. Any controversy
concerning whether an Agreement Dispute is an arbitrable Agreement Dispute,
whether arbitration has been waived, whether an assignee of this Agreement is
bound to arbitrate, or as to the interpretation of enforceability of this
Article VI shall be determined by the arbitrator or arbitrators. In resolving
any dispute, the parties intend that the arbitrator or arbitrators apply the
substantive laws of the State of New York, without regard to the choice of law
principles thereof. The parties intend that the provisions to arbitrate set
forth herein be valid,
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41
enforceable and irrevocable. The undersigned agree to comply with any award made
in any such arbitration proceedings that has become final in accordance with the
Rules and agree to enforcement of or entry of judgment upon such award, by any
court of competent jurisdiction, including (a) the Supreme Court of the State of
New York, New York County, or (b) the United States District Court for the
Southern District of New York, in accordance with Section 8.18 hereof. The
arbitrator or arbitrators shall be entitled, if appropriate, to award any remedy
in such proceedings, including, without limitation, monetary damages, specific
performance and all other forms of legal and equitable relief; provided,
however, the arbitrator or arbitrators shall not be entitled to award punitive
damages. Without limiting the provisions of the Rules, unless otherwise agreed
in writing by or among the relevant parties or permitted by this Agreement, the
undersigned shall keep confidential all matters relating to the arbitration or
the award, provided such matters may be disclosed (i) to the extent reasonably
necessary in any proceeding brought to enforce the award or for entry of a
judgment upon the award and (ii) to the extent otherwise required by law.
Notwithstanding Article 32 of the Rules, the party other than the prevailing
party in the arbitration shall be responsible for all of the costs of the
arbitration, including legal fees and other costs specified by such Article 32.
Nothing contained herein is intended to or shall be construed to prevent any
party, in accordance with Article 22(3) of the Rules or otherwise, from applying
to any court of competent jurisdiction for interim measures or other provisional
relief in connection with the subject matter of any Agreement Disputes.
VI.3. Continuity of Service and Performance. Unless otherwise
agreed in writing, the parties will continue to provide service and honor all
other commitments under this Agreement and each Ancillary Agreement during the
course of dispute resolution pursuant to the provisions of this Article VI with
respect to all matters not subject to such dispute, controversy or claim.
VI.4. Indemnity and Joint Defense Agreement. In no event or
circumstances will any arbitrator or arbitrators appointed hereunder have any
right, authority or jurisdiction to determine the "ACN Maximum Amount" under the
Indemnity and Joint Defense Agreement, or otherwise relating to any dispute
which may arise in connection with Article II thereof, or to prevent, delay or
otherwise interfere with such dispute arbitration or determination.
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VII. INSURANCE
VII.1. Policies and Rights Included Within Assets. (a) The
Cognizant Assets shall include (i) any and all rights of an insured party under
each of the Cognizant Shared Policies, subject to the terms of such Cognizant
Shared Policies and any limitations or obligations of Cognizant contemplated by
this Article VII, specifically including rights of indemnity and the right to be
defended by or at the expense of the insurer, with respect to all claims, suits,
actions, proceedings, injuries, losses, liabilities, damages and expenses
incurred or claimed to have been incurred prior to the Distribution Date by any
party in or in connection with the conduct of the Cognizant Business or, to the
extent any claim is made against Cognizant or any of its Subsidiaries, the
conduct of the D&B Business or the ACNielsen Business, and which claims, suits,
actions, proceedings, injuries, losses, liabilities, damages and expenses may
arise out of an insured or insurable occurrence under one or more of such
Cognizant Shared Policies; provided, however, that nothing in this clause shall
be deemed to constitute (or to reflect) an assignment of such Cognizant Shared
Policies, or any of them, to Cognizant, and (ii) the Cognizant Policies.
(a) The ACNielsen Assets shall include (i) any and all rights
of an insured party under each of the ACNielsen Shared Policies, subject to the
terms of such ACNielsen Shared Policies and any limitations or obligations of
ACNielsen contemplated by this Article VII, specifically including rights of
indemnity and the right to be defended by or at the expense of the insurer, with
respect to all claims, suits, actions, proceedings, injuries, losses,
liabilities, damages and expenses incurred or claimed to have been incurred
prior to the Distribution Date by any party in or in connection with the conduct
of the ACNielsen Business or, to the extent any claim is made against ACNielsen
or any of its Subsidiaries, the conduct of the D&B Business or the Cognizant
Business, and which claims, suits, actions, proceedings, injuries, losses,
liabilities, damages and expenses may arise out of an insured or insurable
occurrence under one or more of such ACNielsen Shared Policies; provided,
however, that nothing in this clause shall be deemed to constitute (or to
reflect) an assignment of such ACNielsen Shared Policies, or any of them, to
ACNielsen, and (ii) the ACNielsen Policies.
VII.2. Post-Distribution Date Claims. (a) If, subsequent to
the Distribution Date, any person shall assert a claim against Cognizant or any
of its Subsidiaries (including, without limitation, where Cognizant or its
Subsidiaries are joint defendants with other persons) with respect to any claim,
suit, action, proceeding, injury, loss, liability, damage or expense incurred or
claimed to have been incurred prior to the Distribution Date in or in connection
with the conduct of the Cognizant Business or, to the extent any claim is made
against Cognizant or any of its Subsidiaries (including, without limitation,
where Cognizant or its Subsidiaries are joint defendants with other persons),
the conduct of the D&B Business or the ACNielsen Business, and which claim,
suit, action, proceeding, injury, loss, liability, damage or expense may arise
out of an insured or insurable occurrence under one or more of the Cognizant
Shared Policies, D&B shall, at the time such claim is asserted, to the extent
any such Policy may require that Insurance Proceeds thereunder be collected
directly by the named insured or anyone other than the party against whom the
Insured Claim is asserted, be deemed to designate, without need of further
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documentation, Cognizant as the agent and attorney-in-fact to assert and to
collect any related Insurance Proceeds under such Cognizant Shared Policy, and
shall further be deemed to assign, without need of further documentation, to
Cognizant any and all rights of an insured party under such Cognizant Shared
Policy with respect to such asserted claim, specifically including rights of
indemnity and the right to be defended by or at the expense of the insurer and
the right to any applicable Insurance Proceeds thereunder; provided, however,
that nothing in this Section 7.2(a) shall be deemed to constitute (or to
reflect) an assignment of the Cognizant Shared Policies, or any of them, to
Cognizant.
(a) If, subsequent to the Distribution Date, any person shall
assert a claim against ACNielsen or any of its Subsidiaries (including, without
limitation, where ACNielsen or its Subsidiaries are joint defendants with other
persons) with respect to any claim, suit, action, proceeding, injury, loss,
liability, damage or expense incurred or claimed to have been incurred prior to
the Distribution Date in or in connection with the conduct of the ACNielsen
Business or, to the extent any claim is made against ACNielsen or any of its
Subsidiaries (including, without limitation, where ACNielsen or its Subsidiaries
are joint defendants with other persons), the conduct of the D&B Business or the
Cognizant Business, and which claim, suit, action, proceeding, injury, loss,
liability, damage or expense may arise out of an insured or insurable occurrence
under one or more of the ACNielsen Shared Policies, D&B shall, at the time such
claim is asserted, to the extent such Policy may require that Insurance Proceeds
thereunder be collected directly by the named insured or anyone other than the
party against whom the Insured Claim is asserted, be deemed to designate,
without need of further documentation, ACNielsen as the agent and
attorney-in-fact to assert and to collect any related Insurance Proceeds under
such ACNielsen Shared Policy, and shall further be deemed to assign, without
need of further documentation, to ACNielsen any and all rights of an insured
party under such ACNielsen Shared Policy with respect to such asserted claim,
specifically including rights of indemnity and the right to be defended by or at
the expense of the insurer and the right to any applicable Insurance Proceeds
thereunder; provided, however, that nothing in this Section 7.2(b) shall be
deemed to constitute (or to reflect) an assignment of the ACNielsen Shared
Policies to ACNielsen.
VII.3. Administration; Other Matters. (a) Administration.
Except as otherwise provided in Section 7.2 hereof, from and after the
Distribution Date, D&B shall be responsible for (i) Insurance Administration of
the Shared Policies and (ii) Claims Administration under such Shared Policies
with respect to D&B Liabilities, Cognizant Liabilities and ACNielsen
Liabilities; provided that the retention of such responsibilities by D&B is in
no way intended to limit, inhibit or preclude any right to insurance coverage
for any Insured Claim of a named insured under such Policies as contemplated by
the terms of this Agreement; and provided further that D&B's retention of the
administrative responsibilities for the Shared Policies shall not relieve the
party submitting any Insured Claim of the primary responsibility for reporting
such Insured Claim accurately, completely and in a timely manner or of such
party's authority to settle any such Insured Claim within any period permitted
or required by the relevant Policy. D&B may discharge its administrative
responsibilities under this Section 7.3 by contracting for the provision of
services by independent parties. Each of the parties hereto shall administer and
pay
<PAGE> 44
44
any costs relating to defending its respective Insured Claims under Shared
Policies to the extent such defense costs are not covered under such Policies
and shall be responsible for obtaining or reviewing the appropriateness of
releases upon settlement of its respective Insured Claims under Shared Policies.
The disbursements, out-of-pocket expenses and direct and indirect costs of
employees or agents of D&B relating to Claims Administration and Insurance
Administration contemplated by this Section 7.3(a) shall be treated in
accordance with the terms of the Transition Services Agreement, if still in
effect with respect to insurance and risk management, or, if the Transition
Services Agreement shall no longer be in effect with respect to insurance and
risk management, then each of D&B, Cognizant and ACNielsen shall be responsible
for its own Claims Administration and Insurance Administration.
(a) Exceeding Policy Limits.
(i) Where Cognizant Liabilities or ACNielsen Liabilities, as
applicable, are specifically covered under the same Shared Policy for
periods prior to the Distribution Date, or covering claims made after
the Distribution Date with respect to an occurrence prior to the
Distribution Date, then from and after the Distribution Date Cognizant
and ACNielsen may claim coverage for Insured Claims under such Shared
Policy as and to the extent that such insurance is available up to the
full extent of the applicable limits of liability of such Shared Policy
(and may receive any Insurance Proceeds with respect thereto as
contemplated by Section 7.2 or Section 7.3(c) hereof), subject to the
terms of this Section 7.3.
(ii) Except as set forth in this Section 7.3(b), D&B,
Cognizant and ACNielsen shall not be liable to one another for claims
not reimbursed by insurers for any reason not within the control of
D&B, Cognizant or ACNielsen, as the case may be, including, without
limitation, coinsurance provisions, deductibles, quota share
deductibles, self-insured retentions, bankruptcy or insolvency of an
insurance carrier, Shared Policy limitations or restrictions, any
coverage disputes, any failure to timely claim by D&B, Cognizant or
ACNielsen or any defect in such claim or its processing, provided that
D&B shall be responsible for the amount of the difference, if any,
between the deductible set forth in any Shared Policy and the
deductible allocable to Cognizant and/or ACNielsen as set forth in
Schedule 7.3(b) hereto.
(b) Allocation of Insurance Proceeds. Except as otherwise
provided in Section 7.2, Insurance Proceeds received with respect to claims,
costs and expenses under the Shared Policies shall be paid to D&B, which shall
thereafter administer the Shared Policies by paying the Insurance Proceeds, as
appropriate, to D&B with respect to D&B Liabilities, to Cognizant with respect
to Cognizant Liabilities and to ACNielsen with respect to the ACNielsen
Liabilities. Payment of the allocable portions of indemnity costs of Insurance
Proceeds resulting from such Policies will be made by D&B to the appropriate
party upon receipt from the insurance carrier. In the event that the aggregate
limits on any Shared Policies are exceeded by the aggregate of outstanding
Insured Claims by two or more of the relevant parties hereto, such parties agree
to allocate the Insurance Proceeds received thereunder based upon their
respective
<PAGE> 45
45
percentage of the total of their bona fide claims which were covered under such
Shared Policy (their "allocable portion of Insurance Proceeds"), and any party
who has received Insurance Proceeds in excess of such party's allocable portion
of Insurance Proceeds shall pay to the other party or parties the appropriate
amount so that each party will have received its allocable portion of Insurance
Proceeds pursuant hereto. Each of the parties agrees to use commercially
reasonable efforts to maximize available coverage under those Shared Policies
applicable to it, and to take all commercially reasonable steps to recover from
all other responsible parties in respect of an Insured Claim to the extent
coverage limits under a Shared Policy have been exceeded or would be exceeded as
a result of such Insured Claim.
(c) Allocation of Deductibles. In the event that two or more
parties have bona fide claims under any Shared Policy for which a deductible is
payable, the parties agree that the aggregate amount of the deductible paid
shall be borne by the parties in the same proportion which the Insurance
Proceeds received by each such party bears to the total Insurance Proceeds
received under the applicable Shared Policy (their "allocable share of the
deductible"), and any party who has paid more than such share of the deductible
shall be entitled to receive from any other party or parties an appropriate
amount so that each party has borne its allocable share of the deductible
pursuant hereto. For purposes of this paragraph 7.3(d), the amount of the
relevant deductible under any Shared Policy shall be that set forth in Schedule
7.3(b) hereto.
(d) Effective as of the Distribution Date, Cognizant and
ACNielsen shall be responsible for the full amount of the deductible for
workers' compensation, general liability and automobile liability claims as set
forth in Schedule 7.3(e).
VII.4. Agreement for Waiver of Conflict and Shared Defense. In
the event that Insured Claims of more than one of the parties hereto exist
relating to the same occurrence, the relevant parties shall jointly defend and
waive any conflict of interest necessary to the conduct of the joint defense.
Nothing in this Article VII shall be construed to limit or otherwise alter in
any way the obligations of the parties to this Agreement, including those
created by this Agreement, by operation of law or otherwise.
VII.5. Cooperation. The parties agree to use their
commercially reasonable efforts to cooperate with respect to the various
insurance matters contemplated by this Agreement.
<PAGE> 46
46
VIII. MISCELLANEOUS
VIII.1. Complete Agreement; Construction. This Agreement,
including the Exhibits and Schedules, and the Ancillary Agreements shall
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter. In the event of any inconsistency
between this Agreement and any Schedule hereto, the Schedule shall prevail.
Other than Section 2.1(j)(i), Section 2.1(j)(ii), Section 2.1(j)(iv), Section
2.7, Section 4.5 and Article VI, which shall prevail over any inconsistent or
conflicting provisions in any Ancillary Agreement other than the Indemnity and
Joint Defense Agreement (the provisions of which shall prevail), notwithstanding
any other provisions in this Agreement to the contrary, in the event and to the
extent that there shall be a conflict between the provisions of this Agreement
and the provisions of any Ancillary Agreement, such Ancillary Agreement shall
control.
VIII.2. Ancillary Agreements. Subject to the last sentence of
Section 8.1, this Agreement is not intended to address, and should not be
interpreted to address, the matters specifically and expressly covered by the
Ancillary Agreements. D&B, Cognizant and ACNielsen acknowledge and agree that
except to the extent that the Indemnity and Joint Defense Agreement expressly
states otherwise, the provisions of such agreement are independent of the
provisions hereof, and, subject to the foregoing exception, none of the
agreements herein or in any other Ancillary Agreement are intended to govern in
any way any of the matters which are the subject of such Indemnity and Joint
Defense Agreement.
VIII.3. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to the other parties.
VIII.4. Survival of Agreements. Except as otherwise
contemplated by this Agreement, all covenants and agreements of the parties
contained in this Agreement shall survive the Distribution Date.
VIII.5. Expenses. Except as otherwise set forth in this
Agreement or any Ancillary Agreement, all costs and expenses incurred on or
prior to the Distribution Date (whether or not paid on or prior to the
Distribution Date) in connection with the preparation, execution, delivery and
implementation of this Agreement and any Ancillary Agreement, the Information
Statement (including any registration statement on Form 10 of which such
Information Statement may be a part) and the Distribution and the consummation
of the transactions contemplated thereby shall be charged to and paid by D&B.
Except as otherwise set forth in this Agreement or any Ancillary Agreement, all
costs and expenses incurred after the Distribution Date in connection with the
implementation of this Agreement or any Ancillary Agreement, the consummation of
the Distribution or the consummation of the transactions contemplated by this
Agreement or any Ancillary Agreement shall be charged to and paid by D&B. Except
as otherwise set forth in this Agreement or any Ancillary Agreement, each party
<PAGE> 47
47
shall bear its own costs and expenses incurred after the Distribution Date. Any
amount or expense to be paid or reimbursed by any party hereto to any other
party hereto shall be so paid or reimbursed promptly after the existence and
amount of such obligation is determined and demand therefor is made.
VIII.6. Notices. All notices and other communications
hereunder shall be in writing and hand delivered or mailed by registered or
certified mail (return receipt requested) or sent by any means of electronic
message transmission with delivery confirmed (by voice or otherwise) to the
parties at the following addresses (or at such other addresses for a party as
shall be specified by like notice) and will be deemed given on the date on which
such notice is received:
To The Dun & Bradstreet Corporation:
One Diamond Hill Road
Murray Hill, NJ 07974
Telecopy: (908) 665-5803
Attn: General Counsel
To Cognizant Corporation:
200 Nyala Farms
Westport, Connecticut 06880
Telecopy: (203) 222-4201
Attn: General Counsel
To ACNielsen Corporation:
177 Broad Street
Stamford, Connecticut 06901
Telecopy: (203) 961-3179
Attn: General Counsel
VIII.7. Waivers. The failure of any party to require strict
performance by any other party of any provision in this Agreement will not waive
or diminish that party's right to demand strict performance thereafter of that
or any other provision hereof.
<PAGE> 48
48
VIII.8. Amendments. Subject to the terms of Section 8.11
hereof, this Agreement may not be modified or amended except by an agreement in
writing signed by each of the parties hereto.
VIII.9. Assignment. (a) This Agreement shall not be
assignable, in whole or in part, directly or indirectly, by any party hereto
without the prior written consent of the other parties hereto, and any attempt
to assign any rights or obligations arising under this Agreement without such
consent shall be void.
(a) D&B will not distribute to its stockholders any interest
in any D&B Business Entity, by way of a spin-off distribution, split-off or
other exchange of interests in a D&B Business Entity for any interest in D&B
held by D&B stockholders, or any similar transaction or transactions, unless the
distributed D&B Business Entity undertakes to each of Cognizant and ACNielsen to
be jointly and severally liable for all D&B Liabilities hereunder.
(b) Cognizant will not distribute to its stockholders any
interest in any Cognizant Business Entity, by way of a spin-off distribution,
split-off or other exchange of interests in a Cognizant Business Entity for any
interest in Cognizant held by Cognizant stockholders, or any similar transaction
or transactions, unless the distributed Cognizant Business Entity undertakes to
each of D&B and ACNielsen to be jointly and severally liable for all Cognizant
Liabilities hereunder.
(c) ACNielsen will not distribute to its stockholders any
interest in any ACNielsen Business Entity, by way of a spin-off distribution,
split-off or other exchange of interests in an ACNielsen Business Entity for any
interest in ACNielsen held by ACNielsen stockholders, or any similar transaction
or transactions, unless the distributed ACNielsen Business Entity undertakes to
each of D&B and Cognizant to be jointly and severally liable for all ACNielsen
Liabilities hereunder.
VIII.10. Successors and Assigns. The provisions to this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and permitted assigns.
VIII.11. Termination. This Agreement (including, without
limitation, Article III hereof) may be terminated and the Distribution may be
amended, modified or abandoned at any time prior to the Distribution by and in
the sole discretion of D&B without the approval of Cognizant or ACNielsen or the
shareholders of D&B. In the event of such termination, no party shall have any
liability of any kind to any other party or any other person. After the
Distribution, this Agreement may not be terminated except by an agreement in
writing signed by the parties; provided, however, that Article III shall not be
terminated or amended after the Distribution in respect of the third party
beneficiaries thereto without the consent of such persons.
VIII.12. Subsidiaries. Each of the parties hereto shall cause
to be performed, and hereby guarantees the performance of, all actions,
agreements and obligations set forth herein to
<PAGE> 49
49
be performed by any Subsidiary of such party or by any entity that is
contemplated to be a Subsidiary of such party on and after the Distribution
Date.
VIII.13. Third Party Beneficiaries. Except as provided in
Article III relating to Indemnitees, this Agreement is solely for the benefit of
the parties hereto and their respective Subsidiaries and Affiliates and should
not be deemed to confer upon third parties any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.
VIII.14. Title and Headings. Titles and headings to sections
herein are inserted for the convenience of reference only and are not intended
to be a part of or to affect the meaning or interpretation of this Agreement.
VIII.15. Exhibits and Schedules. The Exhibits and Schedules
shall be construed with and as an integral part of this Agreement to the same
extent as if the same had been set forth verbatim herein.
VIII.16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
VIII.17. Consent to Jurisdiction. Without limiting the
provisions of Article VI hereof, each of the parties irrevocably submits to the
exclusive jurisdiction of (a) the Supreme Court of the State of New York, New
York County, and (b) the United States District Court for the Southern District
of New York, for the purposes of any suit, action or other proceeding arising
out of this Agreement or any transaction contemplated hereby. Each of the
parties agrees to commence any action, suit or proceeding relating hereto either
in the United States District Court for the Southern District of New York or if
such suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court of the State of New York, New York
County. Each of the parties further agrees that service of any process, summons,
notice or document by U.S. registered mail to such party's respective address
set forth above shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 8.17. Each of the parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Supreme Court of the State of New York, New York County, or
(ii) the United States District Court for the Southern District of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
VIII.18. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in
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50
any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions, the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
<PAGE> 51
51
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the day and year first above written.
THE DUN & BRADSTREET CORPORATION
by /s/ Volney Taylor
--------------------------------
Name: Volney Taylor
Title:
COGNIZANT CORPORATION
by /s/ Robert E. Weissman
--------------------------------
Name: Robert E. Weissman
Title:
ACNIELSEN CORPORATION
by /s/ Nicholas L. Trivisonno
--------------------------------
Name: Nicholas L. Trivisonno
Title:
<PAGE> 1
Exhibit 10(b)
TAX ALLOCATION AGREEMENT
This TAX ALLOCATION AGREEMENT is dated as of October 28, 1996,
among THE DUN & BRADSTREET CORPORATION, a Delaware corporation ("D&B"),
COGNIZANT CORPORATION, a Delaware corporation ("Cognizant"), and ACNIELSEN
CORPORATION, a Delaware corporation ("ACNielsen") (collectively, the "Parties").
WHEREAS, as of the date hereof, D&B is the common parent of an
affiliated group of domestic corporations within the meaning of Section 1504(a)
of the Code, including members of the Cognizant Group (as defined below) and
members of the ACNielsen Group (as defined below), and the members of the
affiliated group have heretofore joined in filing consolidated federal income
tax returns;
WHEREAS, D&B proposes to distribute all of the outstanding
stock of Cognizant and ACNielsen to its stockholders (the "Distribution") and,
as a result of the Distribution, the Cognizant Group and the ACNielsen Group
will not be included in the consolidated Federal income tax return D&B for the
portion of the year following the Distribution or in future years;
WHEREAS, D&B, Cognizant and ACNielsen have entered into an
agreement (the "Distribution Agreement") to, among other things, allocate
certain assets and to allocate and assign responsibility for certain liabilities
of the present D&B and its present and former subsidiaries; and
WHEREAS, D&B, Cognizant and ACNielsen desire to allocate the
tax burdens and benefits of transactions which occurred on or prior to the
Distribution Date and to provide for certain other tax matters, including the
assignment of responsibility for the preparation and filing of tax returns, the
payment of taxes, and the prosecution and defense of any tax controversies;
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereby agree
as follows:
I. DEFINITIONS
I.1. General. As used in this Agreement, the following terms
shall have the following meanings:
(a) "ACNielsen" shall mean ACNielsen Corporation, a Delaware
corporation.
(b) "ACNielsen Business" shall mean the businesses of the
members of the ACNielsen Group, as conducted at any time prior to, on or after
the Distribution Date.
<PAGE> 2
2
Notwithstanding the foregoing, the ACNielsen Businesses shall not include (i)
any activities or operations primarily related to, arising out of or resulting
from any business terminated or divested prior to the Distribution Date; or (ii)
any of the businesses listed on Schedule 1.1(b).
(c) "ACNielsen Common Shares" shall mean all the outstanding
shares of common stock of ACNielsen, together with the appurtenant share
purchase rights.
(d) "ACNielsen Group" shall mean ACNielsen and each
corporation, partnership, limited liability company, or other entity
contemplated to remain or become a Subsidiary of ACNielsen pursuant to the
Distribution Agreement.
(e) "Ancillary Agreements" shall mean all of the written
agreements, instruments, assignments or other arrangements (other than this
Agreement) entered into in connection with the transactions contemplated hereby,
including, without limitation, the Distribution Agreement, the Conveyancing and
Assumption Instruments, the Employee Benefits Services and Liability Agreement,
the Shared Transaction Services Agreement, the Transition Services Agreement,
the Data Processing Agreement and the Intellectual Property Agreements.
(f) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the Treasury regulations promulgated thereunder, including any
successor legislation.
(g) "Cognizant" shall mean Cognizant Corporation, a Delaware
corporation.
(h) "Cognizant Business" shall mean the businesses of the
members of the Cognizant Group, as conducted at any time prior to, on or after
the Distribution Date. Notwithstanding the foregoing, the Cognizant Businesses
shall not include (i) any activities or operations primarily related to, arising
out of or resulting from any business terminated or divested prior to the
Distribution Date; or (ii) any of the businesses listed on Schedule 1.1(h).
(i) "Cognizant Common Shares" shall mean all the outstanding
shares of common stock of Cognizant, together with the appurtenant share
purchase rights.
(j) "Cognizant Group" shall mean Cognizant and each
corporation, partnership, limited liability company, or other entity
contemplated to remain or become a Subsidiary of Cognizant pursuant to the
Distribution Agreement.
(k) "Consolidated Return" shall mean the consolidated federal
income tax return of D&B for the period commencing on January 1, 1996, and
including the members of the ACNielsen Group and the members of the Cognizant
Group through October 31, 1996.
(l) "Controlled Entity" shall mean any corporation,
partnership or other entity of which another entity (i) owns, directly or
indirectly, ownership interests sufficient to elect a majority of the Board of
Directors (or persons performing similar functions) (irrespective of whether at
the time any other class or classes of ownership interests of such corporation,
<PAGE> 3
3
partnership or other entity shall or might have such voting power upon the
occurrence of any contingency) or (ii) is a general partner or an entity
performing similar functions (e.g., a trustee).
(m) "D&B" shall mean The Dun & Bradstreet Corporation, a
Delaware corporation.
(n) "D&B Business" shall mean each and every business
conducted at any time by D&B or any Subsidiary of D&B except a Cognizant
Business or an ACNielsen Business.
(o) "D&B Common Stock" shall mean the shares of common stock,
par value $1.00 per share, of D&B.
(p) "D&B Group" shall mean D&B and each person (other than a
member of the Cognizant Group or the ACNielsen Group) that is a Subsidiary of
D&B.
(q) "Deferred Compensation Deduction" shall mean a deduction
with respect to deferred compensation payments and/or the exercise of stock
options in D&B by any former employee of the Old D&B Group if such deduction is
disallowed for a member of the D&B Group and may be claimed by any member of the
Cognizant Group or any member of the ACNielsen Group.
(r) "Distribution" shall mean the distribution on the
Distribution Date to holders of record of shares of D&B Common Stock as of the
Distribution Record Date of (i) the Cognizant Common Shares owned by D&B on the
basis of one Cognizant Common Share for each outstanding share of D&B Common
Stock and (ii) the ACNielsen Common Shares owned by D&B on the basis of one
ACNielsen Common Share for each three outstanding shares of D&B Common Stock.
(s) "Distribution Agreement" shall have the meaning as defined
in the recitals hereto.
(t) "Distribution Date" shall mean such date as may hereafter
be determined by D&B's Board of Directors as the date as of which the
Distribution shall be effected.
(u) "Distribution Record Date" shall mean such date as may
hereafter be determined by D&B's Board of Directors as the record date for the
Distribution.
(v) "Final Determination" shall mean the final resolution of
liability for any Tax for any taxable period, including any related interest or
penalties, by or as a result of: (i) a final and unappealable decision,
judgment, decree or other order by any court of competent jurisdiction; (ii) a
closing agreement or accepted offer in compromise under Section 7121 or 7122 of
the Code, or comparable agreement under the laws of other jurisdictions which
resolves the entire Tax liability for any taxable period; (iii) any allowance of
a refund or credit in respect of an overpayment of Tax, but only after the
expiration of all periods during which such refund
<PAGE> 4
4
may be recovered by the jurisdiction imposing the Tax; or (iv) any other final
disposition, including by reason of the expiration of the applicable statute of
limitations.
(w) "Foreign Tax Agreement" shall have the meaning as defined
in Section 6.2.
(x) "Governmental Authority" shall mean any federal, state,
local, foreign or international court, government, department, commission,
board, bureau, agency, official or other regulatory, administrative or
governmental authority.
(y) "Included Party" shall have the meaning as defined in
Section 2.1.
(z) "Income Taxes" shall mean any federal, state or local
Taxes determined by reference to income or imposed in lieu of income Taxes, such
as Taxes based on net worth or gross receipts.
(aa) "Indemnifying Party" shall have the meaning as defined in
Section 3.6.
(bb) "Indemnitee" shall have the meaning as defined in Section
3.6.
(cc) "IRS" shall mean the Internal Revenue Service.
(dd) "Nonperforming Party" shall have the meaning as defined
in Section 5.2.
(ee) "Old D&B Consolidated Group" shall mean D&B and all of
the direct and indirect Subsidiaries of D&B prior to the Distribution Date that
joined in or were eligible to join the Consolidated Return or any Prior Period
Consolidated Return.
(ff) "Old D&B Group" shall mean D&B and all of its
Subsidiaries (direct and indirect, domestic and foreign) prior to the
Distribution.
(gg) "Other Taxes" shall mean any federal, state or local
Taxes other than Income Taxes.
(hh) "Parties" shall have the meaning as defined in the
recitals hereto.
(ii) "person" shall mean any natural person, corporation,
business trust, joint venture, association, company, partnership or government,
or any agency or political subdivision thereof.
(jj) "Preparing Party" shall have the meaning as defined in
Section 2.1.
(kk) "Prior Period Consolidated Return" shall mean any
consolidated Tax Return of D&B filed, or to be filed, for years prior to the
Consolidated Return year.
<PAGE> 5
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(ll) "Reorganization Tax Payment" shall mean the payment of
any Tax for which Cognizant or D&B is liable pursuant to Section 3.3 of this
Agreement and the imposition and/or payment of which will permit another Party
or any Subsidiary to increase deductions, losses or Tax credits or decrease
income, gains or recapture of Tax credits for any taxable period or periods
beginning after or including but not ending on October 31, 1996.
(mm) "Reorganizations" shall mean the series of contributions
and distributions of Controlled Entities and assets, transfers and assumptions
of liabilities, and other transactions whereby the D&B Group, the ACNielsen
Group and the Cognizant Group are formed and all other Controlled Entities of
D&B prior to the Distribution are placed under the control of the appropriate
parent corporation(s) in preparation for the Distribution.
(nn) "Separate Business Foreign Taxes" shall have the meaning
as defined in Section 3.1(d).
(oo) "Separate Company Income Tax Item" shall mean any item or
position reported or reportable on a state or local Income Tax Return other than
those items determined by the D&B corporate office and allocated by the
corporate office to the operating division or entity to which such Income Tax
Return relates.
(pp) "Subpart F Income" shall have the meaning as defined in
Section 3.5.
(qq) "Subsidiary" shall mean any entity of which another
entity's ownership satisfies the 80-percent voting and value test defined in
Section 1504(a)(2) of the Code, whether directly or indirectly.
(rr) "Tax" or "Taxes" whether used in the form of a noun or
adjective, shall mean taxes on or measured by income, franchise, gross receipts,
sales, use, excise, payroll, personal property, real property, ad-valorem,
value-added, leasing, leasing use or other taxes, levies, imposts, duties,
charges or withholdings of any nature. Whenever the term "Tax" or "Taxes" is
used (including, without limitation, regarding any duty to reimburse another
party for indemnified taxes or refunds or credits of taxes) it shall include
penalties, fines, additions to tax and interest thereon.
(ss) "Tax Benefit" shall mean the sum of the amount by which
the Tax liability (after giving effect to any alternative minimum or similar
Tax) of a corporation or group of affiliated corporations to the appropriate
taxing authority is reduced (including, without limitation, by deduction,
entitlement to refund, credit or otherwise, whether available in the current
taxable year, as an adjustment to taxable income in any other taxable year or as
a carryforward or carryback, as applicable) plus any interest from such
government or jurisdiction relating to such Tax liability.
(tt) "Tax Item" shall mean any item of income, capital gain,
net operating loss, capital loss, deduction, credit or other Tax attribute
relevant to the calculation of a Tax liability.
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(uu) "Tax Returns" shall mean all reports or returns
(including information returns) required to be filed or that may be filed for
any period with any taxing authority (whether domestic or foreign) in connection
with any Tax or Taxes (whether domestic or foreign).
(vv) "Timing Adjustment" shall mean any adjustment which (x)
decreases deductions, losses or credits or increases income (including any
increases in income where no income was previously reported), gains or recapture
of Tax credits for the period in question, and for which D&B is liable pursuant
to this Agreement, and (y) will permit any member of the ACNielsen Group or any
member of the Cognizant Group to increase deductions, losses or Tax credits or
decrease income, gains or recapture of Tax credits for any taxable period or
periods beginning after or including but not ending on October 31, 1996.
I.2. References; Interpretation. References in this Agreement
to any gender include references to all genders, and references to the singular
include references to the plural and vice versa. The words "include", "includes"
and "including" when used in this Agreement shall be deemed to be followed by
the phrase "without limitation". Unless the context otherwise requires,
references in this Agreement to Articles, Sections, Exhibits and Schedules shall
be deemed references to Articles and Sections of, and Exhibits and Schedules to,
such Agreement. Unless the context otherwise requires, the words "hereof",
"hereby" and "herein" and words of similar meaning when used in this Agreement
refer to this Agreement in its entirety and not to any particular Article,
Section or provision of this Agreement.
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7
II. PREPARATION AND FILING OF TAX RETURNS
II.1. Manner of Preparation.
(a) All Tax Returns filed on or after the Distribution Date
shall be prepared on a basis that is consistent with the rulings obtained from
the IRS or any other Governmental Authority in connection with the
Reorganizations or Distribution (in the absence of a controlling change in law
or circumstances) and shall be filed on a timely basis (including pursuant to
extensions) by the party responsible for such filing under this Agreement. In
the absence of a controlling change in law or circumstances and unless deviation
from past practice would have no adverse effect on any of the Parties, all Tax
Returns filed after the date of this Agreement shall be prepared on a basis
consistent with the elections, accounting methods, conventions, assumptions and
principles of taxation used for the most recent taxable periods for which Tax
Returns involving similar Tax Items have been filed; provided, however, that a
party filing any Tax Return that does not conform to such past practices shall
not be liable for any additional Tax liability imposed, in whole or in part, as
a result of such deviation from past practice if: (i) for Tax Returns filed
within three years of the Distribution Date, 30 days prior to the filing of such
Tax Return, the party filing such Tax Return notifies all parties that may be
adversely affected; and (ii) the party filing such Tax Return establishes that
conformity with past practice involves a significant risk of the imposition of a
penalty. Subject to the provisions of this Agreement, all decisions relating to
the preparation of Tax Returns shall be made in the sole discretion of the party
responsible under this Agreement for its preparation; provided, however, that to
the extent a party (or any of its businesses) is included in a Tax Return
prepared by another party (the "Preparing Party"), the party not responsible for
preparing the Tax Return (the "Included Party") shall have the right to review
and comment on such Tax Return prior to the filing thereof in the following
manner:
(i) The Preparing Party shall submit any part of such Tax
Return relating to the Included Party to the Included Party at least 21 days
prior to the date on which such Tax Return is due (including extensions). The
Included Party shall submit its comments to the Preparing Party within 10 days
of receipt of the relevant portions of such Tax Return. The Preparing Party
shall alter such Tax Return to reflect the comments of the Included Party unless
the Preparing Party reasonably believes that such alteration would have an
adverse impact upon the Preparing Party.
(b) Unless otherwise required by the IRS, any Governmental
Authority or a court, the Parties hereby agree to file all Tax Returns, and to
take all other actions, in a manner consistent with the position that the last
day on which any member of the ACNielsen Group and any member of the Cognizant
Group was included in the Old D&B Group is October 31, 1996. For any period that
includes but does not end on October 31, 1996, to the extent permitted by law or
administrative practice, the taxable year of each member of the Old D&B Group
and any group of such members shall be treated as ending on October 31, 1996. If
a taxable year of any member of the Old D&B Group or any group or other
combination of such members that begins on or before and ends after October 31,
1996, is not treated under the previous sentence as
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8
closing on October 31, 1996, it will be treated for purposes of this Agreement
as if the member or group had a taxable year that ended on October 31, 1996,
except that Tax Items that are calculated on an annual basis shall be
apportioned on a time basis.
II.2. Predistribution Tax Returns.
(a) All consolidated federal Income Tax Returns of the Old D&B
Consolidated Group, as well as any separate, non-consolidated federal Income Tax
Returns of any member of the Old D&B Group, that are required to be filed for
periods beginning before the Distribution Date shall be prepared and filed by
D&B.
(b) All state and local Income Tax Returns of any member of
the Old D&B Consolidated Group that may be or are required to be filed for
periods beginning before the Distribution Date shall be prepared and filed by
D&B.
(c) All Tax Returns for Other Taxes of any member of the Old
D&B Consolidated Group that may be or are required to be filed for any period
beginning before the Distribution Date shall be prepared and filed by ACNielsen
if they relate to an ACNielsen Business, by Cognizant if they relate to a
Cognizant Business, and by D&B if they relate to a D&B Business. If any such Tax
Return relates to businesses of more than one of the Parties, then the entity
that filed the corresponding Tax Return for the most recent period for which
such a Tax Return has been filed, or, if no such corresponding Tax Return has
been filed, the appropriate entity in accordance with local law or custom, shall
prepare and file such Tax Return.
(d) All foreign Tax Returns that are required to be filed by
or relating to any member of the Old D&B Group for periods beginning before the
Distribution Date shall be prepared and filed by the entity that filed the
corresponding Tax Return for the most recent period for which such a Tax Return
has been filed, or, if no such corresponding Tax Return has been filed, by the
appropriate entity in accordance with local law or custom.
II.3. Post-Distribution Tax Returns.
(a) The filing of all Tax Returns for periods beginning on or
after the Distribution Date shall be the responsibility of D&B if they relate to
the D&B Group or any member thereof, shall be the responsibility of ACNielsen if
they relate to the ACNielsen Group or any member thereof, and shall be the
responsibility of Cognizant if they relate to the Cognizant Group or any member
thereof.
(b) In the case of any partnership in which a member of the
Old D&B Consolidated Group is the designated tax matters partner, such entity
shall continue to be responsible for the preparation and filing of such
partnership's Tax Returns.
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III. PAYMENT OF TAXES
III.1. Predistribution Taxes.
(a) D&B shall be liable for and shall pay all Taxes due (or
receive all refunds) in connection with the filing of the Old D&B Consolidated
Group's consolidated federal Income Tax Return, as well as any separate,
non-consolidated federal Income Taxes of any member of the Old D&B Group, for
all taxable periods beginning before the Distribution Date.
(b) Except to the extent provided below, D&B shall be liable
for and shall pay to the relevant taxing authority all state and local Income
Taxes (or receive all refunds) for any taxable periods for which D&B has filing
responsibility under Section 2.2(b) of this Agreement, including any audit
adjustments to such Taxes. To the extent that any Tax Return for such state and
local Income Taxes includes Income Taxes relating to a business of Cognizant or
ACNielsen, the Included Party shall prepare and deliver to D&B, at least 90 days
prior to the due date (including extensions) of such Tax Return, a true and
correct accounting of all relevant Tax Items relating to the Included Party's
business.
(i) Straddle Periods.
(A) In the case of any such taxable period that does not end
on or before October 31, 1996, ACNielsen shall also provide D&B, at least 90
days prior to the due date (including extensions) of the relevant Tax Return,
with a true and correct accounting of all relevant Tax Items and corresponding
Taxes of each member of the ACNielsen Group as if the taxable period for such
entity began immediately after October 31, 1996 (using the principles provided
in Section 2.1(b) of this Agreement), and ACNielsen shall be liable for and
shall pay to D&B any such Taxes attributable to such period, including any audit
adjustments to such Taxes.
(B) In the case of any such taxable period that does not end
on or before October 31, 1996, Cognizant shall also provide D&B, at least 90
days prior to the due date (including extensions) of the relevant Tax Return,
with a true and correct accounting of all relevant Tax Items and corresponding
Taxes of each member of the Cognizant Group as if the taxable period for such
entity began immediately after October 31, 1996 (using the principles provided
in Section 2.1(b) of this Agreement), and Cognizant shall be liable for and
shall pay to D&B any such Taxes attributable to such period, including any audit
adjustments to such Taxes.
(ii) Adjustments to Separate Company Income Tax Items.
(A) If an audit adjustment to any separate, non-consolidated
state or local Income Tax Return of a member of the ACNielsen Group for any
period beginning prior to the Distribution Date is made by the state or local
governmental authority and relates to a Separate Company Income Tax Item, then
ACNielsen shall be liable for such audit adjustment.
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(B) If an audit adjustment to any separate, non-consolidated
state or local Income Tax Return of a member of the Cognizant Group for any
period beginning prior to the Distribution Date is made by the state or local
governmental authority and relates to a Separate Company Income Tax Item, then
Cognizant shall be liable for such audit adjustment.
(c) The entity responsible for the filing of any Tax Return
for Other Taxes pursuant to Section 2.2(c) shall pay to the relevant taxing
authority all Other Taxes due or payable (or receive all refunds) in connection
therewith; provided, however, that each of the Parties shall be liable for all
Other Taxes (or be entitled to receive all refunds) for all periods beginning
prior to the Distribution Date, including audit adjustments thereto, relating to
such Party's businesses. To the extent any Tax Return for such Other Taxes
includes Other Taxes relating to a business other than the Preparing Party's
businesses, the Included Party shall prepare and deliver to the Preparing Party,
at least 90 days prior to the due date (including extensions) of such Tax
Return, a true and correct accounting of all relevant Tax Items and
corresponding Taxes relating to the Included Party's business and shall pay the
Preparing Party the amount of any such Other Taxes attributable to the Included
Party's business at that time.
(d) Except as provided in Schedule 3.1(d), the entity
responsible for the filing of any foreign Tax Return pursuant to Section 2.2(d)
shall pay to the relevant taxing authority all Taxes due or payable (or receive
all refunds) in connection therewith; provided, however, that each of the
Parties shall be liable for all foreign Taxes (or be entitled to receive all
refunds) for all taxable periods beginning prior to the Distribution Date,
including audit adjustments thereto, relating to such Party's businesses. To the
extent any foreign Tax Return includes Taxes relating to a business other than
the Preparing Party's business, the Included Party shall prepare and deliver to
the Preparing Party, at least 90 days prior to the due date (including
extensions) of such foreign Tax Return, a true and correct accounting of all
relevant Tax Items and corresponding Taxes relating to the Included Party's
business for the taxable period ("Separate Business Foreign Taxes") and shall
pay the Preparing Party the amount of any such Separate Business Foreign Taxes
at that time.
(i) Separate Business Foreign Taxes shall be calculated as if
the Included Party's business were a separate taxpayer for the relevant taxable
period. All such calculations shall be based upon the business's actual Tax
attributes for the relevant taxable period, including the use of the business's
Tax attributes (such as losses or credits) from prior periods that are not
otherwise utilized and that are carried over to the relevant taxable period
under local law.
(ii) Tax items that relate to or arise out of the Tax planning
of the group of entities or businesses included in the relevant foreign Tax
Return as a whole rather than any separate entity or business shall not be
included in the calculation of Separate Business Foreign Taxes.
(iii) If the total liability for Taxes reported as due and
payable on the relevant foreign Tax Return exceeds or is less than the total of
the Separate Business Foreign Taxes for all businesses included in such foreign
Tax Return, then the cost or benefit of any net difference
<PAGE> 11
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shall be allocated to each business in proportion to the amount of taxable
income generated by such business.
(iv) Notwithstanding any statement to the contrary in this
Section 3.1(d), the Separate Business Foreign Taxes of any entity shall not
exceed the total liability for Taxes reported as due and payable on the relevant
foreign Tax Return.
(v) In the event of any Final Determination upholding an audit
adjustment to the amount of foreign Taxes reported as due and payable on the
relevant foreign Tax Return, Separate Business Foreign Taxes shall be
recalculated to incorporate any such adjustment.
III.2. Post-Distribution Taxes. Unless otherwise provided in
this Agreement:
(a) D&B shall pay all Taxes and shall be entitled to receive
and retain all refunds of Taxes with respect to periods beginning on or after
the Distribution Date that are attributable to the D&B Group or any member
thereof;
(b) Cognizant shall pay all Taxes and shall be entitled to
receive and retain all refunds of Taxes with respect to periods beginning on or
after the Distribution Date that are attributable to the Cognizant Group or any
member thereof;
(c) ACNielsen shall pay all Taxes and shall be entitled to
receive and retain all refunds of Taxes with respect to periods beginning on or
after the Distribution Date that are attributable to the ACNielsen Group or any
member thereof.
III.3. Restructuring Taxes. Notwithstanding any statement to
the contrary in this Agreement and except as otherwise provided in the
Distribution Agreement, to the extent that any Taxes are found to arise out of
the Reorganizations, then any such Tax liability incurred by the Parties (or any
of their Subsidiaries) shall be the responsibility of D&B; provided, however,
that to the extent specific cash allocations for such Taxes are made in
connection with the Distribution, D&B shall be relieved of its liability for
such Taxes.
III.4. Gain Recognition Agreements.
(a) In the event that the Cognizant Group transfers,
liquidates or otherwise disposes of the stock or assets of any entity listed on
Schedule 3.4(a) and such transfer, liquidation or disposition results in the D&B
Group recognizing gain pursuant to a gain recognition agreement under Section
367(a) of the Code, then Cognizant shall be liable for any resulting Taxes,
including interest, that any member of the D&B Group is required to pay.
(b) In the event that the ACNielsen Group transfers,
liquidates or otherwise disposes of the stock or assets of any entity listed on
Schedule 3.4(b) and such transfer, liquidation or disposition results in the D&B
Group recognizing gain pursuant to a gain
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recognition agreement under Section 367(a) of the Code, then ACNielsen shall be
liable for any resulting Taxes, including interest, that any member of the D&B
Group is required to pay.
III.5. Subpart F Inclusions.
(a) If income earned by any foreign member of the Cognizant
Group is required to be included in the United States federal income tax return
of any member of the Cognizant Group pursuant to Subpart F of the Code ("Subpart
F Income"), then D&B shall be liable for the Taxes attributable to the portion
of such income generated while such foreign member of the Cognizant Group was a
member of the Old D&B Group. The portion of such income which shall be
considered attributable to the period in which such foreign member was a member
of the Old D&B Group shall be computed as if the foreign member's taxable year
ended on October 31, 1996.
(b) If income earned by any foreign member of the ACNielsen
Group constitutes Subpart F Income of any member of the ACNielsen Group, then
D&B shall be liable for the Taxes attributable to the portion of such income
generated while such foreign member of the ACNielsen Group was a member of the
Old D&B Group. The portion of such income which shall be considered attributable
to the period in which such foreign member was a member of the Old D&B Group
shall be computed as if the foreign member's taxable year ended on October 31,
1996.
(c) The amount payable by D&B pursuant to this Section 3.5
shall not exceed the actual Taxes payable with respect to such Subpart F Income
minus any foreign Tax credits attributable to such Subpart F Income.
III.6. Indemnification.
(a) Indemnification by D&B. D&B shall indemnify, defend and
hold harmless Cognizant and ACNielsen (and their respective affiliates) from and
against any and all Tax liabilities allocated to D&B by this Agreement.
(b) Indemnification by Cognizant. Cognizant shall indemnify,
defend and hold harmless D&B and ACNielsen (and their respective affiliates)
from and against any and all Tax liabilities allocated to Cognizant by this
Agreement.
(c) Indemnification by ACNielsen. ACNielsen shall indemnify,
defend and hold harmless D&B and Cognizant (and their respective affiliates)
from and against any and all Tax liabilities allocated to ACNielsen by this
Agreement.
(d) Indemnity Payments.
(i) To the extent that one party (the "Indemnifying Party")
owes money to another party (the "Indemnitee") pursuant to this Section 3.6, the
Indemnitee shall, within 14 days after
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receiving the Indemnifying Party's calculations (as specified in Sections
3.1(b), 3.1(c) and 3.1(d)), submit to the Indemnifying Party the Indemnitee's
calculations of the amount required to be paid pursuant to this Section 3.6,
showing such calculations in sufficient detail so as to permit the Indemnifying
Party to understand the calculations. The Indemnifying Party shall pay the
Indemnitee, no later than 30 days prior to the due date (including extensions)
of the relevant Tax Returns or 14 days after the Indemnifying Party receives the
Indemnitee's calculations, the amount for which the Indemnifying Party is
required to pay or indemnify the Indemnitee under this Section 3.6. The
Indemnifying Party shall have the right to disagree with the Indemnitee's
calculations. Any dispute regarding such calculations shall be resolved in
accordance with Section 5.4 of this Agreement.
(ii) All indemnity payments shall be calculated on a pre-Tax
basis and shall be treated as contributions to capital and/or dividends
immediately prior to the Distribution.
IV. TAX ATTRIBUTES, TIMING ADJUSTMENTS AND REORGANIZATION
TAX PAYMENTS
IV.1. Carrybacks. In the event of the realization of any
deduction, loss or credit by a party for any taxable period beginning on or
after the Distribution Date, the party realizing such deduction, loss or credit
may, in its sole discretion, and to the extent permitted under applicable Tax
law, elect not to carry back such deduction, loss or credit. To the extent any
amount is carried back and used by D&B for a taxable period beginning prior to
the Distribution Date, D&B shall not be obligated to make any payment regarding
such carryback.
IV.2. Deductions or Credits. Except as provided in Section
4.3, none of the Parties shall be obligated to make a payment to another party
as a result of utilizing a net operating loss, credit or similar Tax attribute
arising in a period beginning prior to the Distribution Date.
IV.3. Timing Adjustments, Reorganization Tax Payments, and
Deferred Compensation Deductions.
(a) If an audit or other examination of any federal, state or
local Tax Return (x) for any period beginning prior to the Distribution Date
shall result (by settlement or otherwise) in a Timing Adjustment in favor of the
ACNielsen Group or any member thereof or the Cognizant Group or any member
thereof, or (y) for any taxable period shall result (by settlement or otherwise)
in a Deferred Compensation Deduction in favor of the ACNielsen Group or any
member thereof or the Cognizant Group or any member thereof, or if any
Reorganization Tax Payment in favor of the ACNielsen Group or any member thereof
or the Cognizant Group or any member thereof is made by D&B, then:
(i) D&B shall notify ACNielsen or Cognizant, as the case may
be, and shall provide ACNielsen or Cognizant with adequate information so that
it can reflect on the
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appropriate Tax Returns any resulting increases in deductions, losses or Tax
credits or decreases in income, gains or recapture of Tax credits;
(ii) ACNielsen or Cognizant, as the case may be, shall pay D&B
the amount of any Tax Benefit that results from such Timing Adjustment,
Reorganization Tax Payment, or Deferred Compensation Deduction within 30 days of
the date such Tax Benefits are realized;
(iii) Notwithstanding the foregoing, ACNielsen or Cognizant,
as the case may be, shall only be required to take steps to obtain such Tax
Benefit or to pay D&B if, in the opinion of ACNielsen's or Cognizant's tax
counsel, which counsel shall be reasonably acceptable to D&B, the reporting of
such Tax Benefit shall not subject ACNielsen or Cognizant to the imposition of a
penalty.
(b) If any Reorganization Tax Payment in favor of the
ACNielsen Group or any member thereof or the D&B Group or any member thereof is
made by Cognizant, then:
(i) Cognizant shall notify ACNielsen or D&B, as the case may
be, and shall provide ACNielsen or D&B with adequate information so that it can
reflect on the appropriate Tax Returns any resulting increases in deductions,
losses or Tax credits or decreases in income, gains or recapture of Tax credits;
(ii) ACNielsen or D&B, as the case may be, shall pay Cognizant
the amount of any Tax Benefit that results from such Reorganization Tax Payment
within 30 days of the date such Tax Benefits are realized.
(iii) Notwithstanding the foregoing, ACNielsen or D&B, as the
case may be, shall only be required to take steps to obtain such Tax Benefit or
to pay Cognizant if, in the opinion of ACNielsen's or D&B's tax counsel, which
counsel shall be reasonably acceptable to Cognizant, the reporting of such Tax
Benefit shall not subject ACNielsen or D&B to the imposition of a penalty.
(c) Realization of Tax Benefits.
(i) For purposes of this Section 4.3, a Tax Benefit shall be
deemed to have been realized at the time any refund of Taxes is received or
applied against other Taxes due, or at the time of filing of a Tax Return
(including any Tax Return relating to estimated Taxes) on which a loss,
deduction or credit is applied in reduction of Taxes which would otherwise be
payable; provided, however, that where a party has other losses, deductions,
credits or similar items available to it, such deductions, credits or similar
items of such party may be applied prior to the use of any Timing Adjustment,
Reorganization Tax Payment, or Deferred Compensation Deduction.
(ii) The party in receipt of a Tax Benefit may, at its
election, pay the amount of any Tax Benefit to D&B or Cognizant, as the case may
be, rather than filing amended returns or
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otherwise reflecting adjustments or taking positions on its Tax Returns. If such
an election is made, the party will be treated as having realized a Tax Benefit
at the time it would have realized a Tax Benefit had it chosen to file amended
returns or otherwise to reflect adjustments or to take positions on its Tax
Returns.
(d) Tax Benefits Subsequently Denied. If any Tax Benefit
realized pursuant to Section 4.3(c)(i) is subsequently denied, then D&B or
Cognizant, as the case may be, shall refund the amount of any payment for such
Tax Benefit within 30 days of its notification by D&B, ACNielsen or Cognizant,
as the case may be, that a Final Determination has been reached denying the
claimed Tax Benefit.
IV.4. Competent Authority Relief. If as a result of any audit
of a taxable period beginning prior to the Distribution Date, a Party (or
Subsidiary) is required to adjust its income, deductions, credits or allowances
under Section 482 of the Code or under similar principles in a foreign
jurisdiction, and the payment of additional Taxes in accordance with such a
determination allows another Party (or Subsidiary) to obtain competent authority
relief as a result thereof, then the Party eligible to obtain such relief shall:
(a) execute or cause to be executed any powers of attorney or other documents
necessary to enable the other Party to pursue such relief at its own expense;
and (b) cooperate with the other Party and the competent authorities in seeking
such relief. If a mutual agreement is reached among the competent authorities,
then the Party (or Subsidiary) realizing a Tax Benefit as a result thereof shall
pay the amount of such Tax Benefit to the Party (or Subsidiary) for which the
Tax liability is correspondingly increased within 30 days of the date such Tax
Benefit is realized (within the meaning of Section 4.3(c) of this Agreement). If
any Tax Benefit so realized is subsequently denied, then the Party in receipt of
payment therefor shall refund the amount of any such payment within 30 days of
its notification by the payor that a Final Determination has been reached
denying the claimed Tax Benefit.
V. TAX AUDITS, TRANSACTIONS AND OTHER MATTERS
V.1. Tax Audits and Controversies. In the case of any audit,
examination or other proceeding ("Proceeding") brought against any Party (or
Subsidiary) with respect to Taxes for which another Party is or may be liable
pursuant to this Agreement, the Party subject to such Proceeding shall promptly
inform the other Party and shall execute or cause to be executed any powers of
attorney or other documents necessary to enable the other Party to take all
actions desired with respect to such Proceeding to the extent such Proceeding
may affect the amount of Taxes for which the other Party is liable pursuant to
this Agreement. Each Party shall have the right to control, at its own expense,
the portion of any such Proceeding that relates to Taxes for which such Party is
or may be liable pursuant to this Agreement; provided, however, that such Party
shall consult with the other Parties with respect to any issue that may affect
another Party (or Subsidiary). The Party in control of such Proceeding or any
part thereof shall not enter into any final settlement or closing agreement that
may adversely affect another Party (or Subsidiary) without the consent of such
other Party, which consent may not unreasonably be withheld. Where consent to
any final settlement or closing agreement is withheld, the Party withholding
consent shall continue or initiate further proceedings, at its own expense, and
the liability of the
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Party in control of such Proceeding shall not exceed the liability that would
have resulted from the proposed closing agreement or final settlement (including
interest, additions to Tax and penalties which have accrued at that time).
V.2. Cooperation. D&B, ACNielsen and Cognizant shall cooperate
with each other in the filing of any Tax Returns and the conduct of any audit or
other proceeding and each shall execute and deliver such powers of attorney and
other documents and make available such information and documents as are
necessary to carry out the intent of this Agreement. To the extent such
cooperation involves the services of officers, directors, employees, or agents
of a Party, such services shall be made available in accordance with Section 2.9
of the Distribution Agreement. Each party agrees to notify the other parties of
any audit adjustment that does not result in Tax liability but can reasonably be
expected to affect Tax Returns of the other parties or any of their
Subsidiaries. Notwithstanding any other provision of this Agreement, if a party
(the "Nonperforming Party") fails to give its full cooperation and use its best
efforts in the conduct of an audit or other proceeding as provided by this
Section 5.2, and such failure results in the imposition of additional Taxes for
the period or periods involved in the audit or other proceeding, the
Nonperforming Party shall be liable in full for such additional Taxes.
V.3. Retention of Records; Access. Beginning on the
Distribution Date, D&B, ACNielsen and Cognizant shall, and shall cause each of
their Controlled Entities to:
(a) retain adequate records, documents, accounting data and
other information (including computer data) necessary for the preparation and
filing of all Tax Returns required to be filed by any member of the Old D&B
Group or any combination of such members and for any audits and litigation
relating to such Tax Returns or to any Taxes payable by any member of the Old
D&B Group or any combination of such members; and
(b) give to the other parties reasonable access to such
records, documents, accounting data and other information (including computer
data) and to its personnel and premises, for the purpose of the review or audit
of such reports or returns to the extent relevant to an obligation or liability
of a party under this Agreement and in accordance with the procedures provided
in Article IV of the Distribution Agreement. The obligations set forth in these
paragraphs 5.3(a) and 5.3(b) shall continue until the final conclusion of any
litigation to which the records and information relate or until expiration of
all applicable statutes of limitations, whichever is longer.
V.4. Dispute Resolution. Any dispute or claim arising out of,
in connection with, or in relation to the interpretation, performance,
nonperformance, validity or breach of this Agreement or otherwise arising out
of, or in any way related to this Agreement, shall be resolved in the manner set
forth in Article VI of the Distribution Agreement.
V.5. Confidentiality; Ownership of Information; Privileged
Information. The provisions of Article IV of the Distribution Agreement relating
to confidentiality of information, ownership of information, privileged
information and related matters shall apply with equal force
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to any records and information prepared and/or shared by and among the Parties
in carrying out the intent of this Agreement.
VI. MISCELLANEOUS
VI.1. Complete Agreement; Construction. This Agreement,
including the Exhibits and Schedules, and the Ancillary Agreements shall
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter. In the event of any inconsistency
between this Agreement and any Schedule hereto, the Schedule shall prevail.
VI.2. Master Tax Allocation Agreement. This Agreement,
including the Exhibits and Schedules, shall take precedence over any and all
agreements with respect to foreign Taxes among members of the D&B Group, the
ACNielsen Group, and the Cognizant Group (a "Foreign Tax Agreement"). In the
event that any payment is made or other action taken by a member of the D&B
Group, the ACNielsen Group, or the Cognizant Group pursuant to any Foreign Tax
Agreement and contrary to the terms of this Agreement, then an offsetting
indemnity payment shall be made by the appropriate Party to the injured Party to
conform with the provisions of this Agreement.
VI.3. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to the other parties.
VI.4. Survival of Agreements. Except as otherwise contemplated
by this Agreement, all covenants and agreements of the parties contained in this
Agreement shall survive the Distribution Date.
VI.5. Expenses. Except as otherwise set forth in this
Agreement, all costs and expenses incurred on or prior to the Distribution Date
(whether or not paid on or prior to the Distribution Date) in connection with
the preparation, execution, delivery and implementation of this Agreement shall
be charged to and paid by D&B. Except as otherwise set forth in this Agreement,
each party shall bear its own costs and expenses incurred after the Distribution
Date.
VI.6. Notices. All notices and other communications hereunder
shall be in writing and hand delivered or mailed by registered or certified mail
(return receipt requested) or sent by any means of electronic message
transmission with delivery confirmed (by voice or otherwise) to the parties at
the following addresses (or at such other addresses for a party as shall be
specified by like notice) and will be deemed given on the date on which such
notice is received:
<PAGE> 18
18
To The Dun & Bradstreet Corporation:
One Diamond Hill Road
Murray Hill, NJ 07974
Telecopy: (908) 665-5803
Attn: General Counsel
To Cognizant Corporation:
200 Nyala Farms
Westport, CT 06880
Telecopy: (203) 222-4201
Attn: General Counsel
To ACNielsen Corporation:
177 Broad Street
Stamford, CT 06901
Telecopy: (203) 961-3179
Attn: General Counsel
VI.7. Waivers. The failure of any party to require strict
performance by any other party of any provision in this Agreement will not waive
or diminish that party's right to demand strict performance thereafter of that
or any other provision hereof.
VI.8. Amendments. This Agreement may not be modified or
amended except by an agreement in writing signed by each of the parties hereto.
VI.9. Assignment. This Agreement shall not be assignable, in
whole or in part, directly or indirectly, by any party hereto without the prior
written consent of the other parties hereto, and any attempt to assign any
rights or obligations arising under this Agreement without such consent shall be
void.
VI.10. Successors and Assigns. The provisions to this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and permitted assigns.
VI.11. Termination. This Agreement may be terminated, amended,
modified or abandoned at any time prior to the Distribution by and in the sole
discretion of D&B without the approval of Cognizant or ACNielsen or the
stockholders of D&B. In the event of such termination, no party shall have any
liability of any kind to any other party or any other person.
<PAGE> 19
19
After the Distribution, this Agreement may not be terminated except by an
agreement in writing signed by the parties.
VI.12. Controlled Entities. Each of the parties hereto shall
cause to be performed, and hereby guarantees the performance of, all actions,
agreements and obligations set forth herein to be performed by any Controlled
Entity of such party or by any entity that is contemplated to be a Controlled
Entity of such party on and after the Distribution Date.
VI.13. Third Party Beneficiaries. This Agreement is solely for
the benefit of the parties hereto and their respective Subsidiaries and should
not be deemed to confer upon third parties any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.
VI.14. Title and Headings. Titles and headings to sections
herein are inserted for the convenience of reference only and are not intended
to be a part of or to affect the meaning or interpretation of this Agreement.
VI.15. Exhibits and Schedules. The Exhibits and Schedules
shall be construed with and as an integral part of this Agreement to the same
extent as if the same had been set forth verbatim herein.
VI.16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
VI.17. Consent to Jurisdiction. Without limiting the
provisions of Section 5.4 hereof, each of the parties irrevocably submits to the
exclusive jurisdiction of (a) the Supreme Court of the State of New York, New
York County, and (b) the United States District Court for the Southern District
of New York, for the purposes of any suit, action or other proceeding arising
out of this Agreement or any transaction contemplated hereby. Each of the
parties agrees to commence any action, suit or proceeding relating hereto either
in the United States District Court for the Southern District of New York or if
such suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court of the State of New York, New York
County. Each of the parties further agrees that service of any process, summons,
notice or document by U.S. registered mail to such party's respective address
set forth above shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 6.17. Each of the parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Supreme Court of the State of New York, New York County, or
(ii) the United States District Court for the Southern District of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
<PAGE> 20
20
VI.18. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions, the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the day and year first above written.
THE DUN & BRADSTREET CORPORATION
by /s/ Volney Taylor
-------------------------------
Name: Volney Taylor
Title:
COGNIZANT CORPORATION
by /s/ Robert E. Weissman
-------------------------------
Name: Robert E. Weissman
Title:
ACNIELSEN CORPORATION
by /s/ Nicholas L. Trivisonno
-------------------------------
Name: Nicholas L. Trivisonno
Title:
<PAGE> 1
Exhibit 10(c)
EMPLOYEE BENEFITS AGREEMENT
This EMPLOYEE BENEFITS AGREEMENT is dated as of October 28,
1996 (the "Agreement"), among THE DUN & BRADSTREET CORPORATION, a Delaware
corporation ("D&B"), COGNIZANT CORPORATION, a Delaware corporation,
("Cognizant"), and ACNIELSEN CORPORATION, a Delaware corporation ("ACNielsen").
WHEREAS, the Board of Directors of D&B has determined that it
is appropriate, desirable and in the best interests of the holders of shares of
common stock, par value $1.00 per share, of D&B (the "D&B Common Stock") to take
certain steps to reorganize D&B's Subsidiaries (as defined herein) and
businesses and then to distribute to the holders of the D&B Common Stock all the
outstanding shares of common stock of Cognizant, together with the appurtenant
share purchase rights (the "Cognizant Common Shares"), and all the outstanding
shares of common stock of ACNielsen, together with the appurtenant share
purchase rights (the "ACNielsen Common Shares"); and
WHEREAS, each of D&B, Cognizant and ACNielsen has determined
that it is necessary and desirable to allocate and assign responsibility for
certain employee benefit matters in respect of such entities on and after the
Effective Time (as defined herein).
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, D&B, Cognizant and ACNielsen agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Capitalized terms used in this
Agreement shall have the following meanings:
"ACNielsen" shall mean ACNielsen Corporation, a Delaware
corporation.
"ACNielsen Bifurcated Savings Plan Employees" shall have the
meaning set forth in Section 3.3(a) of this Agreement.
<PAGE> 2
"ACNielsen Common Shares" shall have the meaning set forth in
the recitals hereto.
"ACNielsen Employees" shall mean persons who, immediately
after the Effective Time, are employed by the ACNielsen Group (including persons
who are absent from work by reason of layoff or leave of absence and inactive
employees treated as such by agreement therewith).
"ACNielsen Group" shall mean ACNielsen and each Business
Entity which is contemplated to remain or become a Subsidiary of ACNielsen
pursuant to the Distribution Agreement.
"ACNielsen Lump-Sum Savings Plan Employees" shall have the
meaning set forth in Section 3.3(a) of this Agreement.
"ACNielsen Replacement Plan" shall mean the replacement plan
to be adopted by ACNielsen pursuant to Section 6.1(c) of this Agreement.
"ACNielsen Retirement Eligible Employees" shall have the
meaning set forth in Section 5.6 of this Agreement.
"ACNielsen Retirement Plan" shall mean the defined benefit
plan to be adopted by ACNielsen pursuant to Section 2.3(a) of this Agreement.
"ACNielsen Retirement Plan Effective Date" shall have the
meaning set forth in Section 2.3(a) of this Agreement.
"ACNielsen Retirement Plan Segregation Ratio" shall equal a
fraction, the numerator of which is the Present Value of the accrued vested and
nonvested benefits (as defined in ERISA Section 4044(a)(1)-(6)) of the ACNielsen
Transferred Retirement Plan Employees under the D&B Retirement Plan at the
Effective Time, and the denominator of which is the Present Value of the accrued
vested and nonvested benefits (as defined in ERISA Section 4044(a)(1)-(6)) of
the D&B Pre-Distribution Employees under the D&B Retirement Plan at the
Effective Time.
"ACNielsen Retirement Plan Transfer Date" shall have the
meaning set forth in Section 2.3(b) of this Agreement.
<PAGE> 3
"ACNielsen Savings Plan" shall mean the defined contribution
plan to be adopted by ACNielsen pursuant to Section 3.3(a) of this Agreement.
"ACNielsen Savings Plan Transfer Date" shall have the meaning
set forth in Section 3.3(b) of this Agreement.
"ACNielsen Transferred Retirement Plan Employees" shall have
the meaning set forth in Section 2.3(a) of this Agreement.
"ACNielsen Transferred Savings Plan Employees" shall have the
meaning set forth in Section 3.3(a) of this Agreement.
"Action" shall mean any action, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any governmental or other
regulatory or administrative agency, body or commission or any arbitration
tribunal.
"Affiliate" shall mean, when used with respect to a specified
person, another person that controls, is controlled by, or is under common
control with the person specified. As used herein, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of voting securities or other interests, by contract or otherwise.
"Ancillary Agreements" shall mean all of the written
agreements, instruments, assignments or other written arrangements (other than
this Agreement and the Distribution Agreement) entered into in connection with
the transactions contemplated by this Agreement and the Distribution Agreement,
including, without limitation, the Conveyancing and Assumption Instruments, the
Data Services Agreements, the Intellectual Property Agreement, the Shared
Transaction Services Agreements, the Tax Allocation Agreement and the Transition
Services Agreement.
"Assets" shall have the meaning set forth in Section 1.1(q) of
the Distribution Agreement.
"Board of Directors" shall mean, when used with respect to a
specified corporation, the board of directors of the corporation so specified.
<PAGE> 4
"Business Entity" shall mean any corporation, partnership,
limited liability company or other entity which may legally hold title to
Assets.
"COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and the regulations promulgated
thereunder, including any successor legislation.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder, including any successor
legislation.
"Cognizant" shall mean Cognizant Corporation, a Delaware
corporation.
"Cognizant and ACNielsen Nonqualified Plan Participants" shall
have the meaning as set forth in Section 4.2 of this Agreement.
"Cognizant Bifurcated Savings Plan Employees" shall have the
meaning set forth in Section 3.2(a) of this Agreement.
"Cognizant Common Shares" shall have the meaning set forth in
the recitals hereto.
"Cognizant Employees" shall mean persons who, immediately
after the Effective Time, are employed by the Cognizant Group (including persons
who are absent from work by reason of layoff or leave of absence and inactive
employees treated as such by agreement therewith).
"Cognizant Group" shall mean Cognizant and each Business
Entity which is contemplated to remain or become a Subsidiary of Cognizant
pursuant to the Distribution Agreement.
"Cognizant Lump-Sum Savings Plan Employees" shall have the
meaning set forth in Section 3.2(a) of this Agreement.
"Cognizant Replacement Plans" shall mean the replacement plans
(including, without limitation, the replacement plan for certain IMS employees)
to be adopted by Cognizant pursuant to Section 6.1(b) of this Agreement.
<PAGE> 5
"Cognizant Retirement Eligible Employees" shall have the
meaning set forth in Section 5.6 of this Agreement.
"Cognizant Retirement Plan" shall mean the defined benefit
plan to be adopted by Cognizant pursuant to Section 2.2(a) of this Agreement.
"Cognizant Retirement Plan Effective Date" shall have the
meaning set forth in Section 2.2(a) of this Agreement.
"Cognizant Retirement Plan Segregation Ratio" shall equal a
fraction, the numerator of which is the Present Value of the accrued vested and
nonvested benefits (as defined in ERISA Section 4044(a)(1)-(6)) of the Cognizant
Transferred Retirement Plan Employees under the D&B Retirement Plan at the
Effective Time, and the denominator of which is the Present Value of the accrued
vested and nonvested benefits (as defined in ERISA Section 4044(a)(1)-(6)) of
the D&B Pre-Distribution Employees under the D&B Retirement Plan at the
Effective Time.
"Cognizant Retirement Plan Transfer Date" shall have the
meaning set forth in Section 2.2(b) of this Agreement.
"Cognizant Savings Plan" shall mean the defined contribution
plan to be adopted by Cognizant pursuant to Section 3.2(a) of this Agreement.
"Cognizant Savings Plan Transfer Date" shall have the meaning
set forth in Section 3.2(b) of this Agreement.
"Cognizant Transferred Retirement Plan Employees" shall have
the meaning set forth in Section 2.2(a) of this Agreement.
"Cognizant Transferred Savings Plan Employees" shall have the
meaning set forth in Section 3.2 of this Agreement.
"Conveyancing and Assumption Instruments" shall mean,
collectively, the various agreements, instruments and other documents heretofore
entered into and to be entered into to effect the transfer of Assets and the
assumption of Liabilities in the manner contemplated by the Distribution
Agreement, or otherwise arising out of or relating to the transactions
contemplated in the Distribution Agreement.
<PAGE> 6
"D&B" shall mean The Dun & Bradstreet Corporation, a Delaware
corporation.
"D&B Career Transition Plan" shall mean The Dun & Bradstreet
Career Transition Plan.
"D&B Committee" shall mean the Executive Compensation and
Stock Option Committee of the Board of Directors of D&B.
"D&B Common Stock" shall have the meaning set forth in the
recitals hereto.
"D&B Disabled Employees" shall mean all D&B Pre-Distribution
Employees who are receiving benefits under the D&B Long-Term Disability Plan as
of the Effective Time.
"D&B Group" shall mean D&B and each Business Entity (other
than any member of the Cognizant Group or the ACNielsen Group) that is a
Subsidiary of D&B.
"D&B Long-Term Disability Plan" shall mean The Dun &
Bradstreet Corporation Long Term Disability Plan or any other long-term
disability plan sponsored by D&B or any Subsidiary of D&B prior to the Effective
Time.
"D&B LSARs" shall have the meaning set forth in Section 6.2 of
this Agreement.
"D&B Nonqualified Plans" shall have the meaning as set forth
in Section 4.1 of this Agreement.
"D&B Pension BEP" shall mean the Pension Benefit Equalization
Plan of The Dun & Bradstreet Corporation, as amended effective December 21,
1994.
"D&B Pension BEP Trust" shall mean the trust established in
connection with the D&B Pension BEP and made as of December 15, 1995.
"D&B Post-Distribution Employees" shall mean persons who,
immediately after the Effective Time, are employed by the D&B Group (including
persons who are absent from work by reason of layoff or leave of absence and
inactive employees treated as such by agreement therewith).
<PAGE> 7
"D&B Pre-Distribution Employees" shall mean persons who, at
any time prior to the Effective Time, were employed by D&B or its Subsidiaries.
"D&B Retirees" shall mean persons who (i) were D&B
Pre-Distribution Employees, (ii) terminated employment from D&B prior to the
Effective Time and (iii) are neither Cognizant Employees nor ACNielsen Employees
immediately after the Effective Time.
"D&B Retirement Plan" shall mean the Master Retirement Plan of
The Dun & Bradstreet Corporation, as amended and restated effective January 1,
1994, with certain earlier effective dates.
"D&B Savings BEP" shall mean the Profit Participation Benefit
Equalization Plan of The Dun & Bradstreet Corporation, as amended and restated
effective January 1, 1995.
"D&B Savings Plan" shall mean the Profit Participation Plan of
The Dun & Bradstreet Corporation, as in effect on January 1, 1994, with certain
earlier effective dates.
"D&B Stock Option" shall have the meaning set forth in Section
6.1 of this Agreement.
"D&B Stock Option Plans" shall mean (i) the 1982 Key Employees
Stock Option Plan for The Dun & Bradstreet Corporation and Subsidiaries and (ii)
the 1991 Key Employees Stock Option Plan for The Dun & Bradstreet Corporation
and Subsidiaries.
"D&B Supplemental EBP" shall mean the Supplemental Executive
Benefit Plan of The Dun & Bradstreet Corporation, as amended effective December
21, 1994.
"D&B Supplemental EBP Trust" shall mean the trust established
in connection with the D&B Supplemental EBP and made as of December 15, 1995.
"Daily Average Trading Price" of a given stock on a given day
shall mean the average of the high and low trading prices for such stock on such
date.
"Data Services Agreements" shall mean the Data Services
Agreements to be entered into by D&B, Cognizant and ACNielsen.
<PAGE> 8
"Distribution" shall mean the distribution on the Distribution
Date to holders of record of shares of D&B Common Stock as of the Distribution
Record Date of (i) the Cognizant Common Shares owned by D&B on the basis of one
Cognizant Common Share for each outstanding share of D&B Common Stock and (ii)
the ACNielsen Common Shares owned by D&B on the basis of one share of ACNielsen
Common Share for each three outstanding shares of D&B Common Stock.
"Distribution Agreement" shall mean the Distribution Agreement
among D&B, Cognizant and ACNielsen.
"Distribution Date" shall mean such date as may hereafter be
determined by D&B's Board of Directors as the date as of which the Distribution
shall be effected.
"Distribution Record Date" shall mean such date as may
hereafter be determined by D&B's Board of Directors as the record date for the
Distribution.
"Effective Time" shall mean 12:01 a.m., New York time, on the
Distribution Date.
"Employee Benefit Dispute" shall include any controversy,
dispute or claim arising out of, in connection with, or in relation to the
interpretation, performance, nonperformance, validity or breach of this
Agreement or otherwise arising out of, or in any way related to this Agreement
or the transactions contemplated hereby, including, without limitation, any
claim based on contract, tort, statute or constitution.
"Employee Benefit Litigation Liability" shall mean, with
respect to a Business Entity, a Liability relating to a controversy, dispute or
claim arising out of, in connection with or in relation to the interpretation,
performance, nonperformance, validity or breach of an Employee Benefit Plan of
such Business Entity or otherwise arising out of, or in any way related to such
Employee Benefit Plan, including, without limitation, any claim based on
contract, tort, statute or constitution.
"Employee Benefit Plans" shall mean, with respect to a
Business Entity, all "employee benefit plans" (within the meaning
<PAGE> 9
of Section 3(3) of ERISA), "multiemployer plans" (within the meaning of Section
3(37) of ERISA), retirement, pension, savings, profit-sharing, welfare, stock
purchase, stock option, equity-based, severance, employment, change-in-control,
fringe benefit, collective bargaining, bonus, incentive, deferred compensation
and all other employee benefit plans, agreements, programs, policies or other
arrangements (including any funding mechanisms therefor), whether or not subject
to ERISA, whether formal or informal, oral or written, legally binding or not,
under which (i) any past, present or future employee of the Business Entity or
its Subsidiaries has a right to benefits and (ii) the Business Entity or its
Subsidiaries has any Liability.
"Employee Benefit Records" shall mean all agreements,
documents, books, records or files relating to the Employee Benefit Plans of
D&B, Cognizant and ACNielsen.
"Employee Benefit Welfare Plans" shall mean, with respect to a
Business Entity, all Employee Benefit Plans that are "welfare plans" within the
meaning of Section 3(1) of ERISA.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and the regulations promulgated thereunder, including any
successor legislation.
"ESOP" shall mean an "employee stock ownership plan" within
the meaning of Section 4975(e)(7) of the Code.
"FSA Coverage Period" shall have the meaning set forth in
Section 5.4 of this Agreement.
"IMS" shall mean I.M.S. International, Inc., a Delaware
corporation.
"Information Statement" shall mean the Information Statement
sent to the holders of shares of D&B Common Stock in connection with the
Distribution, including any amendment or supplement thereto.
"Intellectual Property Agreement" shall mean the intellectual
property and licensing agreement among D&B, Cognizant and ACNielsen.
<PAGE> 10
"Liabilities" shall mean any and all losses, claims, charges,
debts, demands, actions, causes of action, suits, damages, obligations,
payments, costs and expenses, sums of money, accounts, reckonings, bonds,
specialties, indemnities and similar obligations, exonerations, covenants,
contracts, controversies, agreements, promises, doings, omissions, variances,
guarantees, make whole agreements and similar obligations, and other
liabilities, including all contractual obligations, whether absolute or
contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising, and including those arising under
any law, rule, regulation, Action, threatened or contemplated Action (including
the costs and expenses of demands, assessments, judgments, settlements and
compromises relating thereto and attorneys' fees and any and all costs and
expenses (including allocated costs of in-house counsel and other personnel),
whatsoever reasonably incurred in investigating, preparing or defending against
any such Actions or threatened or contemplated Actions), order or consent decree
of any governmental or other regulatory or administrative agency, body or
commission or any award of any arbitrator or mediator of any kind, and those
arising under any contract, commitment or undertaking, including those arising
under this Agreement, the Distribution Agreement or any Ancillary Agreement, in
each case, whether or not recorded or reflected or required to be recorded or
reflected on the books and records or financial statements of any person.
"Participant Election Period" shall mean the period during
which the elections described in Sections 3.2 and 3.3 are permitted (such
period, in no event, to be less than 30 days following notice thereof to persons
who are eligible to make the election).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor entity thereto.
"PBGC Assumptions" shall mean the actuarial assumptions set
forth in 29 C.F.R. Part 2619, et seq.
"person" shall mean any natural person, corporation, business
trust, joint venture, association, company, partnership or government, or any
agency or political subdivision thereof.
<PAGE> 11
"Present Value" shall mean the single sum value of a series of
future payments, determined utilizing PBGC Assumptions in effect as of the
measurement date.
"Service" shall mean the Internal Revenue Service or any
successor entity thereto.
"Shared Transaction Services Agreements" shall mean the Shared
Transaction Services Agreements among D&B, Cognizant and ACNielsen.
"Subsidiary" shall mean any corporation, partnership or other
entity of which another entity (i) owns, directly or indirectly, ownership
interests sufficient to elect a majority of the Board of Directors (or persons
performing similar functions) (irrespective of whether at the time any other
class or classes of ownership interests of such corporation, partnership or
other entity shall or might have such voting power upon the occurrence of any
contingency) or (ii) is a general partner or an entity performing similar
functions (e.g., a trustee).
"Tax Allocation Agreement" shall mean the Tax Allocation
Agreement among D&B, Cognizant and ACNielsen.
"Transition Services Agreement" shall mean the Transition
Services Agreement among D&B, Cognizant and ACNielsen.
ARTICLE II
DEFINED BENEFIT PLANS
SECTION 2.1. D&B Retirement Plan. From and after the Effective
Time, D&B shall continue to sponsor the D&B Retirement Plan for the benefit of
D&B Post-Distribution Employees, D&B Retirees and D&B Disabled Employees. Active
participation of Cognizant Employees and ACNielsen Employees in the D&B
Retirement Plan shall cease immediately after the Effective Time.
SECTION 2.2. Cognizant Retirement Plan. (a) As soon as
practicable after the Effective Time, but not later than the first day of the
fourth calendar month that begins after the Effective Time (herein referred to
as the "Cognizant Retirement Plan Effective Date"), Cognizant shall establish
the Cognizant Retirement Plan for the benefit of Cognizant Employees who were
<PAGE> 12
participants in the D&B Retirement Plan immediately prior to the Effective Time
(the "Cognizant Transferred Retirement Plan Employees"). As soon as practicable
after the Effective Time, D&B shall cause the trustee of the D&B Retirement Plan
to segregate the assets of the D&B Retirement Plan allocable to Cognizant
Transferred Retirement Plan Employees in an amount equal to the sum of (i) and
(ii), as follows:
(i) the amount allocable to Cognizant Transferred
Retirement Plan Employees under ERISA Section
4044 as of the Effective Time, determined
using PBGC Assumptions; and
(ii) the excess (if any) of the fair market value
of assets of the D&B Retirement Plan over the
Present Value of the vested and nonvested
benefits accrued thereunder for all the D&B
Pre-Distribution Employees as of the Effective
Time, multiplied by the Cognizant Retirement
Plan Segregation Ratio.
(b) As soon as practicable after the Effective Time, the
assets allocable to the Cognizant Transferred Retirement Plan Employees shall be
transferred to a separate trust established under the Cognizant Retirement Plan
(such date herein referred to as the "Cognizant Retirement Plan Transfer Date");
provided, however, that in no event shall such transfer take place until (i) D&B
has made all required filings and submissions to the appropriate governmental
agencies and (ii) Cognizant has furnished to D&B (A) a favorable determination
letter that the Cognizant Retirement Plan is qualified under Section 401(a) of
the Code or (B) an opinion letter from Simpson Thacher & Bartlett to the effect
that the Cognizant Retirement Plan is qualified under Section 401(a) of the
Code. The value of such assets to be transferred shall equal the value of
segregated assets determined under Section 2.2(a) of this Agreement, adjusted as
follows:
(i) reduced by the amount of benefit payments made
under the D&B Retirement Plan with respect to
Cognizant Transferred Retirement Plan
Employees from the Effective Time to the
Cognizant Retirement Plan Transfer Date; and
(ii) increased (or decreased) by the share of the
net investment income (or loss) from the
Effective Time to
<PAGE> 13
the Cognizant Retirement Plan Transfer Date
attributable to the value of such segregated
assets.
(c) Unless otherwise agreed to by D&B and Cognizant (as well
as ACNielsen if it has assets in the D&B Retirement Plan on the Cognizant
Retirement Plan Transfer Date), the form of the assets to be transferred shall
consist of an undivided percentage interest in each asset that is held by the
D&B Retirement Plan on the Cognizant Retirement Plan Transfer Date, such
undivided percentage interest being equal to the value of assets allocable to
the Cognizant Transferred Retirement Plan Employees, divided by the fair market
value of plan assets.
(d) Prior to the Cognizant Retirement Plan Transfer Date, all
benefit payments to Cognizant Transferred Retirement Plan Employees shall be
made from the D&B Retirement Plan.
SECTION 2.3 ACNielsen Retirement Plan. (a) As soon as
practicable after the Effective Time, but not later than the first day of the
fourth calendar month that begins after the Effective Time (herein referred to
as the "ACNielsen Retirement Plan Effective Date"), ACNielsen shall establish
the ACNielsen Retirement Plan for the benefit of ACNielsen Employees who were
participants in the D&B Retirement Plan immediately prior to the Effective Time
(the "ACNielsen Transferred Retirement Plan Employees"). As soon as practicable
after the Effective Time, D&B shall cause the trustee of the D&B Retirement Plan
to segregate the assets of the D&B Retirement Plan allocable to ACNielsen
Transferred Retirement Plan Employees in an amount equal to the sum of (i) and
(ii), as follows:
(i) the amount allocable to ACNielsen Transferred
Retirement Plan Employees under ERISA Section
4044 as of the Effective Time, determined
using PBGC Assumptions; and
(ii) the excess (if any) of the fair market value
of assets of the D&B Retirement Plan over the
Present Value of the vested and nonvested
benefits accrued thereunder for all the D&B
Pre-Distribution Employees as of the Effective
Time, multiplied by the ACNielsen Retirement
Plan Segregation Ratio.
<PAGE> 14
(b) As soon as practicable after the Effective Time, the
assets allocable to the ACNielsen Transferred Retirement Plan Employees shall be
transferred to a separate trust established under the ACNielsen Retirement Plan
(such date herein referred to as the "ACNielsen Retirement Plan Transfer Date");
provided, however, that in no event shall such transfer take place until (i) D&B
has made all required filings and submissions to the appropriate governmental
agencies and (ii) ACNielsen has furnished to D&B (A) a favorable determination
letter that the ACNielsen Retirement Plan is qualified under Section 401(a) of
the Code or (B) an opinion letter from Simpson Thacher & Bartlett to the effect
that the ACNielsen Retirement Plan is qualified under Section 401(a) of the
Code. The value of such assets to be transferred shall equal the value of
segregated assets determined under Section 2.3(a) of this Agreement, adjusted as
follows:
(i) reduced by the amount of benefit payments made
under the D&B Retirement Plan with respect to
ACNielsen Transferred Retirement Plan
Employees from the Effective Time to the
ACNielsen Retirement Plan Transfer Date; and
(ii) increased (or decreased) by the share of the
net investment income (or loss) from the
Effective Time to the ACNielsen Retirement
Plan Transfer Date attributable to the value
of such segregated assets.
(c) Unless otherwise agreed to by D&B and ACNielsen (as well
as Cognizant if it has assets in the D&B Retirement Plan on the ACNielsen
Retirement Plan Transfer Date), the form of the assets to be transferred shall
consist of an undivided percentage interest in each asset that is held by the
D&B Retirement Plan on the ACNielsen Retirement Plan Transfer Date, such
undivided percentage interest being equal to the value of assets allocable to
the ACNielsen Transferred Retirement Plan Employees, divided by the fair market
value of plan assets.
(d) Prior to the ACNielsen Retirement Plan Transfer Date, all
benefit payments to ACNielsen Transferred Retirement Plan Employees shall be
made from the D&B Retirement Plan.
SECTION 2.4. Allocation of Liabilities. The Cognizant Group
shall assume all Liabilities relating to the participation of Cognizant
Transferred Retirement Plan Employees in the D&B
<PAGE> 15
Retirement Plan and in the Cognizant Retirement Plan. The ACNielsen Group shall
assume all Liabilities relating to the participation of ACNielsen Transferred
Retirement Plan Employees in the D&B Retirement Plan and in the ACNielsen
Retirement Plan. The D&B Group shall retain all other Liabilities relating to
the D&B Retirement Plan.
ARTICLE III
DEFINED CONTRIBUTION PLANS
SECTION 3.1. D&B Savings Plan. From and after the Effective
Time, D&B shall continue to sponsor the D&B Savings Plan for the benefit of D&B
Post-Distribution Employees, D&B Retirees, D&B Disabled Employees, Cognizant
Bifurcated Savings Plan Employees (as defined in Section 3.2(a) below) and
ACNielsen Bifurcated Savings Plan Employees (as defined in Section 3.3(a)
below). Active participation of Cognizant Employees and ACNielsen Employees in
the D&B Savings Plan shall cease immediately after the Effective Time.
SECTION 3.2. Cognizant Savings Plan. (a) As of the Effective
Time, Cognizant shall adopt the Cognizant Savings Plan for the benefit of
Cognizant Employees who were participants in the D&B Savings Plan immediately
prior to the Effective Time. Prior to the Effective Time, Cognizant Employees
shall be given the right to elect one of the following options with respect to
their D&B Savings Plan account balances: (i) Cognizant Employees may keep their
balances in the D&B Savings Plan (such employees being known as "Cognizant
Bifurcated Savings Plan Employees"); (ii) Cognizant Employees may receive a
lump-sum payment (in cash and/or stock) of their balances (such employees being
known as "Cognizant Lump-Sum Savings Plan Employees") or (iii) Cognizant
Employees may transfer their balances to the Cognizant Savings Plan (such
employees being known as "Cognizant Transferred Savings Plan Employees"). If a
Cognizant Employee fails to elect any of the foregoing options prior to the end
of the Participant Election Period, (i) his or her balance shall remain in the
D&B Savings Plan, and (ii) such employee shall be treated as a Cognizant
Bifurcated Savings Plan Employee.
(b) Prior to the date on which the transfer of assets and
liabilities to the Cognizant Savings Plan shall occur (the "Cognizant Savings
Plan Transfer Date"), which date shall occur
<PAGE> 16
as promptly as practicable following the Participant Election Period, (i) D&B
shall (A) cause the trustee of the D&B Savings Plan to segregate, in accordance
with the spinoff provisions set forth under Section 414(l) of the Code, the
assets of the D&B Savings Plan representing the full account balances of
Cognizant Transferred Savings Plan Employees for all periods of participation
through the Effective Time (including, as applicable, all contributions and all
earnings attributable thereto); (B) make all required filings and submissions to
the appropriate governmental agencies; and (C) make all required amendments to
the D&B Savings Plan and related trust agreement necessary to provide for the
segregation and transfer of assets described in this Section 3.2, and (ii)
Cognizant shall furnish to D&B (A) a favorable determination letter that the
Cognizant Savings Plan is qualified under Section 401(a) of the Code or (B) an
opinion letter from Simpson Thacher & Bartlett to the effect that the Cognizant
Savings Plan is qualified under Section 401(a) of the Code.
(c) On the Cognizant Savings Plan Transfer Date, D&B shall
cause the trustee of the D&B Savings Plan to transfer to the trustee of the
Cognizant Savings Plan the full account balances (inclusive of loans) of
Cognizant Transferred Savings Plan Employees in kind based on those investment
funds in which such account balances are then invested (including, but not
limited to, the pooled stock fund); provided, however, that loans to Cognizant
Transferred Savings Plan Employees shall be transferred in the form of notes and
amounts in the D&B stock fund shall be transferred in the form of cash. In
consideration of the segregation and transfer of assets described herein, the
Cognizant Savings Plan shall, as of the Cognizant Savings Plan Transfer Date,
assume all Liabilities attributable to such assets.
(d) Notwithstanding anything in this Agreement to the
contrary, (i) a Cognizant Employee may not elect to be treated as a Cognizant
Bifurcated Savings Plan Employee if his or her account balance in the D&B
Savings Plan is $3,500 or less (in which case such Cognizant Employee shall be
treated as a Cognizant Lump-Sum Savings Plan Employee) and (ii) a Cognizant
Bifurcated Savings Plan Employee may, prior to the second anniversary of the
Distribution Date, elect to receive a distribution of his or her account balance
in the D&B Savings Plan.
<PAGE> 17
SECTION 3.3. ACNielsen Savings Plan. (a) As of the Effective
Time, ACNielsen shall adopt the ACNielsen Savings Plan for the benefit of
ACNielsen Employees who were participants in the D&B Savings Plan immediately
prior to the Effective Time. Prior to the Effective Time, ACNielsen Employees
shall be given the right to elect one of the following options with respect to
their D&B Savings Plan account balances: (i) ACNielsen Employees may keep their
balances in the D&B Savings Plan (such employees being known as "ACNielsen
Bifurcated Savings Plan Employees"); (ii) ACNielsen Employees may receive a
lump-sum payment (in cash and/or stock) of their balances (such employees being
known as "ACNielsen Lump-Sum Savings Plan Employees") or (iii) ACNielsen
Employees may transfer their balances to the ACNielsen Savings Plan (such
employees being known as "ACNielsen Transferred Savings Plan Employees"). If an
ACNielsen Employee fails to elect any of the foregoing options prior to the end
of the Participant Election Period, (i) his or her balance shall remain in the
D&B Savings Plan, and (ii) such employee shall be treated as a ACNielsen
Bifurcated Savings Plan Employee.
(b) Prior to the date on which the transfer of assets and
liabilities to the ACNielsen Savings Plan shall occur (the "ACNielsen Savings
Plan Transfer Date"), which date shall occur as promptly as practicable
following the Participant Election Period, (i) D&B shall (A) cause the trustee
of the D&B Savings Plan to segregate, in accordance with the spinoff provisions
set forth under Section 414(l) of the Code, the assets of the D&B Savings Plan
representing the full account balances of ACNielsen Transferred Savings Plan
Employees for all periods of participation through the Effective Time
(including, as applicable, all contributions and all earnings attributable
thereto); (B) make all required filings and submissions to the appropriate
governmental agencies; and (C) make all required amendments to the D&B Savings
Plan and related trust agreement necessary to provide for the segregation and
transfer of assets described in this Section 3.3, and (ii) ACNielsen shall
furnish to D&B (A) a favorable determination letter that the ACNielsen Savings
Plan is qualified under Section 401(a) of the Code or (B) an opinion letter from
Simpson Thacher & Bartlett to the effect that the ACNielsen Savings Plan is
qualified under Section 401(a) of the Code.
<PAGE> 18
(c) On the ACNielsen Savings Plan Transfer Date, D&B shall
cause the trustee of the D&B Savings Plan to transfer to the trustee of the
ACNielsen Savings Plan the full account balances (inclusive of loans) of
ACNielsen Transferred Savings Plan Employees in kind based on those investment
funds in which such account balances are then invested (including, but not
limited to, the pooled stock fund); provided, however, that loans to ACNielsen
Transferred Savings Plan Employees shall be transferred in the form of notes and
amounts in the D&B stock fund shall be transferred in the form of cash. In
consideration of the segregation and transfer of assets described herein, the
ACNielsen Savings Plan shall, as of the ACNielsen Savings Plan Transfer Date,
assume all Liabilities attributable to such assets.
(d) Notwithstanding anything in this Agreement to the
contrary, (i) an ACNielsen employee may not elect to be treated as an ACNielsen
Bifurcated Savings Plan Employee if his or her account balance in the D&B
Savings Plan is $3,500 or less (in which case such ACNielsen Employee shall be
treated as an ACNielsen Lump-Sum Savings Plan Employee) and (ii) an ACNielsen
Bifurcated Savings Plan Employee may, prior to the second anniversary of the
Distribution Date, elect to receive a distribution of his or her account balance
in the D&B Savings Plan.
SECTION 3.4. Vesting. As of the Effective Time, the account
balances of Cognizant Employees and ACNielsen Employees in the D&B Savings Plan
shall fully vest.
SECTION 3.5. Outstanding Loans. During their employment with
Cognizant or ACNielsen (as the case may be), Cognizant Transferred Savings Plan
Employees and ACNielsen Transferred Savings Plan Employees who have outstanding
loans originally made from the D&B Savings Plan shall be permitted to repay such
loans by way of regular deductions from their paychecks, and, prior to the
Cognizant Savings Plan Transfer Date or ACNielsen Savings Plan Transfer Date (as
the case may be), D&B, Cognizant or ACNielsen (as the case may be) shall cause
all such deductions to be forwarded to the D&B Savings Plan as promptly as
practicable. No such deductions by Cognizant or ACNielsen shall be made in
respect of Cognizant Bifurcated Savings Plan Employees and ACNielsen Bifurcated
Savings Plan Employees who have outstanding loans from the D&B Savings Plan,
<PAGE> 19
and all such employees shall be required to repay their loans directly to the
D&B Savings Plan in accordance with the existing terms thereof. Notwithstanding
the foregoing, prior to the end of the Participant Election Period, and for such
period thereafter as may be reasonably determined by D&B, Cognizant Employees
and ACNielsen Employees who have outstanding loans from the D&B Savings Plan
shall be permitted to repay such loans by way of regular deductions from their
paychecks.
SECTION 3.6. Employer Stock Fund. Participants in the D&B
Savings Plan who, immediately prior to the Effective Time, have balances in the
D&B Common Stock fund shall have such balances converted, as of the Effective
Time, to units in a pooled stock fund consisting of D&B Common Stock, Cognizant
Common Shares and ACNielsen Common Shares. The initial ratio of stock in the
pooled stock fund shall be one share of D&B Common Stock to one share of
Cognizant Common Shares to 1/3 share of ACNielsen Common Shares. The percentage
interest of each participant in the pooled stock fund as of the Effective Time
shall equal such participant's percentage interest in the D&B Common Stock fund
immediately prior to the Effective Time. Each of the Cognizant Savings Plan and
ACNielsen Savings Plan shall maintain a pooled stock fund, to which the pooled
stock fund assets of Cognizant Transferred Savings Plan Employees and ACNielsen
Transferred Savings Plan Employees in the D&B Savings Plan shall be transferred
on the Cognizant Savings Plan Transfer Date and the ACNielsen Savings Plan
Transfer Date (as the case may be). From and after the Effective Time, a
participant may liquidate his or her units in the pooled stock fund and invest
the proceeds thereof in any other investment option available under the
applicable plan. A participant may not acquire additional units in the pooled
stock fund from or after the Effective Time.
SECTION 3.7. Matching Contributions. D&B shall make its
regular monthly matching contributions to the D&B Savings Plan accounts of
Cognizant Employees and ACNielsen Employees for all periods of service on or
prior to the Effective Time.
SECTION 3.8. Allocation of Liabilities. The Cognizant Group
shall assume all Liabilities relating to the participation of (a) Cognizant
Transferred Savings Plan Employees in the D&B Savings Plan and in the Cognizant
Savings Plan and (b) Cognizant Bifurcated Savings Plan Employees in the
Cognizant Savings Plan.
<PAGE> 20
The ACNielsen Group shall assume all Liabilities relating to the participation
of (a) ACNielsen Employees in the D&B Savings Plan and in the ACNielsen Savings
Plan and (b) ACNielsen Bifurcated Savings Plan Employees in the ACNielsen
Savings Plan. The D&B Group shall retain all other Liabilities relating to the
D&B Savings Plan.
ARTICLE IV
NONQUALIFIED PLANS
SECTION 4.1. D&B Nonqualified Plans. From and after the
Effective Time, D&B shall continue to sponsor the D&B Supplemental EBP, the D&B
Supplemental EBP Trust, the D&B Pension BEP, the D&B Pension BEP Trust and the
D&B Savings BEP (collectively, the "D&B Nonqualified Plans") for the benefit of
persons who, prior to the Effective Time, were participants thereunder;
provided, however, that, with respect to Cognizant Employees and ACNielsen
Employees, D&B shall retain only those Liabilities for benefits under the D&B
Nonqualified Plans that, prior to the Effective Time, were accrued and to which
such participants had earned vested rights thereunder.
SECTION 4.2. Service Credit. Cognizant Employees and ACNielsen
Employees who were participants in the D&B Nonqualified Plans immediately prior
to the Effective Time (the "Cognizant and ACNielsen Nonqualified Plan
Participants") shall continue to receive service credit under such plans for
their service with the Cognizant Group or the ACNielsen Group (as the case may
be) from and after the Effective Time, but solely for purposes of satisfying the
one-year waiting requirement for a valid election under the D&B Nonqualified
Plans.
SECTION 4.3. Consent to Termination. Solely with respect to
determining the level of benefits payable under the D&B Nonqualified Plans,
Cognizant and ACNielsen shall have the authority to consent to the termination
of employment prior to age 60 of a Cognizant or ACNielsen Nonqualified Plan
Participant from the Cognizant Group or the ACNielsen Group (as the case may
be).
SECTION 4.4. Termination of Employment. Benefits under the D&B
Nonqualified Plans shall not become payable to a Cognizant or ACNielsen
Nonqualified Plan Participant until such
<PAGE> 21
participant terminates employment from the Cognizant Group or the ACNielsen
Group (as the case may be).
SECTION 4.5. Noncompetition. Solely with respect to the
noncompetition clauses of the D&B Nonqualified Plans, D&B hereby consents to the
employment of the Cognizant and ACNielsen Nonqualified Plan Participants by the
Cognizant Group or the ACNielsen Group (as the case may be) after the Effective
Time, whether or not such employment would otherwise trigger such noncompetition
clauses.
SECTION 4.6. Distributions; Lump-Sum Elections. Cognizant and
ACNielsen Nonqualified Plan Participants who participated in the D&B Savings BEP
immediately prior to the Effective Time shall receive a distribution thereunder,
based on their notional elective deferrals through the Effective Time, at the
time distributions are otherwise made under such plan.
SECTION 4.7. Guarantees; Subrogation. The Cognizant Group
agrees that, in the event the D&B Group is unable to satisfy its obligations in
respect of the benefits of any Cognizant Employee that have accrued under the
D&B Nonqualified Plans prior to the Effective Time, the Cognizant Group shall
make payment when due with respect to such obligations of the D&B Group. The
ACNielsen Group agrees that, in the event the D&B Group is unable to satisfy its
obligations in respect of the benefits of any ACNielsen Employee that have
accrued under the D&B Nonqualified Plans prior to the Effective Time, the
ACNielsen Group shall make payment when due with respect to such obligations of
the D&B Group. In the event that the Cognizant Group or the ACNielsen Group is
required to make any payment pursuant to this Section 4.7, the Cognizant Group
or the ACNielsen Group (as the case may be) shall have full rights of
subrogation against the D&B Group.
SECTION 4.8. Third-Party Beneficiaries. It is the intention of
the parties to this Agreement that the provisions of Section 4.7 shall be
enforceable by (a) the Cognizant and ACNielsen Nonqualified Plan Participants
and (b) their respective surviving beneficiaries.
<PAGE> 22
ARTICLE V
WELFARE PLANS
SECTION 5.1. Employee Benefit Welfare Plans. Except as
provided in Section 5.4 and Section 5.5 below, from and after the Effective
Time, D&B shall sponsor its Employee Benefit Welfare Plans solely for the
benefit of D&B Post-Distribution Employees, D&B Retirees and D&B Disabled
Employees. From and after the Effective Time, Cognizant shall sponsor its
Employee Benefit Welfare Plans solely for the benefit of Cognizant Employees.
From and after the Effective Time, ACNielsen shall sponsor its Employee Benefit
Welfare Plans solely for the benefit of ACNielsen Employees.
Notwithstanding the foregoing, none of D&B, Cognizant or ACNielsen shall have
any obligation to sponsor any Employee Benefit Welfare Plan from or after the
Effective Time.
SECTION 5.2. Pre-Existing Conditions; Dollar Limits. With
respect to any medical plan that may be sponsored by Cognizant or ACNielsen
after the Effective Time, Cognizant and ACNielsen (a) shall cause there to be
waived any pre-existing condition limitations and (b) shall give effect, in
determining any deductible and maximum out-of-pocket limitations, to claims
incurred, and amounts paid by, and amounts reimbursed to, (in each case during
1996 prior to the Effective Time) ACNielsen Employees and Cognizant Employees
under similar plans maintained by D&B (or any Affiliate thereof) for their
benefit immediately prior to the Effective Time.
SECTION 5.3. Severance Plans. The Cognizant Group shall retain
all Liabilities with respect to severance payments made or to be made to
employees of the Cognizant Group who terminated employment prior to the
Effective Time. The ACNielsen Group shall retain all Liabilities with respect to
severance payments made or to be made to employees of the ACNielsen Group who
terminated employment prior to the Effective Time. The D&B Group shall retain
all Liabilities with respect to severance payments made or to be made to all
other D&B Pre-Distribution Employees who terminated employment prior to the
Effective Time. For purposes of this Section 5.3, the term "severance payments"
shall include any welfare benefit coverage provided under severance plans.
<PAGE> 23
SECTION 5.4. Flexible Spending Accounts. From the Effective
Time until December 31, 1996 (the "FSA Coverage Period"), D&B shall continue to
sponsor its flexible spending accounts for all D&B Pre-Distribution Employees;
provided, however, that Cognizant and ACNielsen shall cause all deductions from
participant paychecks to be forwarded to D&B as promptly as practicable.
SECTION 5.5. Allocation of Liabilities. (a) The D&B Group
shall retain responsibility for and continue to pay all expenses and benefits
relating to the D&B Employee Benefit Welfare Plans with respect to (i) claims
incurred prior to the Effective Time by D&B Pre-Distribution Employees and their
covered dependents and (ii) claims incurred from and after the Effective Time by
D&B Post-Distribution Employees, D&B Retirees and D&B Disabled Employees. The
Cognizant Group shall be responsible for and pay expenses and benefits relating
to all Employee Benefit Welfare Plan claims incurred by Cognizant Employees and
their covered dependents from and after the Effective Time. The ACNielsen Group
shall be responsible for and pay expenses and benefits relating to all Employee
Benefit Welfare Plan claims incurred by ACNielsen Employees and their covered
dependents from and after the Effective Time. For purposes of this paragraph, a
claim is deemed incurred when the services that are the subject of the claim are
performed; in the case of life insurance, when the death occurs; in the case of
long-term disability, when the disability occurs; and, in the case of a hospital
stay, when the employee first enters the hospital. Notwithstanding the
foregoing, claims incurred by any employee of a pre-Distribution Subsidiary of
D&B or their covered dependents under any welfare plan maintained by such
Subsidiary solely for the benefit of its employees and their dependents shall,
whether incurred prior to, on or after the Effective Time, be the sole
responsibility and liability of that Subsidiary.
(b) The Cognizant Group shall be responsible for all COBRA
coverage for any employee of the Cognizant Group and his or her covered
dependents who participated in a D&B Employee Benefit Welfare Plan and who had
or have a loss of health care coverage due to a qualifying event occurring prior
to the Effective Time. The ACNielsen Group shall be responsible for all COBRA
coverage for any employee of the ACNielsen Group and his or her covered
dependents who participated in a D&B Employee Benefit Welfare Plan and who had
or have a loss of health care coverage due to a qualifying event occurring prior
to the Effective Time. The D&B Group shall be responsible for all COBRA coverage
for any other D&B Pre-Distribution Employee and his or her covered dependents
who participated in a D&B Employee Benefit Welfare Plan and who had or have a
loss of health care coverage due to a
<PAGE> 24
qualifying event occurring prior to the Effective Time. Notwithstanding the
foregoing, a pre-Distribution Subsidiary of D&B shall be responsible for all
COBRA coverage for its former employees and covered dependents who participated
in a plan maintained solely for their benefit whether the applicable event
occurs prior to, on or after the Effective Time. COBRA coverage to which a
Cognizant Employee or ACNielsen Employee is entitled as a result of a qualifying
event occurring at or after the Effective Time shall be the responsibility of
the Cognizant Group or the ACNielsen Group, respectively.
SECTION 5.6. Retiree Welfare Plans. The Cognizant Group shall
be responsible for providing retiree welfare benefits to those D&B
Pre-Distribution Employees who are Cognizant Employees and who, immediately
prior to the Effective Time, are (i) eligible to retire and (ii) eligible to
elect such coverage under the D&B Employee Benefit Welfare Plans (but who do not
in fact elect such coverage) (the "Cognizant Retirement Eligible Employees");
provided, however, that in the event the Cognizant Group fails to provide to a
Cognizant Retirement Eligible Employee one or more components of retiree welfare
coverage (such components consisting of medical, dental and life benefits), the
D&B Group shall be responsible for the missing component(s), but only to the
same extent it provides such component(s) to its retirees from and after the
time when such Cognizant Retirement Eligible Employee retires or loses his or
her coverage. In the event the D&B Group must provide the benefits described
hereunder, it shall have full rights of reimbursement from the Cognizant Group.
The ACNielsen Group shall be responsible for providing retiree welfare benefits
to those D&B Pre-Distribution Employees who are ACNielsen Employees and who,
immediately prior to the Effective Time, are (i) eligible to retire and (ii)
eligible to elect such coverage under the D&B Employee Benefit Welfare Plans
(but who do not in fact elect such coverage) (the "ACNielsen Retirement Eligible
Employees"); provided, however, that in the event the ACNielsen Group fails to
provide to an ACNielsen Retirement Eligible Employee one or more components of
retiree welfare coverage (such components consisting of medical, dental and life
benefits), the D&B Group shall be responsible for
<PAGE> 25
the missing component(s), but only to the same extent it provides such
component(s) to its retirees from and after the time when such ACNielsen
Retirement Eligible Employee retires or loses his or her coverage. In the event
the D&B Group must provide the benefits described hereunder, it shall have full
rights of reimbursement from the ACNielsen Group. Notwithstanding the provisions
of Sections 10.2, 10.3 or 10.4 hereof, in the event any D&B Pre-Distribution
Employee elects to retire on or prior to the Effective Time and receive retiree
welfare coverage under the D&B Employee Welfare Benefit Plans, neither the
Cognizant Group nor the ACNielsen Group shall provide such employee with past
service credit under their respective Employee Benefit Plans, nor shall any
assets and liabilities be transferred in respect of such employee under Article
II hereof, upon any subsequent employment of such individual by the Cognizant
Group or the ACNielsen Group.
ARTICLE VI
EQUITY-BASED PLANS
SECTION 6.1. D&B Stock Options. Stock options awarded under
the D&B Stock Option Plans ("D&B Stock Options") shall be treated as follows:
(a) D&B Retirees; D&B Disabled Employees; D&B
Post-Distribution Employees. From and after the Effective Time, each unexercised
D&B Stock Option held by D&B Post-Distribution Employees, D&B Retirees and D&B
Disabled Employees shall remain outstanding pursuant to the terms of the award
agreements and the D&B Stock Option Plans; provided, however, that from and
after such time, each unexercised D&B Stock Option shall be adjusted as follows:
(i) the exercise price of the adjusted stock option shall be determined by
multiplying the exercise price of the D&B Stock Option by a fraction, the
numerator of which is the average of the Daily Average Trading Prices of D&B
Common Stock for the five consecutive trading days starting on the first date on
which D&B Common Stock is traded ex-dividend, and the denominator of which is
the average of the Daily Average Trading Prices of D&B Common Stock for the five
consecutive trading days immediately preceding the first date on which D&B
Common Stock is traded ex-dividend and (ii) the number of shares of D&B Common
Stock covered by the adjusted stock option shall be determined by (A)
multiplying the number of shares of D&B Common Stock covered by
<PAGE> 26
the D&B Stock Option by a fraction, the numerator of which is the average of the
Daily Average Trading Prices of D&B Common Stock for the five consecutive
trading days immediately preceding the first date on which D&B Common Stock is
traded ex-dividend, and the denominator of which is the average of the Daily
Average Trading Prices of D&B Common Stock for the five consecutive trading days
starting on the first date on which D&B Common Stock is traded ex-dividend and
(B) rounding down the result to a whole number of shares.
(b) Cognizant Employees. As of the Effective Time, (i) each
unexercised D&B Stock Option held by Cognizant Employees shall be cancelled and
(ii) such individuals shall receive replacement stock options awarded under the
Cognizant Replacement Plans, which shall be adopted by Cognizant prior to the
Effective Time. The exercise price of each replacement stock option shall be
determined by multiplying the exercise price of the cancelled D&B Stock Option
by a fraction, the numerator of which is the average of the Daily Average
Trading Prices of Cognizant Common Shares for the five consecutive trading days
starting on the first date on which Cognizant Common Shares are traded regular
way, and the denominator of which is the average of the Daily Average Trading
Prices of D&B Common Stock for the five consecutive trading days immediately
preceding the first date on which D&B Common Stock is traded ex-dividend. The
number of shares of Cognizant Common Shares covered by each replacement stock
option shall be determined by (i) multiplying the number of shares of D&B Common
Stock covered by the cancelled D&B Stock Option by a fraction, the numerator of
which is the average of the Daily Average Trading Prices of D&B Common Stock for
the five consecutive trading days immediately preceding the first date on which
D&B Common Stock is traded ex-dividend, and the denominator of which is the
average of the Daily Average Trading Prices of Cognizant Common Shares for the
five consecutive trading days starting on the first date on which Cognizant
Common Shares are traded regular way and (ii) rounding down the result to a
whole number of shares. Except as otherwise provided in the Cognizant
Replacement Plans, all other terms of the replacement stock options shall remain
substantially identical to the terms of the cancelled D&B Stock Options.
(c) ACNielsen Employees. As of the Effective Time, (i) each
unexercised D&B Stock Option held by ACNielsen Employees shall be cancelled and
(ii) such individuals shall receive
<PAGE> 27
replacement stock options awarded under the ACNielsen Replacement Plan, which
shall be adopted by ACNielsen prior to the Effective Time. The exercise price of
each replacement stock option shall be determined by multiplying the exercise
price of the cancelled D&B Stock Option by a fraction, the numerator of which is
the average of the Daily Average Trading Prices of ACNielsen Common Shares for
the five consecutive trading days starting on the first date on which ACNielsen
Common Shares are traded regular way, and the denominator of which is the
average of the Daily Average Trading Prices of D&B Common Stock for the five
consecutive trading days immediately preceding the first date on which D&B
Common Stock is traded ex-dividend. The number of shares of ACNielsen Common
Shares covered by each replacement stock option shall be determined by
multiplying the number of shares of D&B Common Stock covered by the cancelled
D&B Stock Option by a fraction, the numerator of which is the average of the
Daily Average Trading Prices of D&B Common Stock for the five consecutive
trading days immediately preceding the first date on which D&B Common Stock is
traded ex-dividend, and the denominator of which is the average of the Daily
Average Trading Prices of ACNielsen Common Shares for the five consecutive
trading days starting on the first date on which ACNielsen Common Shares are
traded regular way and (ii) rounding down the result to a whole number of
shares. Except as otherwise provided in the ACNielsen Replacement Plan, all
other terms of the replacement stock options shall remain substantially
identical to the terms of the cancelled D&B Stock Options.
SECTION 6.2. D&B LSARs. All limited stock appreciation rights
awarded under the D&B Stock Option Plans ("D&B LSARs") shall be adjusted or
substituted (as the case may be) in substantially the same manner as the D&B
Stock Options described in Section 6.1 above.
SECTION 6.3. Allocation of Liabilities. The Cognizant Group
shall assume all Liabilities with respect to awards granted to Cognizant
Employees pursuant to the Cognizant Replacement Option Plan. The ACNielsen Group
shall assume all Liabilities with respect to awards granted to ACNielsen
Employees pursuant to the ACNielsen Replacement Option Plan. The D&B Group shall
retain all other Liabilities with respect to awards granted pursuant to the D&B
Stock Option Plans (including, but not limited to, awards granted to D&B
Post-Distribution Employees, D&B Retirees and D&B Disabled Employees).
<PAGE> 28
ARTICLE VII
FOREIGN EMPLOYEE BENEFIT PLANS
SECTION 7.1. UK Pensions. D&B, Cognizant and ACNielsen shall
use their best efforts to ensure that the relevant employers may continue to
participate in The Dun & Bradstreet (UK) Pension Plan (the "D&B UK Plan") on the
terms and for the period following the Effective Time set forth in Schedule 7.1.
Cognizant and ACNielsen shall cause the relevant employers to establish or
nominate replacement pension arrangements which comply with the provisions of
Schedule 7.1 and which are capable of receiving a transfer of assets and
liabilities from the D&B UK Plan.
ARTICLE VIII
EMPLOYEE STOCK OWNERSHIP PLAN
SECTION 8.1. Employee Stock Ownership Plan. After the
Effective Time, D&B, Cognizant and ACNielsen shall each establish an ESOP for
the benefit of their respective employees, but only to the extent required by
any letter ruling issued by the Service with respect to the Distribution.
ARTICLE IX
OTHER EMPLOYEE BENEFIT ISSUES
SECTION 9.1. Employee Benefit Litigation Liabilities. Except
as otherwise expressly provided in this agreement or with respect to Articles
II, III and VI hereof, the D&B Group shall retain all Employee Benefit
Litigation Liabilities that are asserted by D&B Pre-Distribution Employees prior
to the Effective Time.
SECTION 9.2. Workers' Compensation. The D&B Group shall retain
all Liabilities relating to workers' compensation claims that were incurred (a)
prior to the Effective Time with respect to D&B Pre-Distribution Employees who
were employed by the D&B Group and (b) on and after the Effective Time with
respect to D&B Post-Distribution Employees. The Cognizant Group shall retain all
Liabilities relating to workers' compensation
<PAGE> 29
claims that were incurred (a) prior to the Effective Time with respect to D&B
Pre-Distribution Employees who were employed by the Cognizant Group and (b) on
and after the Effective Time with respect to Cognizant Employees. The ACNielsen
Group shall retain all Liabilities relating to workers' compensation claims that
were incurred (a) prior to the Effective Time with respect to D&B
Pre-Distribution Employees who were employed by the ACNielsen Group and (b) on
and after the Effective Time with respect to ACNielsen Employees. For purposes
of this paragraph, a claim is deemed incurred when the injury that is the
subject of the claim occurs.
ARTICLE X
BENEFIT PLAN PARTICIPATION
SECTION 10.1. D&B Plans. Except as specifically provided
herein, all Cognizant Employees and ACNielsen Employees shall cease
participation in all domestic D&B Employee Benefit Plans as of the Effective
Time.
SECTION 10.2. Cognizant Plans. Except as provided in Section
5.6 herein, (a) with respect to any Employee Benefit Plan sponsored by the
Cognizant Group after the Effective Time, the Cognizant Group shall cause to be
recognized (to the extent applicable) each Cognizant Employee's (i) past service
with the D&B Group to the extent recognized under similar plans maintained by
the D&B Group immediately prior to the Effective Time and (ii) accrued but
unused vacation time and sick days, and (b) any Cognizant Employee who
participated in a D&B Employee Benefit Plan immediately prior to the Effective
Time shall be entitled to immediate participation in a similar Employee Benefit
Plan sponsored by the Cognizant Group.
SECTION 10.3. ACNielsen Plans. Except as provided in Section
5.6 herein, (a) with respect to any Employee Benefit Plan sponsored by the
ACNielsen Group after the Effective Time, the ACNielsen Group shall cause to be
recognized (to the extent applicable) each ACNielsen Employee's (i) past service
with the D&B Group to the extent recognized under similar plans maintained by
the D&B Group immediately prior to the Effective Time and (ii) accrued but
unused vacation time and sick days, and (b) any ACNielsen Employee who
participated in a D&B Employee Benefit Plan immediately prior to the Effective
Time shall be entitled to
<PAGE> 30
immediate participation in a similar Employee Benefit Plan sponsored by
ACNielsen.
SECTION 10.4. Subsequent Employer. Except as provided in
Section 5.6 herein, if, during the one-year period following the Effective Time,
a D&B Post-Distribution Employee, a Cognizant Employee or ACNielsen Employee
terminates employment with his or her employer and then immediately commences
employment with one of the D&B Group, the Cognizant Group or the ACNielsen
Group, the subsequent employer shall cause to be recognized (to the extent
applicable) such employee's past service with the D&B Group, the Cognizant Group
or the ACNielsen Group to the extent recognized under similar plans maintained
by the prior employer. Notwithstanding the foregoing, no past service shall be
recognized with respect to pension accruals under the defined benefit plans of
the subsequent employer.
SECTION 10.5. Right to Amend or Terminate. Except as
specifically provided herein, nothing in this Agreement shall be construed or
interpreted to restrict the D&B Group's, the Cognizant Group's or the ACNielsen
Group's right or authority to amend or terminate any of their Employee Benefit
Plans following the Effective Time.
ARTICLE XI
ACCESS TO INFORMATION
SECTION 11.1. Access to Information. Article IV of the
Distribution Agreement shall govern the rights of the D&B Group, the Cognizant
Group and the ACNielsen Group with respect to access to information. The term
"Records" in that Article shall be read to include all Employee Benefit Records.
<PAGE> 31
ARTICLE XII
INDEMNIFICATION
SECTION 12.1. Indemnification. Article III of the Distribution
Agreement shall govern the rights of the D&B Group, the Cognizant Group and the
ACNielsen Group with respect to indemnification. The term "D&B Liabilities" in
that Article shall be read to include all Liabilities assumed by the D&B Group
pursuant to this Agreement. The term "Cognizant Liabilities" in that Article
shall be read to include all Liabilities assumed by the Cognizant Group pursuant
to this Agreement. The term "ACNielsen Liabilities" in that Article shall be
read to include all Liabilities assumed by the ACNielsen Group pursuant to this
Agreement.
ARTICLE XIII
DISPUTE RESOLUTION
SECTION 13.1. Dispute Resolution. Article VI of the
Distribution Agreement shall govern the rights of the D&B Group, the Cognizant
Group and the ACNielsen Group with respect to dispute resolution. The term
"Agreement Dispute" in that Article shall be read to include all Employee
Benefit Disputes.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1. Complete Agreement; Construction. This
Agreement, including the Exhibits and Schedules (if any), and the Distribution
Agreement shall constitute the entire agreement between the parties with respect
to the subject matter hereof and shall supersede all previous negotiations,
commitments and writings with respect to such subject matter. In the event of
any inconsistency between this Agreement and any Schedule hereto, the Schedule
shall prevail. Other than Sections 2.7 and 4.5 and Article VI of the
Distribution Agreement, which shall prevail over any inconsistent or conflicting
provisions in this Agreement, notwithstanding any other provisions in this
Agreement to the contrary, in the event and to the extent that there shall be a
conflict between the provisions of this Agreement and the provisions of the
Distribution Agreement, this Agreement shall control.
<PAGE> 32
SECTION 14.2. Ancillary Agreements. This Agreement is not
intended to address, and should not be interpreted to address, the matters
specifically and expressly covered by the Ancillary Agreements.
SECTION 14.3. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts have
been signed by each of the parties and delivered to the other parties.
SECTION 14.4. Survival of Agreements. Except as otherwise
contemplated by this Agreement, all covenants and agreements of the parties
contained in this Agreement shall survive the Distribution Date.
SECTION 14.5. Expenses. Except as otherwise set forth in this
Agreement, the Distribution Agreement or any Ancillary Agreement, all costs and
expenses incurred on or prior to the Distribution Date (whether or not paid on
or prior to the Distribution Date) in connection with the preparation,
execution, delivery and implementation of this Agreement, the Distribution
Agreement, any Ancillary Agreement, the Information Statement (including any
registration statement on Form 10 of which such Information Statement may be a
part) and the Distribution and the consummation of the transactions contemplated
thereby shall be charged to and paid by D&B. Except as otherwise set forth in
this Agreement, the Distribution Agreement or any Ancillary Agreement, each
party shall bear its own costs and expenses incurred after the Distribution
Date. Any amount or expense to be paid or reimbursed by any party hereto to any
other party hereto shall be so paid or reimbursed promptly after the existence
and amount of such obligation is determined and demand therefor is paid.
SECTION 14.6. Notices. All notices and other communications
hereunder shall be in writing and hand delivered or mailed by registered or
certified mail (return receipt requested) or sent by any means of electronic
message transmission with delivery confirmed (by voice or otherwise) to the
parties at the following addresses (or at such other addresses for a party as
shall be specified by like notice) and
<PAGE> 33
will be deemed given on the date on which such notice is received:
To The Dun & Bradstreet Corporation:
One Diamond Hill Road
Murray Hill, NJ 07974
Telecopy: (908) 665-5803
Attn: General Counsel
To Cognizant Corporation:
200 Nyala Farms
Westport, CT 06880
Telecopy: (203) 222-4201
Attn: General Counsel
To ACNielsen Corporation:
177 Broad Street
Stamford, CT 06901
Telecopy: (203) 961-3179
Attn: General Counsel
SECTION 14.7. Waivers. The failure of any party to require
strict performance by any other party of any provision in this Agreement will
not waive or diminish that party's right to demand strict performance thereafter
of that or any other provision hereof.
SECTION 14.8. Amendments. Subject to the terms of Section
14.11 hereof, this Agreement may not be modified or amended except by an
agreement in writing signed by each of the parties hereto.
SECTION 14.9. Assignment. This Agreement shall not be
assignable, in whole or in part, directly or indirectly, by any party hereto
without the prior written consent of the other parties hereto, and any attempt
to assign any rights or obligations arising under this Agreement without such
consent shall be void.
SECTION 14.10. Successors and Assigns. The provisions to this
Agreement shall be binding upon, inure to the benefit of
<PAGE> 34
and be enforceable by the parties and their respective successors and
permitted assigns.
SECTION 14.11. Termination. This Agreement (including, without
limitation, Section 4.8 and Article XII hereof) may be terminated and may be
amended, modified or abandoned at any time prior to the Distribution by and in
the sole discretion of D&B without the approval of Cognizant or ACNielsen or the
shareholders of D&B. In the event of such termination, no party shall have any
liability of any kind to any other party or any other person. After the
Distribution, this Agreement may not be terminated except by an agreement in
writing signed by the parties; provided, however, that Section 4.8 and Article
XII shall not be terminated or amended after the Distribution in respect of the
third party beneficiaries thereto without the consent of such persons.
SECTION 14.12. Subsidiaries. Each of the parties hereto shall
cause to be performed, and hereby guarantees the performance of, all actions,
agreements and obligations set forth herein to be performed by any Subsidiary of
such party or by any entity that is contemplated to be a Subsidiary of such
party on and after the Distribution Date.
SECTION 14.13. Third Party Beneficiaries. Except as provided
in Section 4.8 and Article XII, this Agreement is solely for the benefit of the
parties hereto and their respective Subsidiaries and Affiliates and should not
be deemed to confer upon third parties any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.
SECTION 14.14. Title and Headings. Titles and headings to
sections herein are inserted for the convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
SECTION 14.15. Exhibits and Schedules. The Exhibits and
Schedules, if any, shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein.
SECTION 14.16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
<PAGE> 35
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE
OF NEW YORK.
SECTION 14.17. Consent to Jurisdiction. Without limiting the
provisions of Article XIII hereof, each of the parties irrevocably submits to
the exclusive jurisdiction of (a) the Supreme Court of the State of New York,
New York County, and (b) the United States District Court for the Southern
District of New York, for the purposes of any suit, action or other proceeding
arising out of this Agreement or any transaction contemplated hereby. Each of
the parties agrees to commence any action, suit or proceeding relating hereto
either in the United States District Court for the Southern District of New York
or if such suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court of the State of New York, New York
County. Each of the parties further agrees that service of any process, summons,
notice or document by U.S. registered mail to such party's respective address
set forth above shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 14.17. Each of the parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Supreme Court of the State of New York, New York County, or
(ii) the United States District Court for the Southern District of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
SECTION 14.18. Severability. In the event any one or more of
the provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions, the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
<PAGE> 36
SECTION 14.19. Governmental Notices; Cooperation.
Notwithstanding anything in this Agreement to the contrary, all actions
contemplated herein with respect to Employee Benefit Plans which are to be
consummated pursuant to this Agreement shall be subject to such notices to,
and/or approvals by, the Service or the PBGC (or any other governmental agency
or entity) as are required or deemed appropriate by such Employee Benefit Plan's
sponsor. Each of D&B, Cognizant and ACNielsen agrees to use its commercially
reasonable efforts to cause all such notices and/or approvals to be filed or
obtained, as the case may be. Each party hereto shall reasonably cooperate with
the other parties with respect to any government filings, employee notices or
any other actions reasonably necessary to maintain and implement the Employee
Benefit Plans covered by this Agreement.
SECTION 14.20. Further Assurances. From time to time, as and
when reasonably requested by any other party hereto, each party hereto shall
execute and deliver, or cause to be executed and delivered, all such documents
and instruments and shall take, or cause to be taken, all such further or other
actions as such other party may reasonably deem necessary or desirable to effect
the purposes of this Agreement and the transactions contemplated hereunder.
<PAGE> 37
IN WITNESS WHEREOF, the parties have duly executed and entered
into this Agreement, as of the date first above written.
THE DUN & BRADSTREET CORPORATION
by /s/ Volney Taylor
-----------------------
Name: Volney Taylor
Title:
COGNIZANT CORPORATION
by /s/ Robert E. Weissman
--------------------------
Name: Robert E. Weissman
Title:
ACNIELSEN CORPORATION
by /s/ Nicholas L. Trivisonno
------------------------------
Name: Nicholas L. Trivisonno
Title:
<PAGE> 1
Exhibit 10(d)
INTELLECTUAL PROPERTY AGREEMENT
This INTELLECTUAL PROPERTY AGREEMENT ("Agreement") is dated as of
October 28, 1996, between and among THE DUN & BRADSTREET CORPORATION, a Delaware
corporation ("D&B"), COGNIZANT CORPORATION, a Delaware corporation
("Cognizant"), and ACNIELSEN CORPORATION, a Delaware corporation ("ACNielsen")
(each a "Party" and collectively, the "Parties").
RECITALS
WHEREAS, D&B, acting through its direct and indirect subsidiaries,
currently owns various intellectual property rights used in connection with a
number of businesses, which businesses are described in the Distribution
Agreement dated as of October 28, 1996, among D&B, Cognizant and ACNielsen (the
"Distribution Agreement"); and
WHEREAS, the Parties hereto have determined that this Agreement is
appropriate in order to effectuate the purposes of the Distribution Agreement as
described therein, and in order to promote a clear understanding of their
respective intellectual property rights subsequent to the execution of said
Distribution Agreement and the Distribution (as defined therein) contemplated
thereby;
NOW, THEREFORE, in consideration of the mutual agreements, undertakings
and covenants herein and therein, the sufficiency of which is hereby
acknowledged, the Parties hereby agree as follows:
I. DEFINITIONS
1. Except as may be set forth herein, all defined terms shall have the
meaning set forth in Article I, Section 1.1 of the Distribution
Agreement.
2. "Infringement" shall mean any unauthorized use or conduct in violation
or derogation of the rights in question.
3. "Intellectual Property" shall mean all intellectual property rights
related to the Assets or Businesses of either D&B, Cognizant or
ACNielsen as defined in the Distribution Agreement, as they are now or
may in future exist or be conducted, including without limitation:
a. any and all rights, privileges and priorities arising under
the laws or treaties of the United States, any state,
territory or possession thereof, any
<PAGE> 2
2
other country or political subdivision or territory thereof,
or the European Community, relating to patents, copyrights,
trade names, trademarks, service marks, mask works, trade
secrets, inventions, databases, names and logos, trade dress,
and other proprietary information and licenses from third
persons granting the right to use any of the foregoing,
including all registrations and applications for any of the
foregoing that have been issued by or filed with the
appropriate authorities, any common-law rights arising from
the use of the foregoing, any rights commonly known as
"industrial property rights" or the "moral rights" of authors
relating to the foregoing, and all claims, causes of action,
or other rights arising out of or relating to any actual or
threatened Infringement by any person not a Party to this
Agreement relating to the foregoing;
b. all computer applications, programs and other software,
including without limitation operating software, network
software, firmware, middleware, design software, design tools,
systems documentation and instructions, except to the extent
that they may be more specifically addressed in the Data
Services Agreements; and
c. all cost information, sales and pricing data, customer
prospect lists, supplier records, customer and supplier lists,
customer and vendor data, correspondence and lists, product
literature, artwork, design, development and manufacturing
files, vendor and customer drawings, formulations and
specifications, quality records and reports and other books,
records, studies, surveys, reports, plans and documents.
4. "Intellectual Property Disputes" shall mean any and all
controversies, disputes or claims arising out of, in connection with, or in
relation to the interpretation, performance, nonperformance, validity or breach
of this Agreement or otherwise arising out of, or in any way related to this
Agreement or the Intellectual Property, including, without limitation, any and
all claims based on contract, tort, statute or constitution.
5. "LLC" shall mean CZT/ACN Trademarks, L.L.C., a Delaware limited
liability company to be jointly owned by Cognizant and ACN pursuant to the LLC
Agreement.
6. "LLC Agreement" shall mean the agreement to be entered into by
Cognizant and ACNielsen substantially in the form of Schedule I.
7. "Nielsen Intellectual Property" shall mean those patents,
trademarks, service marks, registrations and applications therefor identified
and described in Article III of this Agreement.
<PAGE> 3
3
II. OWNERSHIP OF INTELLECTUAL PROPERTY.
General Principles of Allocation and Recognition
II. A. 1. Without limiting any obligation or liability of D&B under the
Distribution Agreement or any Ancillary Agreement, and subject to the provisions
set forth in Article III below, each of the Parties hereto acknowledges,
recognizes and agrees that, after the Distribution, D&B (or another member of
the D&B Group) shall own all right, title and interest in all Intellectual
Property that (i) originated primarily with the conduct of the D&B Business or
primarily in connection with the D&B Assets; (ii) was obtained by, or
exclusively or primarily for the conduct of, the D&B Business or in connection
with the D&B Assets; (iii) was developed exclusively or primarily for the
conduct of the D&B Business or in connection with the D&B Assets; (iv) arose
from funding by, or exclusively or primarily for the benefit of the conduct of,
the D&B Business or in connection with the D&B Assets; or (v) as of the
Distribution Date is used or held for use exclusively or primarily for the
conduct of the D&B Business or in connection with the D&B Assets. If a conflict
exists between any of the subsections (i) through (iv) of this Section or of
Sections 2.02 or 2.03 on the one hand and subsection (v) of this Section on the
other hand, then subsection (v) of this Section 2.01 shall prevail.
II. A. 2. Without limiting any obligation or liability of Cognizant
under the Distribution Agreement or any Ancillary Agreement, and subject to the
provisions set forth in Article III below, each of the Parties hereto
acknowledges, recognizes and agrees that, after the Distribution, Cognizant (or
another member of the Cognizant Group) shall own all right, title and interest
in all Intellectual Property that (i) originated primarily with the conduct of
the Cognizant Business or primarily in connection with the Cognizant Assets;
(ii) was obtained by, or exclusively or primarily for the conduct of, the
Cognizant Business or in connection with the Cognizant Assets; (iii) was
developed exclusively or primarily for the conduct of the Cognizant Business or
in connection with the Cognizant Assets; (iv) arose from funding by, or
exclusively or primarily for the benefit of the conduct of, the Cognizant
Business or in connection with the Cognizant Assets; or (v) as of the
Distribution Date is used or held for use exclusively or primarily for the
conduct of the Cognizant Business or in connection with the Cognizant Assets. If
a conflict exists between any of the subsections (i) through (iv) of this
Section or of Sections 2.01 or 2.03 on the one hand and subsection (v) of this
Section on the other hand, then subsection (v) of this Section 2.02 shall
prevail.
II. A. 3. Without limiting any obligation or liability of ACNielsen
under the Distribution Agreement or any Ancillary Agreement, and subject to the
provisions set forth in Article III below, each of the Parties hereto
acknowledges, recognizes and agrees that, after the Distribution, ACNielsen (or
another member of the ACNielsen Group) shall own all right, title and interest
in all Intellectual Property that (i) originated primarily with the conduct of
the ACNielsen Business or primarily in connection with the ACNielsen Assets;
(ii) was obtained by, or exclusively or primarily for the conduct of, the
ACNielsen Business or in connection with the ACNielsen Assets; (iii) was
developed exclusively or primarily for the conduct of the ACNielsen
<PAGE> 4
4
Business or in connection with the D&B Assets; (iv) arose from funding
by, or exclusively or primarily for the benefit of the conduct of, the ACNielsen
Business or in connection with the ACNielsen Assets; or (v) as of the
Distribution Date is used or held for use exclusively or primarily for the
conduct of the ACNielsen Business or in connection with the ACNielsen Assets. If
a conflict exists between any of the subsections (i) through (iv) of this
Section or of Sections 2.01 or 2.02 on the one hand and subsection (v) of this
Section on the other hand, then subsection (v) of this Section 2.03 shall
prevail.
II. A. 4. Certain Specified Items. Without limiting any obligation or
liability of any Party under the Distribution Agreement or any Ancillary
Agreement, and subject to the provisions set forth in Article III below, each of
the Parties hereto acknowledges, recognizes and agrees that, after the
Distribution, all right, title and interest in all Intellectual Property
relating to and associated with the items identified in Schedule A shall be
owned by or vested in the Party indicated therein. This provision is intended to
supplement the preceding Sections 2.01-2.03 with regard to these specified
items, and should not be construed in any manner that would tend to derogate
from the validity or applicability of the general principles of allocation and
recognition set forth therein. Nevertheless, if a conflict exists between this
Section 2.04 and Sections 2.01-2.03, then this Section 2.04 shall prevail.
II. A. 5. Rights Arising in Future. Subject to the provisions set forth
in Article III below, each of the Parties hereto acknowledges, recognizes and
agrees that, after the Distribution Date, (i) any and all Intellectual Property
created by or on behalf of a Party, including common-law rights related thereto,
shall belong solely and exclusively to such Party; and (ii) any and all
subsequent ownership, possession and use by each Party of the Intellectual
Property that it will own subsequent to the Distribution pursuant to the terms
of this Agreement (excluding any possession or use pursuant to license granted
by another Party), including common-law rights related thereto, shall inure
solely to such Party's own benefit.
II. A. 6. No Warranties. Each of the Parties hereto understands and
agrees that, except as otherwise expressly provided, no Party hereto is, in this
Agreement or in any other agreement or document contemplated by this Agreement
or otherwise, making any representation or warranty whatsoever regarding the
Intellectual Property, including, without limitation, as to title, value or
legal sufficiency. It is also agreed and understood that any and all
Intellectual Property assets either transferred or retained by the Parties, as
the case may be, shall be "as is, where is".
II. A. 7. Recognition of Non-Party Rights. The recognition among the
Parties of ownership of Intellectual Property rights under Sections 2.01-2.05 of
this Agreement is subject to all pre-existing rights, obligations and
restrictions of non-parties to this Agreement as of the Distribution Date.
<PAGE> 5
5
III. NIELSEN INTELLECTUAL PROPERTY.
Patents and Patent Applications
III. A. 1. Notwithstanding the provisions of Article II of this
Agreement, each of the Parties hereto acknowledges, recognizes and agrees that,
after the Distribution, Cognizant shall own all right, title and interest in, to
and under those patents and patent applications previously owned by ACNielsen
identified in Schedule B, together with all Intellectual Property related
thereto and associated therewith, for the exclusive use and benefit of Cognizant
in connection with the Cognizant Business as it is now or may hereafter be
conducted anywhere in the world.
III. A. 2. Without limiting the generality of the provisions of Article
II of this Agreement, and notwithstanding anything therein to the contrary, each
of the parties hereto acknowledges, recognizes and agrees that, after the
Distribution, ACNielsen shall own all right, title and interest in, to and under
those patents and patent applications identified in Schedule C, together with
all Intellectual Property related thereto and associated therewith, for the
exclusive use and benefit of ACNielsen in connection with the ACNielsen Business
as it is now or may hereafter be conducted anywhere in the world.
III. A. 3. Notwithstanding the provisions of Article II of this
Agreement, each of the Parties hereto acknowledges, recognizes and agrees that
NCH Promotional Services, Inc., shall own all right, title and interest in, to
and under those patents identified in Schedule D, together with all Intellectual
Property related thereto and associated therewith, for the exclusive use and
benefit of NCH Promotional Services, Inc., in connection with its business as it
is now or may hereafter be conducted anywhere in the world.
Trademarks and Trademark Applications
III. A. 4. Notwithstanding the provisions of Article II of this
Agreement, each of the Parties hereto acknowledges, recognizes and agrees that,
after the Distribution, Cognizant shall own all right, title and interest in, to
and under those trademarks, service marks, registrations and applications
therefor identified in Schedule E, together with all goodwill and Intellectual
Property related thereto and associated therewith, for the exclusive use of
Cognizant in connection with the Cognizant Business as it is now or may
hereafter be conducted anywhere in the world.
III. A. 5. Without limiting the generality of the provisions of Article
II of this Agreement, and notwithstanding anything therein to the contrary, each
of the Parties hereto acknowledges, recognizes and agrees that, after the
Distribution, ACNielsen shall own all right, title and interest in, to and under
those trademarks, service marks, registrations and applications therefor
identified in Schedule F, together with all goodwill and Intellectual Property
related
<PAGE> 6
6
thereto and associated therewith, for the exclusive use of ACNielsen in
connection with the ACNielsen Business as it is now or may hereafter be
conducted anywhere in the world.
III. A. 6. Notwithstanding the provisions of Article II of this
Agreement, each of the Parties hereto acknowledges, recognizes and agrees that
NCH Promotional Services, Inc., shall own all right, title and interest in, to
and under those trademarks, service marks, registrations and applications
therefor identified in Schedule G, together with all goodwill and Intellectual
Property related thereto and associated therewith, for the exclusive use and
benefit of NCH Promotional Services, Inc., in connection with its business as it
is now or may hereafter be conducted anywhere in the world.
III. A. 7. Notwithstanding the provisions of Article II of this
Agreement, each of the Parties hereto acknowledges, recognizes and agrees that,
after the Distribution, all right, title and interest in, to and under those
trademarks, service marks, registrations and applications therefor identified in
Schedule H, together with all goodwill and Intellectual Property related thereto
and associated therewith, shall be owned by the LLC, which shall have sole
responsibility for maintaining and preserving the quality of those trademarks,
service marks, registrations and applications therefor in a manner consistent
with the high standards and reputation for quality associated with the "NIELSEN"
name. The LLC will be organized and governed according to the LLC Agreement,
substantially in the form of Schedule I and as it may be amended or modified by
Cognizant and ACNielsen pursuant to its terms, with the fundamental purpose at
all times of assisting both Cognizant and ACNielsen in achieving their
legitimate business purposes to the greatest extent possible while also
preserving the integrity of the trademarks, service marks, registrations and
applications therefor owned by the LLC and minimizing the risk of confusion to
any relevant group of consumers for any product or service associated with any
such trademark, service mark, registration or application therefor. Schedule H
also identifies those trademark and service mark applications that may not be
immediately transferred or assigned to the LLC under the law prevailing in the
relevant jurisdiction. Legal ownership of each such application shall be
retained by ACNielsen for the benefit of the LLC pursuant to an escrow agreement
until such application is granted; at which time the registration and all
goodwill and Intellectual Property related thereto and associated therewith, if
any, shall be transferred to the LLC, as shall be specified in both the LLC
Agreement and the pertinent escrow agreement. If either Cognizant or ACNielsen
desires to use, register and/or apply for registration of any trademark or
service mark incorporating, referring to or derived from the "NIELSEN" name or
"split-N" symbol in any country or with any authority where no such trademark or
service mark has previously been used, registered or applied for, the party
desiring to make such use, registration or application shall cause the LLC to
determine, by obtaining the advice of counsel with expertise in the law
prevailing in the relevant jurisdiction, whether that country or authority is an
Associated Marks Country (as defined in the LLC Agreement) before making any
such use, registration or application. That party shall not use, register or
apply for any such trademark or service mark unless and until the LLC has
determined that the country or authority in question is not an Associated Marks
Country, or if it is determined to be an Associated Marks Country, shall
<PAGE> 7
7
proceed with the use, registration or application of such trademark or service
mark only as a Common Heritage Trademark as defined in and subject to the LLC
Agreement.
III. A. 8. Reversion of Certain Property. Schedule H also identifies
certain trademarks and service marks incorporating, referring to or derived from
the "NIELSEN" name or "split-N" symbol that shall be distributed, together with
all goodwill and Intellectual Property related thereto and associated therewith,
by the LLC to either Cognizant or ACNielsen as indicated therein and to the
extent appropriate under the LLC Agreement, in the event that the relevant local
law pursuant to which rights in such trademarks or service marks are granted
should subsequently, in the opinion of counsel to the LLC with expertise in the
relevant local law, both (a) permit the ownership of such trademarks or service
marks by unrelated entities without substantial jeopardy to their validity or
enforceability, and (b) not present a substantial likelihood of denial for any
future application for registration of such trademarks or service marks, if
applications for concurrent registration of such trademarks or service marks for
similar goods or services or for goods or services in the same class were to be
made by unrelated entities. In no event, however, shall any trademark or service
mark consisting of the "NIELSEN" name or the "split-N" symbol, standing alone,
be so distributed, for so long as both Cognizant and ACNielsen shall continue to
use any trademark or service mark anywhere in the world incorporating, referring
to or derived from the "NIELSEN" name.
III. A. 9. Clear Identification of Source. Cognizant and ACNielsen
agree that, subsequent to the Distribution Date, neither Cognizant nor ACNielsen
shall possess or acquire any right to use the "NIELSEN" name or "split-N" symbol
standing alone or by itself in any manner for any purpose, including use of the
name as an Internet domain name or the equivalent or as the name or logo for a
business, corporation, or other legal entity, except as may otherwise be agreed
by and between Cognizant and ACNielsen; provided, however, that both Cognizant
and ACNielsen may continue to use the "NIELSEN" name or "split-N" symbol in any
usage for which each, respectively, is currently using the name or symbol,
including usage of the name as part of electronic mail or messaging addresses
for its employees using existing systems, during a transitional period of six
months subsequent to the Distribution Date or under the circumstances specified
in Section 2.14(b)(iii) of the Distribution Agreement (a "Transitional Use").
Subsequent to the Distribution Date, except for a Transitional Use, any use that
Cognizant or ACNielsen may make of the "NIELSEN" name or "split-N" symbol for
any business purpose, including any use in trade, advertising, publicity,
packaging, or labeling, and including any use of any trademark or service mark
identified in Schedule H or in Schedules E and F that incorporates, refers to,
or is derived from the "NIELSEN" name or "split-N" symbol, shall only be made in
conjunction with other words, names, symbols or logos prominently displayed in
as near proximity thereto as is reasonably feasible and, at minimum, on the same
page, panel, sheet or screen therewith, clearly identifying the source of the
communication, good or service: (a) with regard to Cognizant, as "NIELSEN TV,"
"NIELSEN MEDIA," "NIELSEN MEDIA RESEARCH," or another entity using a name not
incorporating, referring to, or derived from the "NIELSEN" name; and (b) with
regard to ACNielsen, as "ACNIELSEN," "A.C. NIELSEN," or another entity using a
name not incorporating, referring to, or derived from the "NIELSEN"
<PAGE> 8
8
name. In addition, in the event that ACNielsen enters into any television
audience measurement business in the United States or Canada subsequent to the
Distribution Date, its use of any name incorporating, referring to, or derived
from the "NIELSEN" name in connection with such business shall be subject to the
provisions of Schedule J.
III. B. Limitations on Concurrent Use. The provisions in this Article
shall in no way restrict the rights of Cognizant or ACNielsen to sell any
product or service or enter into any business identical or similar to any
product or service sold, or business conducted by, the other before or after the
Distribution Date. Cognizant and ACNielsen agree, however, that in the event
that either Cognizant or ACNielsen sells any product or service, or enters into
any business, after the Distribution Date in any country that is identical or
substantially similar to those sold or conducted by the other in that country
prior to the Distribution Date, the second party desiring to sell such a similar
product or service or desiring to enter such a similar business shall not use
any name incorporating, referring to or derived from the "NIELSEN" name or the
"split-N" symbol to describe or identify such product, service, or business;
provided that any product, service or business relating to the measurement of
Internet usage or to research and analysis of Internet usage, utilization,
advertising, or purchasing patterns, by businesses or consumers, shall not be
subject to such restriction and shall only be subject to the restrictions set
forth in Section 3.09, and provided further that any product or service that may
in future be sold by ACNielsen in connection with any television audience
measurement business in the United States or Canada shall be subject to both
this restriction and the provisions of Schedule J. Cognizant and ACNielsen
further agree that any future use of any Common Heritage Trademark (as defined
in the LLC Agreement) shall only be made by or pursuant to license from the LLC.
III. C. Clear Fields. Cognizant and ACNielsen agree that, subsequent to
the Distribution Date, neither Cognizant nor ACNielsen shall use as a trademark
or service mark (except pursuant to license), register or attempt to register
any trademark or service mark (whether registered or not) that has been used
(except pursuant to license), owned or applied for by the other in any country
or geographic area as of the Distribution Date, including but not limited to
those trademarks and service marks identified in Schedules A, F, G and H, in
either that country or geographic area or in any other country or geographic
area. This provision shall not apply to the "MIDAS" trademark used and/or
registered by ACNielsen in Germany, the "MIDAS" trademarks or service marks used
and/or registered by IMS (Cognizant) in Germany and elsewhere, the "PRIZMA"
trademark used and/or registered by IMS (Cognizant) in Greece, the "PRISMA
FOLDER" trademark used and/or registered in the Benelux countries by ACNielsen,
the "NIELSEN PRISMA" trademark used and/or registered in Germany by ACNielsen,
the "PROMOTRAK" trademark or service mark used and/or registered by IMS
(Cognizant) in the United States, or the "PROMOTRACK" name and/or trademark or
service mark used and/or registered by ACNielsen elsewhere in the world. With
regard to these specific items, each party shall retain and have such rights
with respect to such items that it would otherwise have or become entitled to
under the laws of any relevant jurisdiction in the absence of this provision.
<PAGE> 9
9
III. D. Notice and Publicity. Prior to or subsequent to the
Distribution, both Cognizant and ACNielsen agree to give or cause to be given,
in each distinct geographic area or line of business in which they intend to
operate or to sell any product or service, such notice and publicity of their
separation and distinct identities as the source of any such business, product
or service as may be reasonable under the circumstances or required by the
relevant local law, where the local law imposes such a duty so to notify and/or
publicize.
III. E. Internet Hyperlinks. Cognizant and ACNielsen agree to assign
and transfer all rights in the existing "nielsen.com" Internet domain name to
the LLC, and to cause the LLC to provide and maintain an Internet or Web site
using that domain name for the purpose of providing and maintaining "hyperlinks"
to the principal Internet or Web sites maintained by both Cognizant and
ACNielsen. In addition, both Cognizant and ACNielsen agree to provide and
maintain in any Internet or Web site maintained by Cognizant or ACNielsen,
respectively, for a period of two (2) years subsequent to the Distribution Date,
a hyperlink to the principal Internet or Web site maintained by the other. All
such hyperlinks shall be displayed together with appropriate text indicating the
nature and purpose of the hyperlink and describing in summary the separation and
distinct identities of each as sources of their respective goods and services.
Cognizant and ACNielsen further agree to cooperate reasonably in the
identification of appropriate addresses and/or domain names and in resolving
technical issues necessary to provide and maintain such hyperlinks.
III. F. Assignments and Sublicenses; Remedies for Improper Use.
Cognizant and ACNielsen agree that any form of transfer of, or grant of rights
in or to, any trademark or service mark (whether registered or not)
incorporating, referring to or derived from the "NIELSEN" name or "split-N"
symbol (including, but not limited to, all rights received by either Cognizant
or ACNielsen pursuant to license from the LLC) by either Cognizant or ACNielsen
(the "Granting Party") to a non-party to this Agreement shall be made explicitly
subject to all pertinent provisions of Article III of this Agreement concerning
the Granting Party's own use of any such trademark or service mark, and notice
shall be given by the Granting Party to the Party other than the Granting Party
(the "Interested Party") of any such transfer or grant of rights. Any such grant
of rights that is not an outright transfer, assignment, sale or disposition of
all of the Granting Party's rights and interests in any such trademark or
service mark, including any sub-license, consent or permission to use, to a
non-party to this Agreement (a "Grantee") shall be pursuant to a written
instrument that shall both (a) explicitly bind the Grantee to all pertinent
provisions of this Agreement restricting the Granting Party's own use of any
such trademark or service mark, and (b) explicitly provide that the Granting
Party may revoke the grant of rights, in its sole discretion, upon not more than
thirty days' notice to the Grantee. It shall be the obligation of the Granting
Party to use its best efforts to police the use made of any such trademark or
service mark by a Grantee. If the Granting Party reasonably believes that a
Grantee is using any such trademark or service mark in a manner that is (c)
inconsistent with the terms of this Agreement or (d) injurious to the high
standards and reputation for quality associated with the "NIELSEN" name (an
"Improper Use"), the Granting Party shall promptly so notify both the Grantee
and the Interested Party. If the Grantee does not thereafter correct or
terminate the Improper Use within
<PAGE> 10
10
thirty days, the Granting Party shall revoke the grant of rights to the Grantee,
and shall give notice thereof to the Interested Party. If the Interested Party
reasonably believes that the use made by a Grantee of rights granted by the
Granting Party is an Improper Use, it may so notify the Granting Party, which
shall thereupon take appropriate measures to investigate the use in question and
shall notify the Interested Party within fourteen (14) days as to whether it
also reasonably believes that the Grantee is engaging in an Improper Use. If the
Granting Party, after receiving notice from the Interested Party, also
reasonably believes that the Grantee is engaging in an Improper Use, it shall
take all appropriate measures to correct or terminate the Improper Use,
including the giving of notice of revocation to the Grantee, if necessary. If
the Granting Party (x) gives notice to the Interested Party that it does not
reasonably believe that a Grantee is engaging in an Improper Use, or (y) fails
to take appropriate measures to correct or terminate an Improper Use after
giving notice to the Interested Party that it reasonably believes a Grantee is
engaging in an Improper Use, or (z) is unable to correct or terminate an
Improper Use by a Grantee within sixty (60) days of the first notice of
suspected Improper Use given by either the Granting Party or the Interested
Party, the Interested Party may both commence any action or proceeding at law or
equity that it believes it has an appropriate and independent basis to assert
against the Grantee and invoke its contractual rights against the Granting Party
in the event of an Intellectual Property Dispute as defined in this Agreement.
III. G. Duty to Avoid Confusion. The Parties hereto confirm their
belief that likelihood of confusion will not result from the Parties' use of
their respective trademarks and service marks as provided for in this Agreement,
due to the differences in the environments in which and the customers to whom
the goods and services of the Parties associated therewith are primarily offered
and sold. The Parties further believe that any potential future confusion will
be prevented under the terms of this Agreement. Furthermore, in order to enable
and permit each other to continue using and to register their respective
trademarks and service marks and to ensure that there is no confusion in any
relevant marketplace between them, the Parties agree to use their best efforts
to avoid actual or potential confusion arising from their use, to advise any
other affected Party of any instance of actual or potential confusion that comes
to a Party's attention concerning use of their respective trademarks and service
marks, to take all such steps as may be appropriate and necessary to remedy any
actual or potential confusion caused by their actions, and to cooperate with
each other in good faith to avoid and prevent actual or potential confusion.
III. H. Consent to Registration. Subject to the other provisions of
this Article, each Party agrees that any other Party may use a copy of this
Agreement to evidence the other Party's express consent to registration of the
Party's trademarks or service marks, if necessary to obtain or maintain a
registration of such mark in the United States Patent and Trademark Office or
any other pertinent governmental agency in any country or group of countries;
and further agrees to take any other necessary action that any other Party may
reasonably request to express or confirm such consent.
<PAGE> 11
11
III. I. Transfer at or Prior to Distribution. The Parties agree to
execute all such documents, and to take all such actions, prior to or at the
Distribution as they may deem to be necessary to achieve or confirm the
respective ownership of rights in the Nielsen Intellectual Property as
contemplated in this Article to be effective upon the Distribution Date.
III. J. Construction. In the event of any inconsistency between Article
III and Article II of this Agreement with respect to the Nielsen Intellectual
Property, then Article III shall prevail.
IV. FURTHER ASSURANCES AND COOPERATION.
IV. A. 1. Without limiting the obligations of any party under Article
III of this Agreement, each Party hereto shall execute and deliver, or cause to
be executed and delivered, as and when reasonably requested by any other Party
hereto, all such documents and instruments and shall take, or cause to be taken,
all such further or other actions as such other Party may reasonably deem
necessary or desirable to effect the purposes of this Agreement and/or to
clarify or confirm the respective ownership rights of the Parties as provided
for in this Agreement.
IV. A. 2. Without limiting the obligations of any party under Article
III of this Agreement, each Party hereto shall reasonably cooperate with the
other Parties with respect to any government filings or any other actions
reasonably necessary to maintain and enforce the rights to the Intellectual
Property covered by this Agreement.
IV. A. 3. Without limiting the obligations of any Party under Article
III of this Agreement, each Party hereto shall, upon the prior written request
of another Party, arrange for the provision of appropriate copies of Records in
its possession or control (or the originals thereof if the Party making the
request has a reasonable need for such originals) created prior to the
Distribution Date and relating to the Intellectual Property, as soon as
reasonably practicable following the receipt of such request, but only to the
extent such items are not already in the possession or control of the requesting
Party.
V. INDEMNIFICATION.
V. A. 1. Article III of the Distribution Agreement shall govern the
rights of D&B, Cognizant and ACNielsen with respect to indemnification for any
and all Indemnifiable Losses incurred by any Party related to the Intellectual
Property.
<PAGE> 12
12
VI. DISPUTE RESOLUTION.
VI. A. 1. Article VI of the Distribution Agreement shall govern the
rights of D&B, Cognizant and ACNielsen with respect to dispute resolution. The
term "Agreement Dispute" in that Article shall be read to include all
Intellectual Property Disputes.
VII. MISCELLANEOUS.
VII. A. 1. Complete Agreement; Construction. This Agreement, the
Schedules thereto, the Distribution Agreement, the LLC Agreement and the Data
Services Agreements shall constitute the entire agreement between the Parties
with respect to the subject matter hereof and shall supersede all previous
negotiations, commitments and writings with respect to such subject matter. In
the event of any inconsistency between this Agreement and any Schedule thereto,
the Schedule shall prevail. In the event of any inconsistency between this
Agreement and the LLC Agreement, this Agreement shall prevail. Other than
Sections 2.7, 2.14 and 4.5 of the Distribution Agreement, which shall prevail
over any inconsistent or conflicting provisions in this Agreement
notwithstanding any other provisions in this Agreement to the contrary, in the
event and to the extent that there shall be an inconsistency between the
provisions of this Agreement and the provisions of the Distribution Agreement,
this Agreement shall prevail.
VII. A. 2. Other Agreements. This Agreement is not intended to address,
and should not be interpreted to address, the matters specifically and expressly
covered by the Distribution Agreement and/or other Ancillary Agreements.
VII. A. 3. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the Parties and delivered to the other Parties.
VII. A. 4. Survival of Agreements. Except as otherwise contemplated by
this Agreement, all covenants and agreements of the Parties contained in this
Agreement shall survive the Distribution Date.
VII. A. 5. Expenses. Except as otherwise set forth in this Agreement,
the LLC Agreement, the Distribution Agreement or any Ancillary Agreement, all
costs and expenses incurred on or prior to the Distribution Date (whether or not
paid on or prior to the Distribution Date) in connection with the preparation,
execution, delivery and implementation of this Agreement and the consummation of
the transactions contemplated thereby shall be charged to and
<PAGE> 13
13
paid by D&B. Except as otherwise set forth in this Agreement, the LLC Agreement,
the Distribution Agreement or any Ancillary Agreement, all costs and expenses
incurred after the Distribution Date in connection with the implementation of
this Agreement, the consummation of this Agreement or the transactions
contemplated by this Agreement shall be charged to and paid by D&B. Except as
otherwise set forth in this Agreement and the LLC Agreement, each Party shall
bear its own costs and expenses related to the Intellectual Property incurred
after the Distribution Date, including the performance of any obligation arising
under Articles III and IV of this Agreement.
VII. A. 6. Notices. All notices and other communications hereunder
shall be in writing and hand delivered or mailed by registered or certified mail
(return receipt requested) or sent by any means of electronic message
transmission with delivery confirmed (by voice or otherwise) to the Parties at
the following addresses (or at such other addresses for a Party as shall be
specified by like notice) and will be deemed given on the date on which such
notice is received:
To The Dun & Bradstreet Corporation:
One Diamond Hill Road
Murray Hill, NJ 07974
Telecopy: (908) 665-5803
Attn: General Counsel
To Cognizant Corporation:
200 Nyala Farms
Westport, Connecticut 06880
Telecopy: (203) 222-4201
Attn: General Counsel
To ACNielsen Corporation:
177 Broad Street
Stamford, Connecticut 06901
Telecopy: (203) 961-3179
Attn: General Counsel
VII. A. 7. Waivers. The failure of any Party to require strict
performance by any other Party of any provision in this Agreement will not waive
or diminish that Party's right to demand strict performance thereafter of that
or any other provision hereof.
<PAGE> 14
14
VII. A. 8. Amendments. Subject to the terms of Section 7.11 hereof,
this Agreement may not be modified or amended except by an agreement in writing
signed by each of the Parties hereto.
VII. A. 9. Assignment. This Agreement shall not be assignable, in whole
or in part, directly or indirectly, by any Party hereto without the prior
written consent of the other Parties hereto, and any attempt to assign any
rights or obligations arising under this Agreement (except as set forth in
Section 3.14) without such consent shall be void.
VII. B. Successors and Assigns. The provisions to this Agreement shall
be binding upon, inure to the benefit of and be enforceable by the Parties and
their respective successors and permitted assigns.
VII. C. Termination. This Agreement may be terminated and may be
amended, modified or abandoned at any time prior to the Distribution by and in
the sole discretion of D&B without the approval of Cognizant or ACNielsen or the
shareholders of D&B. In the event of such termination, no Party shall have any
liability of any kind to any other Party or any other person. After the
Distribution, this Agreement may not be terminated except by an agreement in
writing signed by the Parties.
VII. D. Subsidiaries. Each of the Parties hereto shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth herein to be performed by any Subsidiary of such Party or
by any entity that is contemplated to be a Subsidiary of such Party on and after
the Distribution Date.
VII. E. Third Party Beneficiaries. This Agreement is solely for the
benefit of the Parties hereto and their respective Subsidiaries and Affiliates
and should not be deemed to confer upon third Parties any remedy, claim,
liability, reimbursement, claim of action or other right in excess of those
existing without reference to this Agreement.
VII. F. Title and Headings. Titles and headings to sections herein are
inserted for the convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
VII. G. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
VII. H. Consent to Jurisdiction. Without limiting the provisions of
Article VI hereof, each of the Parties irrevocably submits to the exclusive
jurisdiction of (a) the Supreme Court of the State of New York, New York County,
and (b) the United States District Court for the Southern District of New York,
for the purposes of any suit, action or other proceeding
<PAGE> 15
15
arising out of this Agreement or any transaction contemplated hereby. Each of
the Parties agrees to commence any action, suit or proceeding relating hereto
either in the United States District Court for the Southern District of New York
or if such suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court of the State of New York, New York
County. Each of the Parties further agrees that service of any process, summons,
notice or document by U.S. registered mail to such Party's respective address
set forth above shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 7.16. Each of the Parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Supreme Court of the State of New York, New York County, or
(ii) the United States District Court for the Southern District of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
VII. I. Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby. The Parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions,
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
<PAGE> 16
16
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
duly executed as of the day and year first above written.
THE DUN & BRADSTREET CORPORATION
By: /s/ Volney Taylor
------------------------------
Name: Volney Taylor
Title:
COGNIZANT CORPORATION
By: /s/ Robert E. Weissman
------------------------------
Name: Robert E. Weissman
Title:
ACNIELSEN CORPORATION
By: /s/ Nicholas L. Trivisonno
------------------------------
Name: Nicholas L. Trivisonno
Title:
<PAGE> 1
Exhibit 10(e)
TAM MASTER AGREEMENT
between
Cognizant Corporation
and
ACNielsen Corporation
dated as of
October 28, 1996
***
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Recitals 1
<S> <C> <C>
Article I
Definitions................................................. 2
1.1 Defined Terms .................................................................. 2
1.2 References; Interpretation ..................................................... 12
Article II
Technology and Trademarks.......................................... 13
2.1 Obligation to License Technology ............................................... 13
2.2 Limited Obligation ............................................................. 14
2.3 Research and Development ....................................................... 14
Article III
Option to Purchase.............................................. 17
3.1 Segregation of ACNielsen TAM Business .......................................... 17
3.2 Option ......................................................................... 18
3.3 Price .......................................................................... 22
3.4 Other Terms and Conditions of Exercise ......................................... 22
3.5 Survival ....................................................................... 23
Article IV
Indemnification............................................... 24
4.1 Indemnification............................................................. 24
Article V
Dispute Resolution.............................................. 24
5.1 Dispute Resolution ............................................................. 24
Article VI
Conditions to Effectiveness......................................... 25
6.1 25
Article VII
Covenants.................................................. 25
7.1 Further Assurances. ............................................................ 25
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Article VIII
<S> <C>
Miscellaneous................................................ 26
8.1 Construction ................................................................... 26
8.2 Counterparts ................................................................... 26
8.3 Expenses ....................................................................... 26
8.4 Notices ........................................................................ 26
8.5 Waivers ........................................................................ 26
8.6 Amendments ..................................................................... 26
8.7 Assignment ..................................................................... 27
8.8 Successors and Assigns ......................................................... 27
8.9 Subsidiaries ................................................................... 27
8.10 Third-Party Beneficiaries ..................................................... 27
8.11 Titles and Headings ........................................................... 27
8.12 Exhibits and Schedules ........................................................ 27
8.13 Governing Law ................................................................. 27
8.14 Consent to Jurisdiction ....................................................... 27
8.15 Severability .................................................................. 28
8.16 Confidentiality ............................................................... 28
</TABLE>
Schedules
Schedule 1.1 (a) Countries in which ACNielsen TAM Business is Conducted
Schedule 1.1 (b) Financial Statements
Schedule 1.1 (c) TAM Marks
Schedule 1.1 (d) Calculation of TAM Purchase Price
Schedule 1.1 (e) TAM Technology
Schedule 3.1 (a) Principles Governing Separation of Shared TAM Assets and
Shared TAM Employees
Exhibits
Exhibit A Form of Technology Licensing Agreement
Exhibit B-1 Form of Trademark Licensing Agreement (Cognizant Party to
ACNielsen Party)
Exhibit B-2 Form of Trademark Licensing Agreement (ACNielsen Party to
Cognizant Party) (Media Advisor)
Exhibit C Form of "Media Advisor" Software Licensing Agreement
ii
<PAGE> 4
This MASTER AGREEMENT is dated as of October 28, 1996, between
COGNIZANT CORPORATION, a Delaware corporation ("Cognizant") and ACNIELSEN
CORPORATION, a Delaware corporation ("ACNielsen").
RECITALS
* WHEREAS, The Dun & Bradstreet Corporation, a Delaware
corporation ("D&B"), has determined that it is in the best
interests of the holders of common stock of D&B to separate
from D&B certain businesses currently conducted by D&B;
* WHEREAS, D&B has determined to cause certain of such
businesses, including the NMR TAM Business (as defined herein)
to be owned and conducted, directly or indirectly, by
Cognizant, and to cause certain other businesses, including
the ACNielsen TAM Business (as defined herein), to be owned
and conducted, directly or indirectly, by ACNielsen; and
* WHEREAS, each of Cognizant and ACNielsen has determined that
it is necessary and desirable to set forth agreements relating
to the TAM Business (as defined herein), including their use
of TAM Marks and TAM Technology (each as defined herein) and
their rights upon a change of control of ACNielsen or the
ACNielsen TAM Business.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereby agree
as follows:
<PAGE> 5
2
I
Definitions
I.1 Defined Terms. As used in this Agreement, the following
terms have the following meanings:
"ACN Change of Control Transaction": an event or series of
events by which
(a) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act as in effect on the Distribution Date), of more than 50%
of the total voting power of all voting stock of ACNielsen then
outstanding;
(b) another corporation merges into ACNielsen or ACNielsen
consolidates with or merges into any other corporation, in one
transaction or a series of related transactions with the effect that a
person or group, other than a person or group which is the beneficial
owner of more than 50% of the total voting power of all voting stock of
ACNielsen immediately prior to such transaction becomes the beneficial
owner of more than 50% of the total voting power of all voting stock of
the surviving or transferee corporation of such transaction or series;
or
(c) ACNielsen, in one transaction or a series of transactions
(each, a "Disposition"), conveys, transfers, spins off, or leases
Assets to any person or persons other than Cognizant or a wholly owned
Subsidiary of ACNielsen or Cognizant, (i) which Assets would have
constituted greater than 66 2/3% of ACNielsen's Assets as of the
Distribution Date or (ii) which Disposition or Dispositions would have
resulted in a 50% decrease in ACNielsen's revenue for the fiscal year
immediately preceding the first such Disposition had each such
Disposition taken place on the first day of such preceding fiscal year;
provided, however, that to the extent that within three months of such
Disposition such ACNielsen party (A) reinvests or enters into a binding
agreement or letter of intent to reinvest the proceeds from such
Disposition in Assets that are used in connection with the ACNielsen
Business or (B) outsources to third parties the functions or
information generated by the Assets disposed of, such Disposition shall
not be deemed to be an ACNielsen Change of Control Transaction or count
as a Disposition for purposes of subsequent applications of this
provision; or
(d) during any period of two consecutive years, individuals
who at the beginning of such period constituted ACNielsen's Board of
Directors (together with any new directors whose election by
ACNielsen's Board of Directors, or whose nomination for election by
ACNielsen's shareholders, was approved by a vote of a majority of the
Directors then still in office who were either Directors at the
beginning of such period or
<PAGE> 6
3
whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Directors then in
office.
"ACNielsen Business": the meaning ascribed in the Distribution
Agreement.
"ACNielsen Party": each of ACNielsen and each Subsidiary
thereof on or after the Distribution Date.
"ACNielsen Policies": "ACNielsen Policies" as defined in the
Distribution Agreement, together with all Policies owned or maintained
by or on behalf of any ACNielsen Party or assigned to any ACNielsen
Party on or after the Distribution Date.
"ACNielsen Shared Policies": the meaning ascribed in the
Distribution Agreement.
"ACNielsen TAM Business": the TAM Business outside the United
States and Canada conducted by ACNielsen Parties on the Distribution
Date in the countries listed on Schedule 1.1(a) hereto and any
additional TAM Assets acquired or created by any ACNielsen Parties
after the Distribution Date ("After Acquired Assets"), to the extent
such businesses or Assets have been integrated into and are not easily
severable from the TAM Business outside the United States and Canada
conducted by ACNielsen Parties on the Distribution Date; provided, that
such integrated After Acquired Assets may be separated and excluded
from the ACNielsen TAM Business only if such separation leaves the
remaining business intact. After Acquired Assets that are either
severable in the manner described above or not integrated into the
ACNielsen TAM Business existing on the Distribution Date (including, by
way of example and without limitation, new operations begun or acquired
in a country where ACNielsen does not currently have a TAM Business)
shall be excluded from the ACNielsen TAM Business. Notwithstanding
anything to the contrary contained herein, if an ACNielsen Party
establishes, purchases or otherwise acquires a TAM Business in India
(i) within a reasonable period of time after the Distribution Date and
(ii) in accordance with the business plan currently in effect with
respect to India, such TAM Business will be deemed to be part of the
ACNielsen TAM Business as of the Distribution Date. If ACNielsen
abandons its current plans to begin a TAM Business in India and
subsequently establishes, purchases or otherwise acquires a TAM
Business in India, such TAM Business in India shall be deemed to be an
After Acquired Asset subject to the provisions of this paragraph
regarding After Acquired Assets.
"Action": any action, suit, arbitration, inquiry, proceeding
or investigation by or before any court, any governmental or other
regulatory or administrative agency, body or commission or any
arbitration tribunal.
<PAGE> 7
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"Affiliate": when used with respect to a specified person,
another person that controls, is controlled by, or is under common
control with the person specified. As used herein, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether
through the ownership of voting securities or other interests, by
contract or otherwise.
"After Acquired Assets": the meaning set forth in the
definition of ACNielsen TAM Business.
"Ancillary Licensing Agreements": the collective reference to
the Technology Licensing Agreement, the Trademark Licensing Agreement
and the Computer Software License.
"Asset Purchase Agreement": an Asset purchase agreement to be
executed by the TAM Purchaser and ACNielsen in connection with a TAM
Acquisition.
"Assets": with respect to any party, assets, properties and
rights (including goodwill), wherever located (including in the
possession of vendors or other third parties or elsewhere), whether
real, personal or mixed, tangible, intangible or contingent, in each
case whether or not recorded or reflected or required to be recorded or
reflected on the books and records or financial statements of any
person, including, without limitation, the following:
a. all accounting and other books, records and files
whether in paper, microfilm, microfiche, computer tape
or disc, magnetic tape or any other form;
b. all apparatus, computers and other electronic data
processing equipment, fixtures, machinery, equipment,
furniture, office equipment, automobiles, trucks,
aircraft and other transportation equipment, special and
general tools, test devices, prototypes and models and
other tangible personal property;
c. all inventories of materials, parts, raw materials,
supplies, work-in-process and finished goods and
products;
d. all interests in real property of whatever nature,
including easements, whether as owner, mortgagee or
holder of a Security Interest in real property, lessor,
sublessor, lessee, sublessee or otherwise;
e. all interests in any capital stock or other equity
interests of any Subsidiary or any other person, all
bonds, notes, debentures or other securities issued
<PAGE> 8
5
by any Subsidiary or any other person, interests in
partnerships or joint ventures (whether or not majority
interests), all loans, advances or other extensions of
credit or capital contributions to any Subsidiary or any
other person and all other investments in securities of
any person;
f. all license agreements, leases of personal property,
open purchase orders for raw materials, supplies, parts
or services, unfilled orders for the manufacture and
sale of products and other contracts, agreements or
commitments;
g. letters of credit and performance and surety bonds
issued in favor of such party by a third party;
h. all written technical information, data, specifications,
research and development information, engineering
drawings, operating and maintenance manuals, and
materials and analyses prepared by consultants and other
third parties;
i. all domestic and foreign patents, copyrights, trade
names, trademarks, service marks and registrations and
applications for any of the foregoing, mask works, trade
secrets, inventions, data bases, other proprietary
information and licenses from third persons granting the
right to use any of the foregoing;
j. all computer applications, programs and other software,
including operating software, network software,
firmware, middleware, design software, design tools,
systems documentation and instructions;
k. all cost information, sales and pricing data, customer
prospect lists, supplier records, customer and supplier
lists, customer and vendor data, correspondence and
lists, product literature, artwork, design, development
and manufacturing files, vendor and customer drawings,
formulations and specifications, quality records and
reports and other books, records, studies, surveys,
reports, plans and documents;
l. all prepaid expenses, deposits made by such party, trade
accounts and other accounts and notes receivable;
m. all rights under contracts or agreements, all claims or
rights against any person arising from the ownership of
any asset, all rights in connection with any bids or
offers and all claims, chooses in action or similar
rights, whether accrued or contingent;
<PAGE> 9
6
n. all rights under insurance policies and all rights in
the nature of insurance, indemnification or
contribution;
o. all licenses (including radio and similar licenses),
permits, approvals and authorizations which have been
issued by any Governmental Authority;
p. cash and Cash Equivalents, bank accounts, lock boxes and
other deposit arrangements; and
q. interest rate, currency, commodity or other swap,
collar, cap or other hedging or similar agreements or
arrangements.
"Book Value": The amounts at which the TAM Assets to be
transferred with all or that portion of the ACNielsen TAM Business
being offered or sold are reflected on the accounting records of the
ACNielsen Parties, as determined in accordance with generally accepted
accounting principles in the United States in effect from time to time,
or, if ACNielsen Parties do not prepare their financial statements or
keep their accounting records in accordance with such principles, in
accordance with accounting principles applied consistently throughout
the consolidated group of which ACNielsen Parties are members, less the
amounts at which the TAM Liabilities to be transferred with all or that
portion of the ACNielsen TAM Business being offered or sold are
reflected on the accounting records of the ACNielsen Parties, as
determined in accordance with generally accepted accounting principles
in the United States in effect from time to time, or, if ACNielsen
Parties do not prepare their financial statements or keep their
accounting records in accordance with such principles, in accordance
with accounting principles applied consistently throughout the
consolidated group of which ACNielsen Parties are members.
"Business Day": a day other than Saturday, Sunday or other day
on which commercial banks in New York, New York or Connecticut are
authorized or required by law to be closed.
"Cash Equivalents": certificates of deposit, securities issued
by the United States Treasury and similar readily marketable
securities.
"Cognizant Business": shall have the meaning ascribed in the
Distribution Agreement.
"Cognizant Party": each of Cognizant and each Subsidiary
thereof on or after the Distribution Date.
<PAGE> 10
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"Computer Software License": the license entered into by
ACNielsen, as licensor, and a Cognizant Party, as licensee, in respect
of the "Media Advisor" software and such other items as are listed on
the schedules thereto.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any
of its property is bound.
"Corporate Administration": all personnel, equipment, office
space and other Assets required to perform internal management
functions such as accounting, hiring, payroll, benefits and in-house
legal services.
"D&B": The Dun & Bradstreet Corporation, a Delaware
corporation.
"D&B Party": D&B and each Subsidiary of D&B on and after the
Distribution Date.
"Disclosure Schedules": the meaning ascribed in Section
3.2(a).
"Distribution Agreement": the agreement dated as of October
28, 1996 among D&B, Cognizant and ACNielsen.
"Distribution-Related Agreements": the Distribution Agreement
and all of the written agreements, instruments, assignments or other
arrangements (other than this Agreement and the TAM Ancillary
Agreements) entered into in connection with the transactions
contemplated hereby, including, without limitation, the Conveyancing
and Assumption Instruments, the Data Services Agreements, the Employee
Benefits Agreement, the Indemnity and Joint Defense Agreement, the
Intellectual Property Agreement, the Shared Transaction Services
Agreements, the Tax Allocation Agreement and the Transition Services
Agreement.
"Distribution Date": the meaning ascribed in the Distribution
Agreement.
"Effective Date": November 1, 1996, the effective date of this
Agreement.
"Exercise Period": the meaning ascribed in Section 3.2(c).
"Financial Statements" shall mean all of the financial
statements and schedules listed on Schedule 1.1(b) to be delivered
pursuant to Article III.
<PAGE> 11
8
"Governmental Authority": any federal, state, local, foreign
or international court, government, department, commission, board,
bureau, agency, official or other regulatory, administrative or
governmental authority.
"Liabilities": the meaning ascribed in the Distribution
Agreement.
"License Term": the meaning set forth in Section 2.1.
"Material Adverse Effect": a material adverse effect on the
validity or enforceability of this Agreement or any of the transactions
contemplated hereby.
"MONITOR-PLUS Agreement": the agreement dated as of October
28, 1996 between NMR and ACNielsen pursuant to which NMR agrees to
provide MONITOR-PLUS UPC Linking Services to ACNielsen and ACNielsen
agrees to provide certain data to NMR.
"NMR": Nielsen Media Research Inc., a Delaware corporation.
"NMR TAM Business": the TAM Business in the United States and
Canada that is conducted by Cognizant Parties on the Distribution Date.
"Open Issues": the meaning ascribed in Section 3.2(e).
"Option": shall mean the option described in Section 3.2
pursuant to which the Optionee may, under certain circumstances,
acquire all or part of the ACNielsen TAM Business.
"Option Information": the meaning set forth in Section 3.2.
"Option Trigger Event": shall mean each of the events
described in Section 3.2(b)(i), (ii), (iii) and (iv).
"Person": any natural person, corporation, business trust,
joint venture, association, company, partnership or government, or any
agency or political subdivision thereof.
"Policies": insurance policies and insurance contracts of any
kind (other than life and benefits policies or contracts), including,
without limitation, primary, excess and umbrella policies,
comprehensive general liability policies, director and officer
liability, fiduciary liability, automobile, aircraft, property and
casualty, workers' compensation and employee dishonesty insurance
policies, bonds and self-insurance and captive insurance company
arrangements, together with the rights, benefits and privileges
thereunder.
<PAGE> 12
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"Records": specific and identified agreements, documents,
books, records or files.
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is
subject.
"Security Interest": any mortgage, security interest, pledge,
lien, charge, claim, option, right to acquire, voting or other
restriction, right-of-way, covenant, condition, easement, encroachment,
restriction on transfer, or other encumbrance of any nature whatsoever.
"Shared TAM Asset": any Asset of any ACNielsen Party that is
employed in the ACNielsen TAM Business and one or more other businesses
conducted by an ACNielsen Party.
"Shared TAM Employees": the collective reference to each
person employed by any ACNielsen Party after the Distribution Date,
which person divides (in any manner) his or her working hours between
the ACNielsen TAM Business and other ACNielsen Businesses.
"Subsidiary": any corporation, partnership or other entity of
which another entity (i) owns, directly or indirectly, ownership
interests sufficient to elect a majority of the board of directors (or
persons performing similar functions) (irrespective of whether at the
time any other class or classes of ownership interests of such
corporation, partnership or other entity shall or might have such
voting power upon the occurrence of any contingency) or (ii) is a
general partner or an entity performing similar functions (e.g., a
trustee).
"TAM Acquisition": an acquisition of all or part of the
ACNielsen TAM Business by the TAM Purchaser as contemplated by Article
III.
"TAM Acquisition Date": the date of the consummation of the
related TAM Acquisition.
"TAM Assets": at any date of determination, without
duplication:
a. any and all Assets employed by any ACNielsen Party in
connection with the ACNielsen TAM Business;
<PAGE> 13
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b. subject to Article VII of the Distribution Agreement,
any rights of any ACNielsen Party under any of the
ACNielsen Policies or the ACNielsen Shared Policies
arising out of any ACNielsen Party's conduct of the
ACNielsen TAM Business, including any rights thereunder
arising after the Distribution Date in respect of any
Policies that are (i) occurrence Policies or (ii) claims
made policies, to the extent that claims relating to a
TAM Acquisition are made prior to the related TAM
Acquisition Date;
c. any contract of any ACNielsen Party, any rights or
claims arising thereunder, and any other rights or
claims or contingent rights or claims to the extent
relating to or arising from any TAM Asset or the
ACNielsen TAM Business;
Notwithstanding the foregoing, TAM Assets shall not,
in any event, include any Asset that is expressly contemplated by this
Agreement, including the schedules hereto, as an Asset to be retained
by any ACNielsen Party upon the consummation of a TAM Acquisition.
In the event of any inconsistency or conflict which
may arise in the application or interpretation of any of the foregoing
provisions, for the purpose of determining what is and is not a TAM
Asset, any item expressly included or excluded as a TAM Asset on a
Schedule to this Agreement or any Ancillary Licensing Agreement shall
take priority over any provision of the text hereof.
"TAM Business": the measurement, for the primary purpose of
establishing audience size, of audiences for television programming
(and for incidental VCR playback, electronic games and other incidental
television usage) based on viewing activity by a panel selected to
represent the viewing of the universe from which the panel is selected,
including viewing of television programming on personal computer
monitors and other devices, and delivered by any means including,
without limitation, over-the-air broadcasting, cable and satellite, and
delivery via the Internet.
"TAM Liabilities": at any date of determination, without
duplication: all obligations and Liabilities of any ACNielsen Party
under this Agreement or any of the Ancillary Licensing Agreements and
all Liabilities of each ACNielsen Party primarily relating to, arising
out of or resulting from:
r. the operation of the ACNielsen TAM Business (including
any Liability relating to, arising out of or resulting
from any act or failure to act by any director, officer,
employee, agent or representative (whether or not such
act or failure to act is or was within such person's
authority)); or
<PAGE> 14
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s. any TAM Assets;
whether arising before, on or after the Distribution Date.
Notwithstanding the foregoing, the TAM Liabilities shall not include:
(x) Liabilities allocated to another party
pursuant to the Tax Allocation Agreement;
(y) any Liabilities that are expressly
contemplated by this Agreement or any
Ancillary Licensing Agreements, including the
Schedules hereto or thereto, in particular,
the excluded Liabilities listed on Schedule
1.1(d) hereto) as Liabilities to be retained
or assumed by any ACNielsen Party or by any
Cognizant Party upon any TAM Acquisition; or
(z) any agreement or obligation of (i) any D&B
Party or any Cognizant Party under the
Distribution-Related Agreements or (ii) any
Cognizant Party under this Agreement or any of
the Ancillary Licensing Agreements.
"TAM Marks": the trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and the
goodwill associated therewith, now existing or hereafter adopted or
acquired for use in connection with the TAM Business, and all
applications in connection therewith, whether in the United States
Patent and Trademark Office or in any similar office or agency of the
United States, any state thereof or any other country or any political
subdivision thereof, or otherwise, including, without limitation, any
thereof referred to on Schedule 1.1(c), and all renewals thereof.
"TAM Personnel": the collective reference to Shared TAM
Employees and to each person employed by any ACNielsen Party after the
Distribution Date, which person devotes all of his or her working hours
to the ACNielsen TAM Business.
"TAM Purchase Price": Book Value, as adjusted in accordance
with Schedule 1.1 (d) plus Transfer Costs.
"TAM Purchaser": any of Cognizant, NMR or a permitted
successor or assign of either that acquires all or part of the
ACNielsen TAM Business pursuant to Article III.
"TAM Technology": the technology set forth on Schedule 1.1(e)
hereto and the schedules to the Ancillary Licensing Agreements.
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"Tax" or "Taxes": taxes on or measured by income, franchise,
gross receipts, sales, use, excise, payroll, personal property, real
property, ad-valorem, value-added, leasing, leasing use or other taxes,
levies, imposts, duties, charges or withholdings of any nature.
Whenever the term "Tax" or "Taxes" is used (including, without
limitation, regarding any duty to reimburse another party for
indemnified taxes or refunds or credits of taxes), it shall include
penalties, fines, additions to tax and interest thereon.
"Technology Licensing Agreement": the collective reference to
one or more nonexclusive technology licensing and support services
agreements substantially in the form of Exhibit A, by and between a
Cognizant Party, as licensor, and one or more ACNielsen Parties, as
licensee and any related permitted sublicensing agreements between
ACNielsen Parties or between an ACNielsen Party and a joint venture
partner.
"Trademark Licensing Agreement": the collective reference to
the nonexclusive trademark licensing agreements covering TAM Marks and
substantially in the forms of Exhibits B-1 and B-2 by and between a
Cognizant Party or an ACNielsen Party, as licensor, and one or more
ACNielsen Parties or Cognizant Parties, respectively, as licensee, and
any related permitted sublicensing agreements between ACNielsen
Parties, between Cognizant Parties or between an ACNielsen Party or a
Cognizant Party and a joint venture partner.
"Transfer Costs": costs reasonably attributable to the
transfer of all or that portion of the ACNielsen TAM Business being
offered or sold including, without limitation, transfer taxes and
filing fees, but excluding ACNielsen's (i) accountants' fees incurred
in connection with the determination of Book Value and the TAM Purchase
Price in accordance with Article III, (ii) any investment bankers' fees
incurred by ACNielsen in connection with such transfer or (iii) income
taxes incurred by ACNielsen in connection with such transfer.
"Year Four": the meaning set forth in Section 3.2.
"Year Four Purchaser": the meaning set forth in Section 3.2.
"Year Four Trigger Event": the meaning set forth in Section
3.2.
I.2 References; Interpretation. References in this Agreement
to any gender include references to all genders, and references to the singular
include references to the plural and vice versa. The words "include", "includes"
and "including" when used in this Agreement shall be deemed to be followed by
the phrase "without limitation". Unless the context otherwise requires,
references in this Agreement to Articles, Sections, Exhibits and schedules shall
be deemed references to Articles and Sections of, and Exhibits and schedules to,
this Agreement.
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Unless the context otherwise requires, the words "hereof", "hereby" and "herein"
and words of similar meaning when used in this Agreement refer to this Agreement
in its entirety and not to any particular Article, Section or provision of this
Agreement.
<PAGE> 17
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II
Technology
and Trademarks
II.1 Obligation to License Technology.
(a) Each Cognizant Party shall license to each ACNielsen Party
that so requests, (i) TAM Technology for use in Australia, Ireland and, subject
to Section 2.1(b), India to which such Cognizant Party has rights in commercial
use, (ii) upgrades thereof to the extent required to permit such ACNielsen Party
to fulfill a Contractual Obligation existing on the Distribution Date including,
without limitation, any Contractual Obligation resulting from the exercise of a
unilateral renewal (or other) right by a party other than such ACNielsen Party
and (iii) additional licenses to permit use of new technology in connection with
the technology described in clauses (i) and (ii) to the extent required to
permit such ACNielsen Party to fulfill a Contractual Obligation existing on the
Distribution Date with respect to such country, pursuant to the Technology
Licensing Agreement for the period commencing on the Distribution Date to and
including the later of the fifth anniversary thereof and such date as is
required to permit such ACNielsen Party to fulfill any Contractual Obligation
existing on the Distribution Date, including, without limitation, any
Contractual Obligation resulting from the exercise of a unilateral renewal (or
other) right by a party other than such ACNielsen Party (each such period, a
"License Term") provided that ACNielsen may terminate any or all of such
Licenses prior to the expiration of the License Term upon two months notice to
the licensing Cognizant Party.
(b) (i) Cognizant and ACNielsen will, or will cause the
appropriate Cognizant Party or ACNielsen Party, as the case may be, to
enter into each Technology Licensing Agreement with respect to
Australia and Ireland within thirty days after the Effective Date. In
the event that a Cognizant Party or an ACNielsen Party does not execute
each Technology Licensing Agreement within such period, each such
Technology Licensing Agreement shall be deemed to have been executed on
the Effective Date by the appropriate Cognizant Party and the
appropriate ACNielsen Party in the form attached hereto, and shall be
enforceable against each such party in accordance with its terms.
(ii) Cognizant and ACNielsen will, or will cause the
appropriate Cognizant Party or ACNielsen Party, as the case may be, to
enter into the Technology Licensing Agreement with respect to India
within thirty days after an ACNielsen Party establishes, purchases or
otherwise acquires a TAM Business in India in the manner described in
the penultimate sentence of the definition of "ACNielsen TAM Business";
provided, however, that if ACNielsen abandons its current plans to
begin a TAM Business in India in the manner described in the last
sentence of the definition of "ACNielsen TAM Business", no Cognizant
Party shall have the obligation to enter into such Technology Licensing
Agreement. In the event that a Cognizant Party does not
<PAGE> 18
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execute such Technology Licensing Agreement to the extent and within
the period required by the preceding sentence, such Technology
Licensing Agreement shall be deemed to have been executed by the
appropriate Cognizant Party and the appropriate ACNielsen Party on the
date such ACNielsen Party established, purchased or otherwise acquired
such business in the form attached hereto, and shall be enforceable
against each such party in accordance with its terms.
(c) ACNielsen agrees that ACNielsen or the relevant ACNielsen
Party will pay to Cognizant for as long as such TAM Technology is licensed a
royalty in a dollar amount to be agreed upon.
(d) ACNielsen agrees that ACNielsen or the relevant ACNielsen
Party will reimburse each relevant Cognizant Party for such party's actual costs
of technology maintenance and support services provided to ACNielsen Parties in
Australia, Ireland and India. For such purpose, actual costs shall include
out-of-pocket expenses and overhead allocable to the provision of such services.
The parties agree that Cognizant shall not make a profit nor incur a loss in
connection with the provision of such services.
II.2 Limited Obligation. Nothing contained herein shall
prohibit any ACNielsen Party from amending or modifying any existing Contractual
Obligation relating to the licensed TAM Technology provided that such amendment
or modification does not in any way extend the Cognizant Party licensor's
obligations other than as permitted hereunder.
II.3 Research and Development. (a) Each Cognizant Party, on
the one hand, and each ACNielsen Party, on the other, will maintain ownership
and control over, and will bear all costs with respect to, all technology
research and development originated by such party.
(a) No Cognizant Party or ACNielsen Party shall have any
obligation to share research and development except to the extent expressly set
forth in Section 2.1 or in any Ancillary Licensing Agreement.
II.4 Audit Rights. ACNielsen shall, and shall cause each
relevant ACNielsen Party to, maintain complete and accurate accounts and records
of each ACNielsen Party's revenues in respect of which a royalty is payable
under the relevant Technology Licensing Agreement in accordance with generally
accepted accounting principles. Cognizant shall have the right to cause an audit
during normal business hours of each ACNielsen Party's records referred to in
the first sentence of this Section 2.4 once a year upon reasonable notice.
Cognizant shall bear the cost of any audit performed pursuant to this Section
2.4 except that if, as a result of Cognizant's audit (which shall be calculated
in accordance with generally accepted accounting principles) the royalty owed to
Cognizant is determined to be greater than the royalty determined by ACNielsen
by 10% or more, ACNielsen shall bear the cost of such audit.
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II.5 Trademark Licensing Agreements and Computer Software
License Between the Parties. (a) Cognizant and ACNielsen will, or will cause the
appropriate Cognizant Party or ACNielsen Party, as the case may be, to enter
into each Trademark Licensing Agreement and the Computer Software License within
thirty days after the Effective Date. To the extent that a Cognizant Party or an
ACNielsen Party does not execute each Trademark Licensing Agreement and the
Computer Software License within such period, each such Trademark Licensing
Agreement and the Computer Software License shall be deemed to have been
executed by the appropriate Cognizant Party and the appropriate ACNielsen Party
in the form attached hereto on the Effective Date, and shall be enforceable
against each such party in accordance with its terms.
(b) Without limiting the generality of clause (a), Cognizant
shall grant to ACNielsen a non-exclusive, non-transferable license substantially
in the form of Exhibit B-1, pursuant to which ACNielsen will obtain the right to
use certain trademarks identified in a schedule thereto in the conduct of the
ACNielsen TAM Business for a five-year period commencing on the Effective Date,
all as more specifically set forth in Exhibit B-1. ACNielsen Parties shall have
the right to use such licensed trademarks in every country, other than the
United States and Canada, whether or not such country is set forth on Schedule
1.1(a), except that no ACNielsen Party shall have the right to use trademarks
owned by Cognizant and incorporating the name "Nielsen" (e.g. "Nielsen Media"
and "Nielsen Media Research") in countries where no ACNielsen Party is doing
business on the Effective Date. During the term of such Trademark Licensing
Agreement, Cognizant shall not grant any license to use such trademarks to any
person unrelated to either Cognizant or ACNielsen outside the United States and
Canada. Cognizant Parties may, however, use such trademarks worldwide in
connection with any business, including a business that competes directly with
the ACNielsen TAM Business.
(c) ACNielsen shall grant to Cognizant a non-exclusive license
(without right to sub-license to a party unrelated to Cognizant), transferable
only under the circumstances set forth in Section 8.7(b), substantially in the
form of Exhibit B-2 and Exhibit C hereto, pursuant to which Cognizant will
obtain the right to use the "Media Advisor" trademark and/or computer software
programs relating thereto in the conduct of the TAM Business in Canada until the
fifth anniversary of the Distribution Date.
<PAGE> 20
17
III
Option to Purchase
III.1 Segregation of ACNielsen TAM Business. (a) ACNielsen
shall, no later than January 1, 1998, produce and deliver to Cognizant or the
then-Optionee a comprehensive, detailed and feasible written plan (the "Plan")
for segregating the ACNielsen TAM Business from other ACNielsen businesses, for
the purpose of rendering feasible the consummation of a TAM Acquisition with
respect to the ACNielsen TAM Business as a whole pursuant to Section 3.2 and
enabling the TAM Purchaser, commencing on the TAM Acquisition Date, to operate
the ACNielsen TAM Business as a going concern without interruption, subject to
Section 3.1(b) below; provided, however, that ACNielsen shall not be required to
create a standalone Corporate Administration pursuant to the Plan to satisfy the
requirements of this Section 3.1(a). The Plan shall be based on the principles
and guidelines set forth on Schedule 3.1(a) and shall include, without
limitation, the following:
(i) complete and correct schedules setting forth the
following in reasonable detail:
(x) each Asset, including each Shared TAM Asset,
employed in connection with the ACNielsen TAM
Business and a description thereof; and
(y) the TAM Personnel and the Shared TAM Employees,
including without limitation persons involved in
Corporate Administration for the ACNielsen TAM
Business, each employee's job description, the
approximate percentage of each employee's time
spent on the TAM Business, if less than all, and a
description of such employee's compensation
(salary, benefits, bonuses and options); and
(ii) provisions identifying Assets and specified TAM
Personnel to be transferred to the TAM Purchaser upon
the consummation of the TAM Acquisition based upon a
fair and equitable allocation of Multiple Use Assets and
Shared TAM Employees together with a transition plan
demonstrating how such transfers would be effected and
that the accomplishment of such transfers in accordance
with the transition plan would enable the TAM Purchaser
to operate the ACNielsen TAM Business as a going concern
without interruption commencing on the TAM Acquisition
Date, subject to Section 3.1(b) below. Such provisions
must expressly address transition arrangements,
technical infrastructure,
<PAGE> 21
18
operations, sales, customer relations, and data
collection, transmission and analysis on a
country-by-country basis.
(a) Cognizant, any subsequent Optionee and ACNielsen shall at
all relevant times cooperate in good faith with respect to the Plan. Each such
party will act in good faith in negotiating the allocation of Shared TAM
Employees and Shared TAM Assets. For the period commencing on the date that the
Optionee has given notice of the exercise of the Option and ending on the
earlier of (i) the date the Optionee gives notice that it no longer desires to
acquire the relevant ACNielsen TAM Business and (ii) the first anniversary of
the TAM Acquisition Date, no party shall attempt to solicit for employment or
otherwise influence any ACNielsen employee to accept employment with an employer
other than the employer designated by the Plan for such employee. Prior to the
exercise of the Option, ACNielsen may move employees from one business group to
another or change an employee's job description in good faith in the ordinary
course of business but may not do so with the purpose of adversely affecting
(from the TAM Purchaser's perspective) the allocation of Shared TAM Employees
pursuant to the Plan. Each of Cognizant and ACNielsen understand and acknowledge
that the separation of Shared TAM Employees and Multiple Use Assets will cause
disruption of and create expense for the ACNielsen TAM Business and other
ACNielsen businesses. The parties further agree that the transition arrangements
contained in the Plan regarding Shared TAM Employees and Multiple Use Assets
shall be in accordance with Schedule 3.1(a) and that the parties shall make a
good faith effort to divide the potential disruption and expense to the
ACNielsen TAM Business and the other ACNielsen businesses fairly and equitably.
Each party acknowledges that such party may be required to hire additional
personnel and replace Assets to enable its businesses to operate as going
concerns after the TAM Acquisition.
(b) During the 60 days following delivery of the Plan,
ACNielsen shall afford to the Optionee and its outside accountants, counsel,
financial advisors and other representatives, access during normal business
hours to all officers, employees and information (including, without limitation,
books and records) reasonably necessary for the Optionee to determine the
feasibility of the Plan and ACNielsen's compliance with the terms of this
Agreement relating to the Plan, and shall furnish to the Optionee such
information concerning the ACNielsen TAM Business as the Optionee may reasonably
request. ACNielsen shall respond promptly in writing to any written questions,
objections and counter-proposals submitted by the Optionee in respect of the
Plan.
(c) ACNielsen shall, and shall cause each other ACNielsen
Party, promptly after the Distribution Date to use reasonable efforts (without
expending money or making any contractual concessions) to cause each new and
each existing contract with employees working in the ACNielsen TAM Business to
be assignable to the TAM Purchaser without consent. Contracts (other than
employee contracts) which cannot be assigned shall be addressed in the
transition arrangements of the Plan and ACNielsen will (or will cause the
appropriate ACNielsen Party to) endeavor to obtain the benefits of such contract
for the TAM Purchaser.
<PAGE> 22
19
III.2 Option.
(a) Voluntary Option. At any time after the Distribution Date
ACNielsen, acting in good faith, may notify the Optionee in writing that it
desires to sell all or a portion of the ACNielsen TAM Business to the Optionee
(which notice, with respect to TAM Assets constituting less than all of the
ACNielsen TAM Business, must be based upon ACNielsen's good faith intention to
find a purchaser for such TAM Assets), by submitting to the Optionee with such
notification the following items relating to all or the portion of the ACNielsen
TAM Business being offered, (i) the Plan (unless ACNielsen has already submitted
the Plan to the Optionee), (ii) a statement setting forth Book Value and an
estimate of the TAM Purchase Price, each as of a reasonably recent date, setting
forth in reasonable detail the basis for their respective calculations, (iii)
the Financial Statements and (iv) schedules setting forth as of a recent date
(but in no event dating back more than 60 days), all known Liabilities and known
contingent Liabilities not reflected in the Financial Statements which
individually or in the aggregate are material, threatened or pending litigation
matters that individually or in the aggregate are material, material
non-compliance with laws, material required consents, and material Assets
(including contracts) which require approval to be transferred (the "Disclosure
Schedules"). The items set forth in (i), (ii), (iii) and (iv), as they relate to
all or any portion of the ACNielsen TAM Business being offered or sold, are
hereinafter referred to as the "Option Information". Upon receipt of the Option
Information, the provisions of Section 3.2(d), (e), (f) and (g) and the
remaining provisions of this Article III shall apply.
(b) Mandatory Option. If on or prior to the third anniversary
of the Distribution Date, subject to (f) below:
(i) an ACN Change of Control Transaction occurs; or
(ii) any ACNielsen Party executes a binding agreement or
letter of intent (each of which must be subject to the
Cognizant Party's Option rights hereunder) in connection with
the sale or other disposition of TAM Assets that (A) generate
50% or more of the revenue of the ACNielsen TAM Business for
the preceding twelve months or (B) represent greater than 50%
of the TAM Assets before giving effect to such sale or
disposition, including, for purposes of determining whether
the tests in (A) or (B) are met, any prior dispositions that,
when aggregated with the proposed disposition, would cause the
aggregate amount of TAM Assets disposed of collectively by the
ACNielsen Parties in a series of transactions to exceed 50% of
TAM Assets or constitute TAM Assets generating 50% or more of
the revenue of the ACNielsen TAM Business for the twelve
months preceding the first such disposition; provided,
however, that to the extent
<PAGE> 23
20
that within three months of such disposition, such ACNielsen
party (A) reinvests or enters into a binding agreement or
letter of intent to reinvest the proceeds from such
disposition of TAM Assets in Assets that are used in
connection with the ACNielsen TAM Business or (B) outsources
or enters into a binding agreement or letter of intent to
outsource to third parties the functions or information
generated by the TAM Assets disposed of, such disposition
shall not be deemed to be an Option Trigger Event or count as
a disposition for purposes of subsequent applications of this
provision; or
(iii) any ACNielsen Party executes a binding agreement or
letter of intent (each of which must be subject to the
Cognizant Party's Option rights hereunder) in connection with
the sale or other disposition of TAM Assets that (A) generate
50% or more of the revenue of the ACNielsen TAM Business in
any country for the preceding twelve months or (B) represent
greater than 50% of the TAM Assets in any country before
giving effect to such sale or disposition, including, for
purposes of determining whether the tests in (A) or (B) are
met, any prior dispositions that, when aggregated with the
proposed disposition, would cause the aggregate amount of TAM
Assets disposed of collectively by the ACNielsen Parties in
such country in a series of transactions to exceed 50% of such
Assets or constitute Assets generating 50% or more of the
revenue in such country for the twelve months preceding such
disposition; provided, however, that to the extent that within
three months of such disposition, such ACNielsen party (A)
reinvests or enters into a binding agreement or letter of
intent to reinvest the proceeds from the proposed disposition
of TAM Assets in such country in Assets that are used in
connection with the TAM Business in such country or (B)
outsources or enters into a binding agreement or letter of
intent to outsource to third parties the functions or
information generated by the TAM Assets disposed of in such
country, such disposition shall not be deemed to be an Option
Trigger Event with respect to such country or count as a
disposition for purposes of subsequent applications of this
provision; or
(iv) any ACNielsen Party adopts a definitive plan or takes
similar definitive action to shut down or otherwise terminate
the operations of the ACNielsen TAM Business in any country or
other geographic area which constitutes a distinct TAM
Business.
ACNielsen must give Cognizant written notice within ten Business Days of such
event and must provide to Cognizant, within sixty Business Days of such event,
the Option Information.
<PAGE> 24
21
(c) To the extent that a TAM Acquisition is to be consummated
pursuant to this Article III, ACNielsen shall deliver updated Disclosure
Schedules dated as of the related TAM Acquisition Date to the TAM Purchaser.
Such updated Disclosure Schedules shall include all Liabilities, other than
Liabilities incurred in the ordinary course of business, which would have been
required to be included by ACNielsen in the Disclosure Schedules originally
provided to the Optionee had such Liabilities existed on such date. To the
extent that such updated Disclosure Schedules contain material changes from the
original Disclosure Schedules that would affect the TAM Purchase Price, the TAM
Purchase Price shall be recalculated as of the related TAM Acquisition Date
based on the TAM Assets and TAM Liabilities actually being transferred as set
forth in such schedules. To the extent that the updated Disclosure Schedules
reflect a material adverse change in the relevant ACNielsen TAM Business, the
Optionee shall have the right not to purchase such business.
(d) During the period beginning on the fifteenth day after the
occurrence of the Option Trigger Event and ending no later than the thirtieth
day following the Optionee's receipt of all of the Option Information, ACNielsen
shall provide to Cognizant during ACNielsen's normal business hours (and upon
reasonable notice) reasonable access to (i) members of ACNielsen's management
and ACNielsen's independent accountants and counsel who possess an in-depth
understanding of the ACNielsen TAM Business and (ii) the premises, books and
records of ACNielsen that relate to all or that portion of the ACNielsen TAM
Business proposed to be sold. On or prior to the expiration of the thirty-day
period following the Optionee's receipt of all of the Option Information (the
"Exercise Period"), the Optionee must notify ACNielsen in writing whether the
Optionee desires to acquire all or the portion of the ACNielsen TAM Business
described in the notice in (b) above for the TAM Purchase Price. Failure of the
Optionee timely to give such notice shall be deemed to be notice that the
Optionee does not desire to effect such TAM Acquisition. If the Optionee
notifies ACNielsen that the Optionee desires to effect such TAM Acquisition but
disagrees with the Plan (to the extent not previously agreed) or the calculation
of the TAM Purchase Price, the parties shall promptly negotiate to resolve such
issues during the thirty-day period immediately following receipt of such
notice, notwithstanding any other time period set forth in this Agreement in
respect of the negotiation of the Plan, including Section 3.1(b).
In the event that (x) during the thirty-day negotiation period
referred to in the preceding paragraph, the Optionee and ACNielsen (i) are
unable to agree on a Plan or (ii) are unable to agree on changes to a Plan, or
(y) ACNielsen fails to submit all of the Option Information, as applicable, the
Optionee shall give ACNielsen written notice within ten Business Days thereafter
stating whether the Optionee still desires to acquire the ACNielsen TAM Business
proposed to be sold. If so, the Optionee may submit all or a portion of the Plan
(to the extent delivered) to binding arbitration in accordance with Article V
hereof and the arbitrator shall determine the final provisions of the Plan or
the portion thereof so submitted.
<PAGE> 25
22
(e) The parties shall use reasonable efforts to close as soon
as practicable after agreement on the Plan.
(f) Option Tail. In the event that:
(i) any of the events described in (b)(i), (ii) (iii)
or (iv) above occurs within the one-year period after
the third anniversary of the Distribution Date (such
one-year period referred to as "Year Four", and any
such event a "Year Four Trigger Event"), and
(ii) any of the following actions were taken by any
ACNielsen Party during the one-year period prior to
the third anniversary of the Distribution Date: (A)
the adoption by such ACNielsen Party of resolutions
of the board of directors or equivalent body
authorizing the engagement of investment bankers or
financial advisors in contemplation of such Year Four
Trigger Event or otherwise authorizing the ACNielsen
Party to solicit offers or indications of interest
for the purchase of all or part of the ACNielsen TAM
Business, or the entry into discussions with the
third party with whom such Year Four Trigger Event
was ultimately consummated (such party being referred
to as the "Year Four Purchaser") or with any
representative or agent thereof; (B) the engagement
of investment bankers or financial advisors in
contemplation of a Year Four Trigger Event or the
entry into discussions with the Year Four Purchaser
or any representative or agent thereof in
contemplation of a Year Four Trigger Event, whether
or not such action was authorized by the board of
directors or equivalent body or (C) the solicitation
of the Year Four Purchaser to participate in such
Year Four Trigger Event,
then ACNielsen must notify the Optionee of such Year Four Trigger Event and
treat such Year Four Trigger Event as an Option Trigger Event for all purposes
under this Agreement.
(g) Limits on Option. If the Optionee notifies ACNielsen that
it does not desire to exercise an Option to purchase the entire ACNielsen TAM
Business (or chooses not to purchase such business in accordance with (c)
above), the Optionee shall no longer have any right to exercise any Option
hereunder and ACNielsen Parties may sell all or any part of the ACNielsen TAM
Business or TAM Assets without any obligation to the Optionee under this Article
III. If after a notice has been delivered with respect to a part of the
ACNielsen TAM Business, including, without limitation, a particular country or
countries, the Optionee notifies ACNielsen that it does not desire to exercise
its Option with respect to the TAM Assets that are the subject of the original
notification from ACNielsen to the Optionee (or chooses not to purchase such
business in accordance with (c) above), it shall thereafter no longer have any
right to exercise any Option hereunder in respect of such TAM Assets unless such
TAM Assets are
<PAGE> 26
23
subsequently offered as part of a larger group of TAM Assets, in which case such
TAM Assets would be subject to the Option rights hereunder as part of such
larger group of TAM Assets.
III.3 Price. ACNielsen will notify the TAM Purchaser in
writing of its final calculation and estimation of the TAM Purchase Price at
least 5 Business Days prior to the closing of the acquisition. The TAM Purchaser
will pay undisputed Transfer Costs on the TAM Acquisition Date and will deposit
any disputed amounts in escrow. ACNielsen will deliver an accounting of the TAM
Purchase Price within 30 days after the TAM Acquisition Date. The TAM Purchaser
must deliver written notice of any objection to any part of such accounting
within 21 days after receipt of such accounting. If the TAM Purchaser delivers
such notice, the provisions of Article V will govern the resolution of all
disputed items.
III.4 Other Terms and Conditions of Exercise. (a) ACNielsen
shall use its reasonable efforts (without expending money or making any
contractual concessions) to obtain assignments of (i) employment contracts of
employees working in the ACNielsen TAM Business whom the TAM Purchaser desires
to retain and (ii) such other contracts constituting TAM Assets as the TAM
Purchaser shall reasonably request.
(a) (i) ACNielsen shall represent in each Asset Purchase
Agreement that ACNielsen has not knowingly or recklessly included in the
information delivered by or on behalf of ACNielsen to the TAM Purchaser,
including the Option Information and information provided pursuant to Section
3.2(c) (the "Disclosure Information"), any untrue statement of a material fact,
or omitted to disclose or state any material fact required to be stated therein
or necessary in order to make the Disclosure Information, in light of the
circumstances under which such information was delivered, not misleading.
(ii) Neither ACNielsen nor any TAM Purchaser shall be required
to make any other representation or warranty in any Asset Purchase Agreement.
(b) No Asset Purchase Agreement shall provide for
indemnification of either party by the other in connection with the TAM
Acquisition, except that the parties shall indemnify each other in respect of
third party claims to the extent provided in Article III of the Distribution
Agreement.
(c) Each Asset Purchase Agreement shall subject the parties
thereto to dispute resolution as provided in Article VI of the Distribution
Agreement.
(d) (i) ACNielsen shall covenant in each Asset Purchase
Agreement not to compete with the TAM Purchaser in the TAM Business for a period
of three years after the TAM Acquisition Date in the country or countries in
which the acquired TAM Business was operated as of such TAM Acquisition Date,
subject to any Contractual Obligation of any ACNielsen Party
<PAGE> 27
24
existing on the Distribution Date which Contractual Obligation is not
transferred to the TAM Purchaser.
(ii) Such covenant shall not restrict or limit any ACNielsen
Party's ability to engage in activities relating to computers or to the
Internet, except measurement of viewing of programming of a type that, prior to
the date hereof, primarily has been viewed on television sets via broadcast,
cable and satellite transmission.
(iii) Nothing contained herein shall prevent any ACNielsen
Party from engaging in measurement of accessing or retrieving information, other
than the programming described in clause (ii), on the Internet or otherwise,
even if such accessing or retrieving occurs via a television set.
(e) Each Asset Purchase Agreement shall require ACNielsen to
use reasonable efforts (without expending money) to transfer to the TAM
Purchaser its interests in joint ventures in which ACNielsen or its Affiliates
hold an interest and which are part of the ACNielsen TAM Business being sold.
ACNielsen shall in good faith attempt to obtain the right to assign to the TAM
Purchaser without further consent, such party's interest in any such joint
venture that such party enters into from and after the Effective Date.
III.5 Survival. In the event that Cognizant disposes of a
controlling interest in NMR, the purchaser of such controlling interest shall
succeed to Cognizant's rights and obligations as Optionee under this Article
III.
<PAGE> 28
25
IV
INDEMNIFICATION
4.1 Indemnification. Article III of the Distribution Agreement
shall govern the rights of Cognizant Parties and ACNielsen Parties with respect
to indemnification. The term "Cognizant Liabilities" in that Article shall be
read to include all Liabilities assumed by Cognizant Parties pursuant to this
Agreement. The term "ACNielsen Liabilities" in that Article shall be read to
include all Liabilities assumed by ACNielsen Parties pursuant to this Agreement.
V
DISPUTE RESOLUTION
5.1 Dispute Resolution. Article VI of the Distribution
Agreement shall govern the rights of Cognizant Parties and ACNielsen Parties
with respect to dispute resolution. The term "Agreement Dispute" in that Article
shall be read to include all disputes between Cognizant Parties and ACNielsen
Parties relating to or arising out of this Agreement.
<PAGE> 29
26
VI
CONDITIONS TO EFFECTIVENESS
6.1 The effectiveness of this Agreement is subject of the
satisfaction, or waiver by the party to whom performance is owed, of the
following conditions:
(a) Occurrence of Distribution Date. The Distribution Date
shall have occurred.
VII
COVENANTS
VII.1 Further Assurances. In case at any time after the
Distribution Date any further action is reasonably necessary or desirable to
carry out the purposes of this Agreement, any Asset Purchase Agreement or any
Ancillary Licensing Agreements, the proper officers of each party to this
Agreement shall take all such necessary action. Without limiting the foregoing,
Cognizant and ACNielsen shall use their reasonable efforts (without expending
money) promptly to obtain all consents and approvals, to enter into all
amendatory agreements and to make all filings and applications that may be
required for the consummation of the transactions contemplated by this
Agreement, any Asset Purchase Agreement and the Ancillary Licensing Agreements,
including, without limitation, all applicable governmental and regulatory
filings.
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27
VIII
MISCELLANEOUS
VIII.1 Construction. This Agreement, including the Exhibits
and Schedules, and the Ancillary Licensing Agreements shall constitute the
entire agreement between the parties with respect to the subject matter hereof
and shall supersede all previous negotiations, commitments and writings with
respect to such subject matter. In the event and to the extent that there shall
be a conflict between the provisions of this Agreement and the provisions of any
Ancillary Licensing Agreement, this Agreement shall control.
VIII.2 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to the other parties.
VIII.3 Expenses. Except as otherwise expressly set forth in
this Agreement or any Ancillary Licensing Agreement, each party shall bear its
own costs and expenses. Any amount or expense to be paid or reimbursed by any
party hereto to any other party hereto shall be so paid or reimbursed promptly
after the existence and amount of such obligation is determined and demand
therefor is made.
VIII.4 Notices. All notices and other communications hereunder
shall be in writing and hand delivered or mailed by registered or certified mail
(return receipt requested) or sent by any means of electronic message
transmission with delivery confirmed (by voice or otherwise) to the parties at
the following addresses (or at such other addresses for a party as shall be
specified by like notice) and will be deemed given on the date on which such
notice is received:
To Cognizant Corporation: 200 Nyala Farms
Westport, CT 06880
Attention: General Counsel
To ACNielsen Corporation: 177 Broad Street
Stamford, CT 06901
Attention: General Counsel
VIII.5 Waivers. The failure of any party to require strict
performance by any other party of any provision in this Agreement will not waive
or diminish that party's right to demand strict performance thereafter of that
or any other provision hereof.
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28
VIII.6 Amendments. This Agreement may not be modified or
amended except by an agreement in writing signed by each of the parties hereto.
VIII.7 Assignment. (a) Except as set forth in Article III
above, ACNielsen may not assign this Agreement, in whole or in part, directly or
indirectly, without the prior written consent of Cognizant.
(a) Cognizant may assign this Agreement to a purchaser of a
controlling interest in, or all or substantially all of the Assets of, NMR.
VIII.8 Successors and Assigns. The provisions to this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and permitted assigns.
VIII.9 Subsidiaries. Each of the parties hereto shall cause to
be performed, and hereby guarantees the performance of, all actions, agreements
and obligations set forth herein to be performed by any Subsidiary of such party
or by any entity that is contemplated to be a Subsidiary of such party on or
after the Distribution Date.
VIII.10 Third-Party Beneficiaries. Except as provided in
Article IV relating to Indemnities, this Agreement is solely for the benefit of
the parties hereto and their respective Subsidiaries and Affiliates and should
not be deemed to confer upon third parties any remedy, claim, Liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.
VIII.11 Titles and Headings. Titles and headings to sections
herein are inserted for the convenience of reference only and are not intended
to be a part of or to affect the meaning or interpretation of this Agreement.
VIII.12 Exhibits and Schedules. The Exhibits and Schedules
shall be construed with and as an integral part of this Agreement to the same
extent as if the same had been set forth verbatim herein.
VIII.13 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
VIII.14 Consent to Jurisdiction. Without limiting the
provisions of Article V hereof, each of the parties irrevocably submits to the
exclusive jurisdiction of (a) the Supreme Court of the State of New York, New
York County, and (b) the United States District Court for the Southern District
of New York, for the purposes of any suit, action or other proceeding
<PAGE> 32
29
arising out of this Agreement or any transaction contemplated hereby. Each of
the parties agrees to commence any action, suit or proceeding relating hereto
either in the United States District Court for the Southern District of New York
or if such suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court of the State of New York, New York
County. Each of the parties further agrees that service of any process, summons,
notice or document by U.S. registered mail to such party's respective address
set forth above shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 8.14. Each of the parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Supreme Court of the State of New York, New York County, or
(ii) the United States District Court for the Southern District of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
VIII.15 Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions, the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
VIII.16 Confidentiality. Each of Cognizant and ACNielsen
agrees, on behalf of itself and the other Cognizant Parties and ACNielsen
Parties, respectively, that (i) no such party shall, for a period of three years
from the latest date of delivery of all required Option Information, use or
permit the use of (without the prior written consent of the other) and each such
party shall at all times hereafter keep, and shall cause its consultants and
advisors to keep, confidential all information concerning the other parties in
its possession, its custody or under its control (except to the extent that (A)
such information has been in the public domain through no fault of such party or
(B) such information has been later lawfully acquired from other sources by such
party or (C) this Agreement or any agreement entered into pursuant hereto
permits the use or disclosure of such information) to the extent such
information (w) relates to or was acquired during the period up to the
Distribution Date, (x) relates to any of this Agreement, the Distribution
Agreement or any agreement contemplated hereby or thereby, (y) is obtained in
the course of performing services for the other party pursuant to any such
agreement, or (z) is based upon or is derived from information described in the
preceding clauses (w), (x) or (y), and no party shall not (without the prior
written consent of the other) otherwise release or disclose such information to
any other person, except such party's auditors and attorneys, unless compelled
to disclose such information by judicial or administrative process or unless
such disclosure is required by law and such party has used commercially
reasonable efforts to consult with the other affected party or parties prior to
such disclosure.
<PAGE> 33
30
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the day and year first above written.
COGNIZANT CORPORATION
By /s/ Robert E. Weissman
______________________________________
Name: Robert E. Weissman
Title:
ACNIELSEN CORPORATION
By /s/ Nicholas L. Trivisonno
______________________________________
Name: Nicholas L. Trivisonno
Title:
<PAGE> 1
Exhibit 10(f)
INDEMNITY AND JOINT DEFENSE AGREEMENT
This INDEMNITY AND JOINT DEFENSE AGREEMENT is dated as of
October 28, 1996 (the "Agreement"), among THE DUN & BRADSTREET CORPORATION, a
Delaware corporation ("D&B"), COGNIZANT CORPORATION, a Delaware corporation,
("Cognizant"), and ACNIELSEN CORPORATION, a Delaware corporation ("ACNielsen").
WHEREAS, the Board of Directors of D&B has determined that it
is appropriate, desirable and in the best interests of the holders of shares of
common stock, par value $1.00 per share, of D&B (the "D&B Common Stock") to take
certain steps to reorganize D&B's Subsidiaries (as defined herein) and
businesses and then to distribute to the holders of the D&B Common Stock all the
outstanding shares of common stock of Cognizant, together with the appurtenant
share purchase rights, and all the outstanding shares of common stock of
ACNielsen, together with the appurtenant share purchase rights; and
WHEREAS, D&B, A.C. Nielsen Company and I.M.S. International,
Inc. ("IMS") have been named as defendants in an action commenced by Information
Resources, Inc. ("IRI") by the filing of its complaint dated July 29, 1996 in
the action captioned Information Resources, Inc. v. The Dun & Bradstreet
Corporation, A.C. Nielsen Co. and IMS International, Inc. (S.D.N.Y.) 96 Civ.
5716 (this action and any amended complaint or action arising out of the same or
substantially similar factual allegations by IRI or any successor or affiliate
thereof are referred to herein as the "Lawsuit");
WHEREAS, the reorganization of D&B's Subsidiaries and
businesses as contemplated by the Distribution Agreement (as defined herein)
could be potentially affected by the commencement of the Lawsuit, and in order
to consummate such reorganization in a timely fashion and in substantially the
manner contemplated prior to the commencement of the Lawsuit, the parties hereto
have determined that it is desirable to enter into this Agreement, and each
party hereto expressly acknowledges that the execution and delivery of this
Agreement does not in any manner constitute an admission that the Lawsuit has
any merit;
WHEREAS, pursuant to the terms and subject to the limitations
hereof, (x) ACNielsen has agreed, inter alia, to indemnify D&B and Cognizant
against IRI Liabilities (as defined below), up to a certain amount, which may be
incurred directly or indirectly by D&B or Cognizant, and (y) D&B and Cognizant
have agreed, inter alia, to indemnify ACNielsen against IRI Liabilities, in
excess of such amount, if any, which may be incurred directly or indirectly by
ACNielsen;
WHEREAS, the parties believe that they have a mutuality of
interest in a joint defense in connection with the Lawsuit and any additional
actions, investigations or proceedings that have arisen or may arise in
connection with the subject matter of the Lawsuit;
<PAGE> 2
2
WHEREAS, it is the intention and understanding of the parties
that communications between and among them as provided herein and any joint
interviews of prospective witnesses for the purpose of a joint defense are
confidential and are protected from disclosure to any third party by the
attorney-client privilege, the work product doctrine and any other applicable
privileges;
WHEREAS, in order to pursue a joint defense effectively, the
parties have also concluded that, from time to time, their mutual interests will
be best served by sharing privileged material, mental impressions, memoranda,
interview reports and other work products and information, including the
confidences of each party;
WHEREAS, it is a purpose of this Agreement to insure that the
exchanges and disclosures of privileged materials contemplated herein do not
diminish or constitute a waiver of any privilege that may otherwise be available
by virtue of any prior agreement, conduct, operation of law or otherwise;
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, D&B, Cognizant and ACNielsen agree as follows:
I
DEFINITIONS
I.1. Definitions. Capitalized terms used in this Agreement and
not defined herein shall have the meanings set forth in the Distribution
Agreement (as defined herein) and the following terms shall have the following
meanings:
"ACN Maximum Amount" means the maximum amount which, at the
time any IRI Liability becomes payable, a hypothetical investment banking firm
would determine that ACNielsen would be able to pay (assuming the amount of the
ACN Payment is zero) after giving effect to (i) any recapitalization or similar
corporate transaction, including, without limitation, asset dispositions and/or
increased borrowings or other capital raising transactions, which would be
recommended by such hypothetical investment bank in order to maximize the claims
paying ability of ACNielsen (a "Hypothetical Recapitalization Plan"), and (ii)
the payment of interest which would be reasonably expected to be incurred on any
ACN Notes and the payment of investment banking, legal and other fees and
expenses which would be reasonably expected to be incurred in connection with
such Hypothetical Recapitalization Plan, without impairing the financial
viability of ACNielsen or A.C. Nielsen Company as either such company would
exist after consummation of such Hypothetical Recapitalization Plan and the
payment of such interest, fees and expenses.
"ACN Note" shall have the meaning set forth in Section 2.1(c)
hereto.
"ACN Payment" shall have the meaning set forth in Section
2.1(b).
<PAGE> 3
3
"ACNielsen" shall have the meaning set forth in the preamble
hereto.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of Voting Stock, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Ancillary Agreements" shall mean all of the written
agreements, instruments, assignments or other written arrangements (other than
this Agreement and the Distribution Agreement) entered into in connection with
the transactions contemplated by this Agreement and the Distribution Agreement,
including, without limitation, the Conveyancing and Assumption Instruments, the
Data Services Agreement, the Employee Benefits Agreement, the Intellectual
Property Agreement, the Shared Transaction Services Agreements, the TAM Master
Agreement, the Tax Allocation Agreement and the Transition Services Agreement.
"Board of Directors" shall mean, when used with respect to a
specified corporation, the board of directors of the corporation so specified.
"Business Combination" means, with respect to any Person, any
consolidation or merger or any sale, conveyance, assignment, transfer, lease or
other disposition of all or substantially all of the properties and assets of
such Person as an entirety in one transaction or series of transactions.
"Capital Lease Obligations" of a Person means any obligation
which is required to be classified and accounted for as a capital lease on the
balance sheet of such Person prepared in accordance with GAAP; the amount of
such obligations shall be the capitalized amount thereof, determined in
accordance with GAAP.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations, rights to purchase, warrants, options, or
other equivalents (however designated) of capital stock of a corporation, and
any and all equivalent ownership interests in a Person other than a corporation,
in each case whether now outstanding or hereafter issued.
"Cash Equivalents" means, at any time, (a) any evidence of
Indebtedness with a maturity of 180 days or less from the date of acquisition
issued or directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof (provided that the full faith
and credit of the United States of America is pledged in support thereof); (b)
certificates of deposit, money market deposit accounts and acceptances with a
maturity of 180 days or less from the date of acquisition of any financial
institution that is a member of the Federal Reserve System having combined
capital and surplus and undivided profits of not less than $500 million; (c)
commercial paper with a maturity of 180 days or less from the date of
<PAGE> 4
4
acquisition issued by a corporation that is not an Affiliate of ACNielsen and is
organized under the laws of any state of the United States or the District of
Columbia whose debt rating, at the time as of which such investment is made, is
at least "A-1" by Standard & Poor's Corporation or at least "P-1" by Moody's
Investors Service, Inc. or rated at least an equivalent rating category of
another nationally recognized securities rating agency; (d) repurchase
agreements and reverse repurchase agreements having a term of not more than 30
days for underlying securities of the types described in clause (a) above
entered into with a financial institution meeting the qualifications described
in clause (b) above; (e) any security, maturing not more than 180 days after the
date of acquisition, backed by standby or direct pay letters of credit issued by
a bank meeting the qualifications described in clause (b) above; and (f) any
security, maturing not more than 180 days after the date of acquisition, issued
or fully guaranteed by any state, commonwealth, or territory of the United
States of America, or by any political subdivision thereof, and rated at least
"A" by Standard & Poor's Corporation or at least "A" by Moody's Investors
Service, Inc. or rated at least an equivalent rating category of another
nationally recognized securities rating agency.
"Cognizant" shall have the meaning set forth in the preamble
hereto.
"Cognizant Counsel" shall have the meaning set forth in
Section 4.1(b) hereto.
"Cognizant/D&B Payment" shall have the meaning set forth in
Section 2.1(b) hereto.
"Consolidated Earnings Before Interest, Taxes, Depreciation
and Amortization" means for any period the sum of Consolidated Net Income plus,
to the extent deducted in computing Consolidated Net Income, Consolidated
Interest Expense, Consolidated Tax Expense, all depreciation and, without
duplication, all amortization, in each case, for such period, of the Relevant
Party and its Subsidiaries on a consolidated basis, all as determined in
accordance with GAAP.
"Consolidated Interest Expense" means for any period the sum
of (a) the aggregate of the interest expense on Indebtedness of the Relevant
Party and its Subsidiaries for such period, on a consolidated basis as
determined in accordance with GAAP (excluding the amortization of costs relating
to original debt issuances but including the amortization of debt discount) plus
(b) without duplication, that portion of Capital Lease Obligations of the
Relevant Party and its Subsidiaries representing the interest factor for such
period as determined in accordance with GAAP plus (c) without duplication,
dividends paid in respect of preferred stock of Subsidiaries or Disqualified
Stock of the Relevant Party to Persons other than the Relevant Party or a wholly
owned Subsidiary.
"Consolidated Net Income" means for any period the net income
or loss of the Relevant Party and its Subsidiaries for such period on a
consolidated basis as determined in accordance with GAAP, adjusted by excluding
the after-tax effect of (a) any gains (but not losses) from currency exchange
transactions not in the ordinary course of business; (b) the net
<PAGE> 5
5
income of any Person which is not a Subsidiary or is accounted for by the equity
method of accounting except to the extent of the amount of dividends or
distributions actually paid in cash by such Person to the Relevant Party or a
Subsidiary of the Relevant Party during such period; (c) except to the extent
includible pursuant to clause (b), the net income of any Person accrued prior to
the date it becomes a Subsidiary of the Relevant Party or is merged into or
consolidated with the Relevant Party or any of its Subsidiaries or such Person's
assets are acquired by the Relevant Party or any of its Subsidiaries; (d) net
gains attributable to write-ups (determined after taking into account losses
attributable to write-downs) of assets or liabilities other than in the ordinary
course of business; (e) the cumulative effect of a change in accounting
principles; and (f) net income from discontinued operations.
"Consolidated Net Worth" of a Person and its Subsidiaries
means as of any date all amounts that would be included under stockholders'
equity on a consolidated balance sheet of such Person and its Subsidiaries
determined in accordance with GAAP.
"Consolidated Tax Expense" means for any period the aggregate
of the federal, state, local and foreign income tax expense of the Relevant
Party and its Subsidiaries for such period, on a consolidated basis as
determined in accordance with GAAP, to the extent deducted in computing
Consolidated Net Income.
"Counsel of Record" shall have the meaning set forth in
Section 4.1(a).
"D&B" shall have the meaning set forth in the preamble hereto.
"D&B Common Stock" shall have the meaning set forth in the
recitals hereto.
"D&B Counsel" shall have the meaning set forth in Section
4.1(b) hereto.
"Defense Costs" shall have the meaning set forth in Section
4.1(h).
"Defense Materials" shall have the meaning set forth in
Section 4.1(c) hereto.
"Disqualified Firm" shall have the meaning set forth in
Section 2.2(a) hereto.
"Disqualified Stock" means any Capital Stock which pays a
mandatory dividend (other than in Capital Stock) or which, by its terms (or by
the terms of any security into which it is convertible or exchangeable), or upon
the happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part or is exchangeable for debt securities of ACNielsen
or its Subsidiaries.
"Distribution Agreement" shall mean the Distribution Agreement
among D&B, Cognizant and ACNielsen.
<PAGE> 6
6
"Fixed Charge Coverage Ratio" means for any period the ratio
of Consolidated Earnings Before Interest, Taxes, Depreciation and Amortization
to Consolidated Interest Expense for such period; provided, however, that in
making such computation, the interest expense on any Indebtedness to be incurred
and computed on a pro forma basis and bearing a floating interest rate shall be
computed as if the rate in effect on the date of computation had been the
applicable rate for the entire period.
"GAAP" means the generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession in the United States, in each case applied on a
consistent basis.
"Hypothetical Recapitalization Plan" shall have the meaning
set forth in the definition of "ACN Maximum Amount", above.
"IMS" shall have the meaning set forth in the recitals hereto.
"IMS Counsel" shall have the meaning set forth in Section
4.1(b) hereto.
"Indebtedness" means, with respect to any Person, without
duplication, (a) the principal of and premium (if any) in respect of (i)
indebtedness of such Person for money borrowed and (ii) indebtedness evidenced
by notes, indentures, bonds, other similar instruments for the payment of which
such Person is responsible or liable; (b) all Capital Lease Obligations of such
Person; (c) all obligations of such Person issued or assumed as the deferred
purchase price of property; (d) all obligations of such Person for the
reimbursement of any obligor on any letter of credit or similar credit
transaction; (e) all dividends on Capital Stock issued by third parties for the
payment of which such Person is responsible; (f) all obligations of the type
referred to in clauses (a) through (e) above of third parties secured by any
Lien on any property or asset of such Person, the amount of such obligation
being deemed to be the lesser of the value of such property or assets or the
amount of the obligation so secured; (g) indebtedness secured by any Lien
existing on property acquired by such Person subject to such Lien, whether or
not the indebtedness secured thereby shall have been assumed, provided that if
such Person has not assumed such Indebtedness the amount of Indebtedness of such
Person shall be deemed to be the lesser of the value of such acquired property
or the amount of the indebtedness secured; (h) guarantees, endorsements and
other obligations, whether or not contingent, in respect of, or agreements to
purchase or otherwise acquire, Indebtedness of other Persons; (i) all
Disqualified Stock issued by such Person valued at the greater of its voluntary
or involuntary maximum fixed repurchase price plus accrued and unpaid dividends;
(j) preferred stock issued by any Subsidiary valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid
dividends; and (k) all obligations under or in respect of Interest Rate
Protection or other Hedging Agreements.
<PAGE> 7
7
For purposes of this definition, "maximum fixed repurchase
price" of any preferred stock issued by any Subsidiary and of any Disqualified
Stock which does not have a fixed repurchase price shall be calculated in
accordance with the terms of such preferred stock or such Disqualified Stock as
if such preferred stock or such Disqualified Stock were purchased on any date on
which Indebtedness shall be required to be determined pursuant to the Indenture,
and if such price is based upon, or measured by, the fair market value of such
preferred stock or Disqualified Stock, such fair market value shall be
determined in good faith by the board of directors of the issuer of such
preferred stock or such Disqualified Stock.
"Interest Rate Protection and Other Hedging Agreements" means
one or more of the following agreements entered into by one or more financial
institutions: (a) interest rate protection agreements (including, without
limitation, interest rate swaps, caps, floors, collars and similar agreements),
(b) foreign exchange contracts, currency swap agreements or other, similar
agreements or arrangements designed to protect against fluctuations in currency
values and/or (c) other types of hedging agreements from time to time.
"IRI" shall have the meaning set forth in the recitals hereto.
"IRI Liabilities" shall have the meaning set forth in Section
2.1(a) hereto.
"Lawsuit" shall have the meaning set forth in the recitals
hereto.
"Lien" means any mortgage, lien, pledge, security interest,
conditional sale or other title retention agreement or other security interest
or encumbrance of any kind (including any agreement to give any security
interest).
"Note Amount" shall have the meaning set forth in Section
2.1(c) hereto.
"Parent" of a Person means any other Person with the power to
direct the management and policies of such Person, directly or indirectly,
whether through ownership of Voting Stock, by contract or otherwise.
"Party Counsel" shall have the meaning set forth in Section
4.1(b) hereto.
"Payment Date" shall mean the day on which the IRI
Liabilities, if any, are ultimately required to be paid.
"Person" shall mean any natural person, corporation, business
trust, joint venture, association, company, partnership or government, or any
agency or political subdivision thereof.
"Recapitalization Plan" shall have the meaning set forth in
Section 2.2(c) hereto.
"Related Person" means (a) any Affiliate of ACNielsen, (b) any
Person who directly or indirectly holds 5% or more of any class of Voting Stock
of ACNielsen, (c) any
<PAGE> 8
8
Person who is an executive officer or director of ACNielsen and (d) any
Affiliate of or any relative by blood, marriage or adoption not more remote than
first cousin of any such Person referred to in clause (b) or (c) above.
"Relevant Party" shall have the meaning set forth in Section
3.4 hereto.
"Restricted Payment" means, with respect to ACNielsen and its
Subsidiaries, (a) any declaration or payment of any dividend on, or any
distribution in respect of, or any purchase, redemption or retirement for value
of, any Capital Stock of ACNielsen or such Subsidiary or any deposit with
respect to the foregoing (other than (i) through the issuance of Capital Stock
of ACNielsen, other than Disqualified Stock or rights to Disqualified Stock, and
(ii) dividends or distributions payable solely to ACNielsen or a wholly owned
Subsidiary), other than dividends or repurchases contemplated by the
Distribution Agreement or any Ancillary Agreement, (b) any charitable
contribution, (c) any voluntary payments to pension or other benefit plans, or
(d) any accelerated payment of any accounts payable or any cancellation or
discounting of, or delay or extension in the collection of, any accounts
receivable, unless such acceleration, cancellation, discounting, delay or
extension, as the case may be, is in the ordinary course of ACNielsen's
business.
"Service" shall mean the Internal Revenue Service or any
successor entity thereto.
"Strategic Transaction" shall mean any acquisition or
disposition of any business or of any assets comprising a business, or any
acquisition or disposition of any interest in a joint venture or other equity
investment in any business.
"Subsidiary" shall mean any corporation, partnership or other
entity of which another entity (a) owns, directly or indirectly, ownership
interests sufficient to elect a majority of the Board of Directors (or persons
performing similar functions) (irrespective of whether at the time any other
class or classes of ownership interests of such corporation, partnership or
other entity shall or might have such voting power upon the occurrence of any
contingency) or (b) is a general partner or an entity performing similar
functions (e.g., a trustee).
"Viability Opinion" shall have the meaning set forth in
Section 2.2(c) hereto.
"Voting Stock" means all outstanding classes of Capital Stock
of any entity entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof.
"Withdrawing Party" shall have the meaning set forth in
Section 4.1(g).
II
ALLOCATION OF LIABILITIES/ARBITRATION OF ACN MAXIMUM AMOUNT
<PAGE> 9
9
II.1. Allocation of Liabilities. (a) The parties agree that in
the event that liabilities are incurred by any party hereto or any Subsidiary
thereof directly relating to, arising out of or resulting from a final,
non-appealable judgment being entered, or any settlement permitted hereby being
entered into, in connection with the Lawsuit, such liabilities ("IRI
Liabilities") shall be allocated among the parties as follows:
(i) ACNielsen agrees to assume exclusive liability
for the IRI Liabilities up to the ACN Maximum Amount; and
(ii) Cognizant and D&B each agree to assume exclusive
liability for 50% of any IRI Liabilities not payable by ACNielsen pursuant to
this Agreement.
(b) No later than five business days after the date on which
any IRI Liabilities are incurred, ACNielsen shall give notice to each of
Cognizant and D&B of the amount of such IRI Liabilities which ACNielsen will
then pay (such amount, the "ACN Payment") and of the amount which ACNielsen has
determined to be the ACN Maximum Amount, and ACNielsen will deliver the ACN
Payment to Counsel of Record for delivery to the plaintiff in the Lawsuit. Each
of Cognizant and D&B agrees to pay to the plaintiff in the Lawsuit on the
Payment Date an amount equal to 50% of the excess (if any) of (x) the aggregate
amount of the IRI Liabilities over (y) the ACN Payment (such amount, the
"Cognizant/D&B Payment"). In the event Cognizant or D&B disputes or disagrees
with ACNielsen's determination of the ACN Maximum Amount, the dispute shall be
resolved and the ACN Maximum Amount determined as described in Section 2.2.
(c) Upon the payment of the Cognizant/D&B Payment pursuant to
the immediately preceding sentence, ACNielsen shall issue a note (an "ACN Note")
to each of Cognizant and D&B. The principal amount of each ACN Note shall be
equal to the Note Amount, as defined below, and each such ACN Note shall be in
the form of Schedule A hereto. Interest on the Note Amount as finally determined
for each ACN Note shall accrue at a rate equal to the rate of interest per annum
publicly announced from time to time by The Chase Manhattan Bank as its prime
rate in effect at its principal office in New York City and shall be payable at
maturity. For purposes hereof, the "Note Amount" of each Note shall initially be
equal to the Cognizant/D&B Payment, provided, however, (i) that upon the
determination of the ACN Maximum Amount, if the Note Amount is greater than 50%
of the difference between the ACN Maximum Amount and the ACN Payment, then the
Note Amount shall be reduced to and shall equal 50% of such difference, and (ii)
that upon receipt of the aggregate amount of proceeds generated by any
Recapitalization Plan (as defined below) upon completion thereof in accordance
with the first sentence of Section 2.2(g), if the Note Amount (after giving
effect to any adjustment pursuant to clause (i)) is greater than 50% of the
amount of such proceeds, then the Note Amount shall be reduced to and shall
equal 50% of the amount of such proceeds. The Note Amount, together with accrued
and unpaid interest thereon, shall be payable upon the earlier of (x) the
completion of the Recapitalization Plan, provided, however, that if the
Recapitalization Plan is structured to generate proceeds which are receivable by
ACNielsen at
<PAGE> 10
10
different times without being contingent upon the completion of any other aspect
of the Recapitalization Plan, then at each time that proceeds are so received,
50% of such proceeds shall be payable to each of Cognizant and D&B, and the
receipt by Cognizant and D&B of their respective share of such proceeds shall
reduce the then applicable Note Amount accordingly, and (y) the declaration by
the Payee of an ACN Note (as defined therein) that such Note Amount and interest
thereon are immediately due and payable in accordance with the terms of such ACN
Note upon determination being made under Section 2.2(g) hereof that ACNielsen
has not exercised its good faith best efforts to implement the Recapitalization
Plan as soon as practicable, or as otherwise provided by such ACN Note.
(d) Immediately after the Payment Date, ACNielsen agrees to
grant to, and to cause each of its Subsidiaries to grant to, Cognizant and D&B,
as collateral security for the payment and performance of ACNielsen's
obligations under the ACN Notes and otherwise to indemnify Cognizant and D&B
against any IRI Liabilities as required by this Article II, a perfected first
priority security interest in all of its tangible and intangible assets
(including, without limitation, intellectual property, real property and all of
the capital stock of each of its direct and indirect domestic subsidiaries and
first-tier foreign subsidiaries), to the extent permitted by any other bona fide
security or other similar agreements with third-parties not controlled by
ACNielsen or any of its Affiliates, pursuant to such documents (the "Security
Documents") as Cognizant and D&B shall deem reasonably necessary or advisable to
grant to them a perfected first priority lien on such assets. Each of the
Security Documents shall be in form and substance reasonably satisfactory to
Cognizant and D&B, shall contain terms and conditions which are usual and
customary for similar documents delivered in secured financings and shall
include guarantees executed and delivered by each of ACNielsen's Subsidiaries
which shall be secured by the security interests granted by such Subsidiaries
pursuant to the Security Documents. Without limiting the foregoing, ACNielsen
agrees to take, and to cause each of its Subsidiaries to take, all actions
necessary or advisable to cause the liens granted pursuant to the Security
Documents to be duly perfected in accordance with all applicable requirements of
law, including, without limitation, the filing of financing statements in such
jurisdictions as may be requested by Cognizant and D&B and the delivery to
Cognizant and D&B (or their representative) of any certificates representing
pledged stock, together with undated stock powers executed and delivered in
blank by a duly authorized officer of ACNielsen or the relevant Subsidiary.
II.2. Arbitration of ACN Maximum Amount. (a) Cognizant, D&B
and ACNielsen expressly agree that any dispute or disagreement concerning the
ACN Maximum Amount shall be submitted to binding arbitration and agree that
disputes concerning the ACN Maximum Amount shall be resolved by an
internationally recognized investment banking firm, as arbitrator, pursuant to
the procedures and instructions set forth below. Such arbitrator shall be chosen
by ACNielsen, Cognizant and D&B, unless the parties cannot agree within two
business days of the determination of the Cognizant/D&B Payment, in which case
the arbitrator shall be selected through a random drawing, conducted jointly by
the parties, in which each party selects and enters the name of one of the firms
listed on Schedule B hereto and the firm whose name is
<PAGE> 11
11
picked in such drawing shall be the arbitrator, provided, however, that if the
firm picked is a "Disqualified Firm", the process shall be repeated until the
firm picked is not a Disqualified Firm. A "Disqualified Firm" shall be any firm
which could reasonably be expected to be partial to one or more parties hereto
within the meaning of Section 10(b) of the Federal Arbitration Act. Any firm
picked by such drawing shall, within two business days, disclose to each of the
parties hereto any and all potential conflicts of interest with respect to any
of the parties. The parties shall have two business days from receiving such
disclosure to dispute such firm's impartiality. The parties agree that failure
to dispute any such firm's impartiality within such period shall constitute a
waiver of any right to challenge such firm's impartiality based on facts known
or disclosed at such time. Any dispute concerning whether or not a firm is a
Disqualified Firm shall be resolved by a single arbitrator, who shall be a
lawyer, selected by the parties or, if the parties are unable to agree on an
arbitrator within two business days, then one shall be selected by the American
Arbitration Association in accordance with its most expeditious procedures. The
arbitrator selected to resolve any dispute concerning the impartiality of a
proposed investment banking firm shall be instructed to resolve such dispute
within ten business days pursuant to the dispute resolution procedures set forth
in Section 6.2 of the Distribution Agreement. The place of any such arbitration
shall be in New York City, New York.
(a) Cognizant, D&B and ACNielsen agree that any arbitrator or
arbitrators appointed to resolve any dispute pursuant to Article VI of the
Distribution Agreement shall have no right, authority or jurisdiction to
determine the ACN Maximum Amount, to resolve any dispute concerning the
determination of the ACN Maximum Amount, to resolve any other dispute arising
under this Article II, or to prevent, delay or otherwise interfere with any such
dispute arbitration or determination, and that any dispute concerning the
determination of the ACN Maximum Amount shall only be resolved by an investment
banking firm appointed as arbitrator pursuant hereto. The determination of the
ACN Maximum Amount and the resolution of any other dispute arising under this
Article II by such investment banking firm shall be made without any party
hereto asserting any other claims, offsets, defenses or counterclaims. Each of
Cognizant, D&B and ACNielsen agrees that notwithstanding any other disputes
between or among any of them or any of their respective Subsidiaries under the
Distribution Agreement, any Ancillary Agreement or otherwise, such party will
not take any action to prevent or delay the arbitration contemplated hereby or
claim any right to offset any claim or amount payable hereunder. The parties
hereto intend the provisions to arbitrate set forth in this Article II to be
valid, enforceable and irrevocable. Any award rendered by the arbitrator shall
be final and binding on the parties and their respective Subsidiaries, and
judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof in accordance with Section 5.15 hereof.
(b) The investment banking firm chosen as arbitrator to
resolve any disputes concerning the ACN Maximum Amount may perform such
financial analyses and studies and consider such historical and projected
financial information and other data as it deems relevant, and shall afford each
party with an opportunity to be heard and to present financial information and
other data relevant to the determination of the ACN Maximum Amount. Such
investment banking firm shall be directed to make an award determining the ACN
Maximum Amount as the
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12
maximum amount which, at the time any such IRI Liabilities become payable,
ACNielsen is able to pay (assuming the amount of the ACN Payment is zero) after
giving effect to (i) any recapitalization or similar corporate transaction,
including, without limitation, asset dispositions and/or increased borrowings or
other capital raising transactions, that may be submitted pursuant to paragraph
(e) below in order to maximize the claims paying ability of ACNielsen (a
"Recapitalization Plan"), and (ii) the payment of interest on the ACN Notes and
investment banking, legal and other fees and expenses reasonably expected to be
incurred in connection with such Recapitalization Plan, without impairing the
financial viability of ACNielsen or A.C. Nielsen Company as either such company
would exist after consummation of the Recapitalization Plan and the payment of
such interest, fees and expenses. The award made by such investment banking firm
shall also allocate the IRI Liabilities based on the ACN Maximum Amount, as
determined by such investment banking firm, strictly in accordance with Section
2.1 (a) hereof. Such investment banking firm shall consider the amount of any
proceeds to be received by ACNielsen pursuant to any counterclaim against IRI in
connection with the Lawsuit. In addition to the award required by this paragraph
(c), such investment banking firm shall deliver a written opinion addressed to
the Boards of Directors of each of ACNielsen, Cognizant, D&B and A.C. Nielsen
Company (a) confirming any determination of the ACN Maximum Amount and (b) to
the effect that, after taking into account the Recapitalization Plan, the
payment of interest on the ACN Notes, the payment of related fees and expenses
and the payment of the ACN Maximum Amount as so determined, each of ACNielsen
and A.C. Nielsen Company will be financially viable as described below (the
"Viability Opinion").
(c) Notwithstanding any amount determined by an investment
banking firm as contemplated hereby, the ACN Maximum Amount may never exceed an
amount which would require the portion of the ACN Maximum Amount payable by A.C.
Nielsen Company to exceed an amount which, if paid by A.C. Nielsen Company
immediately prior to the Distribution, would have prevented A.C. Nielsen Company
from immediately after the Distribution paying $1.00 of dividends out of surplus
in compliance with Delaware law.
(d) In connection with the award required by paragraph (c)
above, such investment banking firm shall be directed to prepare and submit to
the parties a Recapitalization Plan which shall be designed to give effect to
the goal of the parties to maximize the ACN Maximum Amount without preventing
such investment banking firm from delivering the Viability Opinion, but which
shall not require any action requiring shareholder approval pursuant to the
Delaware General Corporation Law or the Certificate of Incorporation or By-Laws
of ACNielsen as in effect on the date hereof or any transaction which, in the
sole discretion of such investment banking firm, is not reasonably practicable
in the circumstances.
(e) For purposes of this Section 2.2 and of the Viability
Opinion, financial viability of each of ACNielsen and A.C. Nielsen Company shall
mean the ability of ACNielsen and A.C. Nielsen Company, respectively, after
giving effect to the Recapitalization Plan, the payment of interest on the ACN
Notes, the payment of related fees and expenses and the payment by ACNielsen of
the ACN Maximum Amount and the payment by A.C. Nielsen Company of the portion,
if any, of the ACN Maximum Amount payable by A.C. Nielsen
<PAGE> 13
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Company, (i) to pay its debts as they become due and payable and (ii) to finance
the current and anticipated operating and capital requirements of its business,
as reconstituted, for two years from the date any such Recapitalization Plan is
expected to be implemented.
(f) ACNielsen agrees (i) to cause its management to cooperate
with such investment banking firm and (ii) to exercise its good faith best
efforts, and to cause its Board of Directors and management to use good faith
best efforts, to implement the Recapitalization Plan as soon as practicable and
to take all actions which may be necessary or appropriate in connection
therewith. Cognizant and D&B agree that notwithstanding Section 2.1(a), if
ACNielsen has used its good faith best efforts to implement the Recapitalization
Plan as soon as practicable but the sum of the aggregate proceeds generated
thereby and the ACN Payment are less than the ACN Maximum Amount, then, upon
payment of such proceeds to Cognizant and D&B, any such deficit shall be
forgiven, and ACNielsen's obligation to assume the IRI Liabilities up to the ACN
Maximum Amount hereunder shall be deemed discharged. In no event will the
failure of ACNielsen to take the action provided for in the first sentence of
this Section 2.2(g) relieve ACNielsen of its obligation to pay the ACN Maximum
Amount, and ACNielsen agrees that if a determination is made pursuant to the
next succeeding sentence that ACNielsen has not used its good faith best efforts
to implement the Recapitalization Plan as soon as practicable, then (x)
ACNielsen shall remain liable for the full ACN Maximum Amount (less the amount
of any ACN Payment), and (y) immediately after receiving the investment banking
firm's determination referred to in the succeeding sentence, Cognizant and D&B
shall be entitled (a) to enforcement of or entry of a judgment upon the award of
the ACN Maximum Amount (less the amount of any ACN Payment) by the Supreme Court
of the State of New York, New York County, or the United States District Court
for the Southern District of New York in accordance with Section 5.15 hereof or
(b) to declare the Note Amount and interest thereon to be immediately due and
payable in accordance with the terms of such ACN Note. Any dispute concerning
whether or not ACNielsen has used its good faith best efforts to implement the
Recapitalization Plan as promptly as practicable shall be submitted to and
finally determined by the investment banking firm which prepared and submitted
such Recapitalization Plan, in the sole discretion of such investment banking
firm, after giving each of the parties hereto an opportunity to be heard, and
based on its knowledge of the Recapitalization Plan, the manner and degree to
which such plan has actually been implemented and the goal of the parties to
maximize ACN Maximum Amount pursuant hereto. Any such determination shall be
made in writing and delivered to the parties hereto promptly (i) upon the
completion of such Recapitalization Plan or (ii) in response to a request by any
party hereto that such a determination be made.
(g) Without prejudice to such arbitral immunity to which the
arbitrator shall be entitled, each of ACNielsen, Cognizant and D&B agrees to
enter into an indemnification agreement with the investment banking firm engaged
to act as arbitrator to determine the ACN Maximum Amount, to deliver the
Viability Opinion and to make the determination contemplated by Section 2.2(g)
hereof in such form as such investment banking firm may reasonably request and
as may be reasonably customary in the circumstances. Each of the parties further
acknowledges that the fees and expenses of such investment banking firm shall be
included in the expenses used in determining the ACN Maximum Amount, and that
such firm shall look to
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ACNielsen as the primary obligor for payment of such fees and expenses and to
Cognizant and D&B as secondary obligors. Each of the parties further agrees that
such investment banking firm may retain its own counsel (the reasonable fees of
such counsel to be included in the expenses used in determining the ACN Maximum
Amount) and that such investment banking firm may rely on such counsel for legal
advice and may rely on financial information, including projections, provided by
ACNielsen management and may assume the accuracy and reasonableness of any such
projections.
II.3. Other Agreements Relating to Allocation of IRI
Liabilities. (a) Each of ACNielsen, Cognizant and D&B agrees not to amend or
waive any provision of this Agreement which would have the effect of releasing
Cognizant or D&B of their obligations under Section 2.1 (a)(ii) above unless, at
such time, A.C. Nielsen Company could pay the maximum possible amount of any IRI
Liabilities and immediately thereafter pay $1.00 of dividends out of surplus in
compliance with Delaware law.
(a) If either D&B or Cognizant acquires beneficial ownership
of 20% or more of the outstanding Voting Stock of IRI or any successor thereof
(an "IRI Investor"), then such IRI Investor shall be deemed to be Withdrawing
Party for purposes of and with the consequences set forth in Section 4.1 (g).
(b) Cognizant and D&B agree that if it shall be necessary to
post any bond pending any appeal of the Lawsuit or otherwise in connection
therewith, Cognizant and D&B shall promptly procure such a bond, and each shall
pay 50% of the cost thereof, provided that such cost shall be added to and be
deemed to be part of the IRI Liabilities hereunder.
(c) The directors of A.C. Nielsen Company immediately prior to
the Distribution shall be third-party beneficiaries of the agreements set forth
in Article II.
III
COVENANTS OF ACNIELSEN
III.1. Limitation on Restricted Payments. ACNielsen will not,
directly or indirectly, and will not permit any Subsidiary to, make any
Restricted Payment if, at the time of such Restricted Payment, and giving effect
thereto, the aggregate amount of all Restricted Payments (the amount of such
payments, if other than in cash, having been determined in good faith by the
ACNielsen Board of Directors, whose determination shall be conclusive and
evidenced by a Board resolution certified and delivered to each of Cognizant and
D&B) declared and made after the Distribution Date would exceed the sum of:
(a) $15 million; and
(b) 20% of the aggregate Consolidated Net Income (or, if such
Consolidated Net Income is a negative number, 100% of such consolidated net
loss) of ACNielsen accrued on a
<PAGE> 15
15
cumulative basis during the period beginning on the Distribution Date and ending
on the last day of ACNielsen's last fiscal quarter ending prior to the date of
such proposed Restricted Payment (except that the amount, if any, of
consolidated net loss shall not reduce the $15 million amount available pursuant
to clause (a) above);
provided, however, that the foregoing provisions will not prevent the payment of
a dividend within 60 days after the date of its declaration if at the date of
declaration such payment was permitted by the foregoing provisions.
III.2. Limitation on Transactions with Related Persons. At any
time when the Voting Stock of ACNielsen is not listed and traded on The New York
Stock Exchange, The American Stock Exchange or the National Market System of the
National Association of Securities Dealers Automated Quotation System, ACNielsen
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, enter into or suffer to exist any transaction or series of related
transactions (including, without limitation, the sale, purchase, exchange or
lease of assets, property or services) with any Related Person (other than a
wholly owned Subsidiary) unless such transaction or series of transactions is on
terms that are no less favorable to ACNielsen or such Subsidiary, as the case
may be, than would be available in a comparable transaction with an unrelated
third party and (a) where such transaction or series of transactions involves
aggregate consideration (including, without limitation, the assumption of
indebtedness) in excess of 2.5% of ACNielsen's Consolidated Net Worth as of the
end of the prior fiscal year, such transaction or series of transactions is
approved by a majority of the Board of Directors of ACNielsen, including the
approval of a majority of the independent, disinterested directors, and (b)
where such transaction or series of transactions involves aggregate
consideration (including, without limitation, the assumption of indebtedness) in
excess of 7.5% of ACNielsen's Consolidated Net Worth as of the end of the prior
fiscal year, ACNielsen also delivers to Cognizant and D&B an opinion from an
internationally recognized investment banking firm as to the fairness of such
transaction or series of transactions to ACNielsen or such Subsidiary from a
financial point of view (without considering, for purposes of such fairness
opinion, any impact which such transaction may have on the ACN Maximum Amount).
For purposes of the foregoing, a series of related transactions will be deemed
to include, without limitation, a series of transactions if, within six months
of closing one transaction, another transaction is entered into with the same
Person or with a successor or affiliate thereof. Notwithstanding the foregoing,
this provision will not apply to (i) any transactions contemplated by the
Distribution Agreement or any Ancillary Agreement; (ii) compensation or employee
benefit arrangements with any officer or director of ACNielsen; and (iii) any
transaction entered into in the ordinary course of business by ACNielsen or a
wholly owned Subsidiary with a wholly owned Subsidiary.
III.3. Merger and Consolidation. ACNielsen may not engage in
any Business Combination with any Person, unless (a) either (i) ACNielsen shall
be the continuing corporation and the Persons who were ACNielsen stockholders
immediately prior to transaction or series of transactions continue to hold more
than 50% of the Voting Stock of the continuing corporation upon consummation of
such transaction or series of transactions, or (ii) (A) such Person and such
Person's Parent, if any, (x) shall be a corporation, partnership or trust
organized and validly
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existing under the laws of the United States or any State thereof or the
District of Columbia or (y) shall duly execute and deliver a consent to
jurisdiction in substantially the form of Schedule C hereto, (B) such Person
and, if such Person has a Parent, such Parent shall expressly assume all of
ACNielsen's obligations hereunder, (C) such Person, or such Person's Parent, if
any, shall be included with ACNielsen for purposes of determining the ACN
Maximum Amount and (D) in the event clause (ii)(y) is applicable, a certificate
signed by ACNielsen's Chief Executive Officer and by its General Counsel is
delivered to each of Cognizant and D&B at least 30 days prior to the
consummation of the proposed transaction which certifies that the consent to
jurisdiction contemplated by such clause (ii)(y) has been executed and will take
effect on the consummation of such transaction and which certificate attaches
thereto a duly executed copy of such consent to jurisdiction; (b) immediately
after such transaction or each element of such series, ACNielsen and its
Subsidiaries or such Person, or such Person's Parent, if any, and its
Subsidiaries shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of ACNielsen and its Subsidiaries immediately prior to
such transaction or element; and (c) such transaction or series of transactions
is permitted under Section 3.4 below.
III.4. Limitation on Certain Transactions. (a) ACNielsen will
not enter into any Strategic Transaction or engage in any Business Combination
unless the Chief Executive Officer or the Chief Financial Officer of ACNielsen
delivers a certificate to Cognizant and D&B certifying that, after giving pro
forma effect to such Strategic Transaction or Business Combination, the Fixed
Charge Coverage Ratio of ACNielsen, or, in the case of a Business Combination,
the Fixed Charge Coverage Ratio of the continuing corporation following such
Business Combination (ACNielsen or such continuing corporation, as the case may
be, referred to as the "Relevant Party"), in each case calculated as set forth
in Section 3.4(c) below, is greater than 4 to 1, which certificate shall be
accompanied by a letter from the Relevant Party's independent accountants
confirming that such Fixed Charge Coverage Ratio has been correctly calculated
in accordance with the requirements hereof and based on financial statements
prepared in accordance with U.S. generally accepted accounting principles.
(a) In addition, ACNielsen will not enter into any Strategic
Transaction or engage in any Business Combination involving aggregate
consideration (including, without limitation, the assumption of indebtedness) in
excess of $50 million, unless the following conditions are met:
(i) the Board of Directors of each of ACNielsen,
Cognizant and D&B has received an opinion in writing from an internationally
recognized investment bank chosen by ACNielsen, to the effect that such
transaction is fair, from a financial point of view, to ACNielsen (without
considering, for purposes of such fairness opinion, any impact which such
transaction may have on the ACN Maximum Amount); and
(ii) in the case of a disposition of a business, an
equity interest in a business or the disposition of assets comprising a
business, which disposition does not involve the simultaneous equity investment
in a joint venture entity which is the acquirer of such business, equity
investment or assets, the consideration therefor is limited to cash,
<PAGE> 17
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Cash Equivalents and/or marketable securities which are freely tradable
on a public stock exchange or inter-dealer quotation system.
(b) The Fixed Charge Coverage Ratio shall be for the most
recent four consecutive full fiscal quarters ending prior to such certification,
taken as one period, and calculated on the assumptions that (i) any Indebtedness
to be incurred in connection with an acquisition or Business Combination had
been incurred on the first day of such four-quarter period, (ii) any other
Indebtedness incurred, repaid or retired by the Relevant Party and its
Subsidiaries since the beginning of such four-quarter period was incurred,
repaid or retired, as the case may be, on the first day of such four-quarter
period (except that, in making such computation, the amount of Indebtedness
under any revolving credit facility outstanding on the date of such calculation
shall be computed based on (A) the average daily balance of such Indebtedness
during such four-quarter period or during such shorter included period when such
facility was outstanding or (B) if such facility was created after the end of
such four-quarter period, the average daily balance of such Indebtedness during
the period from the date of creation of such facility to the date of the
calculation) and (iii) any acquisition or disposition by the Relevant Party or
its Subsidiaries of any assets out of the ordinary course of business or of any
company, division or line of business, in each case since the first day of its
last four completed fiscal quarters, had been consummated on such first day of
such four-quarter period.
(c) For purposes of the foregoing, any issuance or transfer of
any Capital Stock of a wholly owned Subsidiary which is a holder of obligations
of a Subsidiary that constitute Indebtedness shall be deemed an incurrence of
Indebtedness if such issuance or transfer results in such wholly owned
Subsidiary no longer being a wholly owned Subsidiary.
(d) Paragraphs (a) and (b) above shall not apply to any
transaction which is contemplated by the Distribution Agreement or any Ancillary
Agreement.
III.5. Limitation on Reincorporation. ACNielsen will not,
without the prior written consent of each of Cognizant and D&B, re-incorporate
or re-organize its corporate form under the laws of a jurisdiction other than
the State of Delaware unless ACNielsen, as re-incorporated or re-organized under
the laws of such other jurisdiction, could take substantially the same actions
without stockholder (or equity holder) consent or approval under the laws of
such jurisdiction and ACNielsen's then applicable certificate of incorporation,
charter, by-laws or other organizational documents as ACNielsen could take
without stockholder consent or approval under the General Corporation Law of the
State of Delaware and ACNielsen's certificate of incorporation and by-laws as of
the date hereof, and counsel reasonably satisfactory to Cognizant and D&B
confirms the foregoing in writing to the reasonable satisfaction of Cognizant
and D&B.
IV
JOINT DEFENSE PROVISIONS
<PAGE> 18
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IV.1. Counsel. (a) ACNielsen shall select counsel of record to
represent ACNielsen, D&B and Cognizant (which reference to Cognizant shall be
deemed to include I.M.S. International, Inc.) in the Lawsuit ("Counsel of
Record"). Counsel of Record shall communicate and consul with all parties in
connection with the defense of the Lawsuit, but shall be subject to direction
only from ACNielsen.
(a) D&B and Cognizant shall be free to retain at their own
expense counsel to monitor the Lawsuit ("D&B Counsel" and "Cognizant Counsel"
respectively, and, collectively, "Party Counsel"). Counsel of Record shall
communicate and consult with any Party Counsel. Neither D&B Counsel nor any
other counsel retained by D&B shall appear in the Lawsuit unless D&B shall have
become a Withdrawing Party under Section 4.1(g) hereof. Neither Cognizant
Counsel nor any other counsel retained by Cognizant shall appear in the Lawsuit
unless Cognizant shall have become a Withdrawing Party under Section 4.1(g)
hereof.
(b) Counsel of Record and Party Counsel shall make available
to other such counsel and any party confidential oral information and memoranda
or other documents related to the defense of the Lawsuit ("Defense Materials")
to the extent that they deem it prudent and consistent with the objectives of
the joint defense provided for herein.
(c) The Defense Materials obtained by counsel for any party
shall remain confidential and shall be protected from disclosure to any third
party except as provided herein.
(d) Counsel of Record and Party Counsel shall not disclose
Defense Materials or the contents thereof to anyone except their respective
clients, expert witnesses and consultants, counsel for other parties to the
Agreement, or attorneys, paralegals and staff within their firms, without first
obtaining the consent of Counsel of Record and Party Counsel whose clients (or
who themselves) may be entitled to claim any privilege with respect to such
materials. All persons permitted access to Defense Materials shall be
specifically advised that the Defense Materials are privileged and subject to
the terms of this Agreement.
(e) If any other person or entity requests or demands, by
subpoena or otherwise, any Defense Materials from any of the parties or their
counsel, the recipient of the request will immediately notify Counsel of Record
and Party Counsel, and each such counsel shall take all steps necessary to
permit the assertion of all applicable rights and privileges with respect to
such Defense Materials and shall cooperate fully with such other counsel in any
proceeding relating to the disclosure of Defense Materials.
(f) If D&B or Cognizant decides that it no longer wishes to
engage in a joint defense (a "Withdrawing Party"), the Withdrawing Party
immediately shall notify the other parties to the Agreement in writing and shall
simultaneously return to Counsel of Record the originals and all copies of
Defense Materials provided to it. In such event, the Withdrawing Party shall no
longer have any rights to obtain Defense Materials, but shall retain other
rights and obligations set forth in the Agreement, including the obligations to
share Defense Costs pursuant to Section 4.1(h) below, unless otherwise
specifically provided. The Withdrawing Party shall
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lose its right, if any, to indemnification by ACNielsen under this Agreement and
shall be liable for one third of the amount of any IRI Liabilities incurred in
the Lawsuit. The Withdrawing Party shall continue to be obligated to pay 50% of
any IRI Liabilities in excess of the amount payable by ACNielsen pursuant to
this Agreement. ACNielsen shall have the absolute right to continue to be
represented in all matters in and affecting the Lawsuit by Counsel of Record.
All parties expressly agree that Counsel of Record may continue to represent
parties that have not withdrawn, and all parties agree and acknowledge that
receipt and use of Defense Materials by Counsel of Record or any action taken or
knowledge gained by Counsel of Record in connection with its representation of a
Withdrawing Party shall not be grounds for disqualification of Counsel of Record
as counsel for any other party to this Agreement in the Lawsuit.
(g) It is the intention of the parties that ACNielsen, D&B and
Cognizant shall share equally the costs of defending the Lawsuit, including
attorneys' fees, expert witness and consultants fees and all other costs and
expenses for the defense of the Lawsuit (or prosecution of any counterclaim to
the Lawsuit) duly incurred by ACNielsen or Counsel of Record ("Defense Costs").
ACNielsen shall forward on a monthly basis a statement of the Defense Costs
incurred in the preceding month and D&B and Cognizant shall each reimburse
ACNielsen for one third of such Defense Costs promptly thereafter. In the event
that ACNielsen obtains reimbursement for Defense Costs from IRI in accordance
with a certain Settlement Agreement and Release between ACNielsen and IRI, dated
as of July 1, 1985, or for any other reason, ACNielsen shall repay to each of
D&B and Cognizant one third of such reimbursement up to the extent of their
respective payments.
(h) No party may enter into any settlement agreement in the
Lawsuit without express consent in writing of the other parties, except that
ACNielsen may, if it so chooses, enter into a full and final settlement of the
Lawsuit if ACNielsen agrees to pay the full amount of the settlement and obtains
a full and final release of D&B and Cognizant with respect to the Lawsuit. Such
a settlement shall impose no obligation on any other party to this Agreement
without the party's express consent in writing. In the event that any party
receives a settlement proposal with respect to the Lawsuit, it shall immediately
communicate the substance of the offer to the Counsel of Record.
(i) All other parties to this Agreement shall cooperate with
ACNielsen in the defense of the Lawsuit and the prosecution of any counterclaim
therein, including providing, or causing to be provided, records or witnesses as
soon as practicable after receipt of any request therefor from or on behalf of
ACNielsen.
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V
MISCELLANEOUS
V.1. Complete Agreement; Construction. This Agreement,
including the Exhibit hereto, shall constitute the entire agreement between the
parties with respect to the subject matter hereof and shall supersede all
previous negotiations, commitments and writings with respect to such subject
matter. In the event and to the extent that there shall be a conflict between
the provisions of this Agreement and the provisions of the Distribution
Agreement or any other agreement, this Agreement shall control.
V.2. Ancillary Agreements. This Agreement is not intended to
address, and should not be interpreted to address, the matters specifically and
expressly covered by the Ancillary Agreements.
V.3. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to the other parties.
V.4. Survival of Agreements. Except as otherwise contemplated
by this Agreement, all covenants and agreements of the parties contained in this
Agreement shall survive the Distribution Date.
V.5. Notices. All notices and other communications hereunder
shall be in writing and hand delivered or mailed by registered or certified mail
(return receipt requested) or sent by any means of electronic message
transmission with delivery confirmed (by voice or otherwise) to the parties at
the following addresses (or at such other addresses for a party as shall be
specified by like notice) and will be deemed given on the date on which such
notice is received:
To The Dun & Bradstreet Corporation:
One Diamond Hill Road
Murray Hill, NJ 07974
Telecopy: (908) 665-5803
Attn: General Counsel
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To Cognizant Corporation:
200 Nyala Farms
Westport, Connecticut 06880
Telecopy: (203) 222-4201
Attn: General Counsel
To ACNielsen Corporation:
177 Broad Street
Stamford, Connecticut 06901
Telecopy: (203) 961-3179
Attn: General Counsel
V.6. Waivers. The failure of any party to require strict
performance by any other party of any provision in this Agreement will not waive
or diminish that party's right to demand strict performance thereafter of that
or any other provision hereof.
V.7. Amendments. Subject to the terms of Sections 2.3(a) and
5.10 hereof, this Agreement may not be modified or amended except by an
agreement in writing signed by each of the parties hereto.
V.8. Assignment. This Agreement shall not be assignable, in
whole or in part, directly or indirectly, by any party hereto without the prior
written consent of the other parties hereto, and any attempt to assign any
rights or obligations arising under this Agreement without such consent shall be
void.
V.9. Successors and Assigns. The provisions to this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and permitted assigns.
V.10. Termination. Subject to the terms of Section 2.3(a),
this Agreement may be terminated and may be amended, modified or abandoned at
any time prior to the Distribution by and in the sole discretion of D&B. In the
event of such termination, no party shall have any liability of any kind to any
other party or any other person. Subject to Section 2.3(a), after the
Distribution, this Agreement may not be terminated except by an agreement in
writing signed by the parties.
V.11. Third Party Beneficiaries. Except as provided in Article
II, this Agreement is solely for the benefit of the parties hereto and their
respective Subsidiaries and Affiliates and should not be deemed to confer upon
third parties any remedy, claim, liability, reimbursement, claim of action or
other right in excess of those existing without reference to this Agreement.
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V.12. Title and Headings. Titles and headings to sections
herein are inserted for the convenience of reference only and are not intended
to be a part of or to affect the meaning or interpretation of this Agreement.
V.13. Exhibits. The Exhibit shall be construed with and as an
integral part of this Agreement to the same extent as if the same had been set
forth verbatim herein.
V.14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
V.15. Consent to Jurisdiction. Each of the parties irrevocably
submits to the exclusive jurisdiction of (a) the Supreme Court of the State of
New York, New York County, and (b) the United States District Court for the
Southern District of New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby.
Each of the parties agrees to commence any action, suit or proceeding relating
hereto either in the United States District Court for the Southern District of
New York or if such suit, action or other proceeding may not be brought in such
court for jurisdictional reasons, in the Supreme Court of the State of New York,
New York County. Each of the parties further agrees that service of any process,
summons, notice or document by U.S. registered mail to such party's respective
address set forth above shall be effective service of process for any action,
suit or proceeding in New York with respect to any matters to which it has
submitted to jurisdiction in this Section 5.15. Each of the parties irrevocably
and unconditionally waives any objection to the laying of venue of any action,
suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in (i) the Supreme Court of the State of New York, New York
County, or (ii) the United States District Court for the Southern District of
New York, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum. This
consent to jurisdiction shall not be construed to be and is not in any way an
exception to the agreement of the parties to resolve any dispute concerning the
determination ACN Maximum Amount exclusively through the arbitration procedures
set forth in Article II hereof.
V.16. Dispute Resolution. The investment banking firm engaged
pursuant to Section 2.2 shall have the authority to act as an arbitrator to
resolve any dispute concerning the ACN Maximum Amount or any other provision
contained in Article II. Any dispute or disputes arising out of or in connection
with Articles III, IV or V of this Agreement shall be settled in accordance with
the dispute resolution mechanisms set forth in Article VI of the Distribution
Agreement.
V.17. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity,
<PAGE> 23
23
legality and enforceability of the remaining provisions contained herein and
therein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions, the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
V.18. Further Assurances. From time to time, as and when
reasonably requested by any other party hereto, each party hereto shall execute
and deliver, or cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such further or other
actions as such other party may reasonably deem necessary or desirable to effect
the purposes of this Agreement and the transactions contemplated hereunder.
IN WITNESS WHEREOF, the parties have duly executed and entered
into this Agreement, as of the date first above written.
THE DUN & BRADSTREET CORPORATION
by /s/ Volney Taylor
---------------------------
Name: Volney Taylor
Title:
COGNIZANT CORPORATION
by /s/ Robert E. Weissman
---------------------------
Name: Robert E. Weissman
Title:
ACNIELSEN CORPORATION
by /s/ Nicholas L. Trivisonno
---------------------------
Name: Nicholas L. Trivisonno
Title:
<PAGE> 1
EXHIBIT 10(g)
1996 ACNIELSEN CORPORATION
NON-EMPLOYEE DIRECTORS' STOCK INCENTIVE PLAN
1. PURPOSE OF THE PLAN
The purpose of the Plan is to aid the Company in attracting,
retaining and compensating non-employee directors and to enable them to increase
their ownership of Shares. The Plan will be beneficial to the Company and its
stockholders since it will allow non-employee directors of the Board to have a
greater personal financial stake in the Company through the ownership of Shares,
in addition to underscoring their common interest with stockholders in
increasing the value of the Shares on a long-term basis.
2. DEFINITIONS
The following capitalized terms used in the Plan have the respective
meanings set forth in this Section:
(a) Act: The Securities Exchange Act of 1934, as amended, or any
successor thereto.
(b) Award: An Option or Share of Restricted Stock granted pursuant
to the Plan.
(c) Beneficial Owner: As such term is defined in Rule 13d-3 under
the Act (or any successor rule thereto).
(d) Board: The Board of Directors of the Company.
(e) Change in Control: The occurrence of any of the following
events:
(i) any Person (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company, or any company owned, directly or indirectly, by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company),
becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 20% or more of the
combined voting power of the Company's then-outstanding
securities;
(ii) during any period of twenty-four months (not including
any period prior to the Effective Date), individuals who at
the beginning of such period constitute the Board, and any new
director (other than (A) a director nominated by a Person who
has entered into an agreement with the Company to
<PAGE> 2
2
effect a transaction described in Sections 2(e)(i), (iii) or
(iv) of the Plan, (B) a director nominated by any Person
(including the Company) who publicly announces an intention to
take or to consider taking actions (including, but not limited
to, an actual or threatened proxy contest) which if
consummated would constitute a Change in Control or (C) a
director nominated by any Person who is the Beneficial Owner,
directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of the
Company's securities) whose election by the Board or
nomination for election by the Company's stockholders was
approved in advance by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors
at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason
to constitute at least a majority thereof;
(iii) the stockholders of the Company approve any transaction
or series of transactions under which the Company is merged or
consolidated with any other company, other than a merger or
consolidation (A) which would result in the voting securities
of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving
entity) more than 66 2/3% of the combined voting power of the
voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation and
(B) after which no Person holds 20% or more of the combined
voting power of the then-outstanding securities of the Company
or such surviving entity; or
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets.
(f) Code: The Internal Revenue Code of 1986, as amended, or any
successor thereto.
(g) Committee: The Compensation Committee of the Board.
(h) Company: ACNielsen Corporation, a Delaware corporation.
<PAGE> 3
3
(i) D&B: The Dun & Bradstreet Corporation, a Delaware corporation.
(j) Disability: Inability to continue to serve as a non-employee
director of the Board due to a medically determinable physical
or mental impairment which constitutes a permanent and total
disability, as determined by the Committee (excluding any
member thereof whose own Disability is at issue in a given
case) based upon such evidence as it deems necessary and
appropriate. A Participant shall not be considered disabled
unless he or she furnishes such medical or other evidence of
the existence of the Disability as the Committee, in its sole
discretion, may require.
(k) Effective Date: The date on which the Plan takes effect, as
defined pursuant to Section 13 of the Plan.
(l) Fair Market Value: On a given date, the arithmetic mean of the
high and low prices of the Shares as reported on such date on
the Composite Tape of the principal national securities
exchange on which such Shares are listed or admitted to
trading, or, if no Composite Tape exists for such national
securities exchange on such date, then on the principal
national securities exchange on which such Shares are listed
or admitted to trading, or, if the Shares are not listed or
admitted on a national securities exchange, the arithmetic
mean of the per Share closing bid price and per Share closing
asked price on such date as quoted on the National Association
of Securities Dealers Automated Quotation System (or such
market in which such prices are regularly quoted), or, if
there is no market on which the Shares are regularly quoted,
the Fair Market Value shall be the value established by the
Committee in good faith. If no sale of Shares shall have been
reported on such Composite Tape or such national securities
exchange on such date or quoted on the National Association of
Securities Dealers Automated Quotation System on such date,
then the immediately preceding date on which sales of the
Shares have been so reported or quoted shall be used.
(m) Option: A stock option granted pursuant to Section 6 of the
Plan.
(n) Option Price: The purchase price per Share of an Option, as
determined pursuant to Section 6(b) of the Plan.
<PAGE> 4
4
(o) Participant: Any director of the Company who is not an
employee of the Company or any Subsidiary of the Company as of
the date that an Award is granted.
(p) Person: As such term is used for purposes of Section 13(d) or
14(d) of the Act (or any successor section thereto).
(q) Plan: The 1996 ACNielsen Corporation Non-Employee Directors'
Stock Incentive Plan.
(r) Restricted Stock: A Share of restricted stock granted pursuant
to Section 7 of the Plan.
(s) Retirement: Termination of service with the Company after such
Participant has attained age 70, regardless of the length of
such Participant's service; or, with the prior written consent
of the Committee (excluding any member thereof whose own
Retirement is at issue in a given case), termination of
service at an earlier age after the Participant has completed
six or more years of service with the Company.
(t) Shares: Shares of common stock, par value $0.01 per share, of
the Company.
(u) Spinoff Date: The date on which the Shares that are owned by
D&B are distributed to the holders of record of shares of D&B.
(v) Subsidiary: A subsidiary corporation, as defined in Section
424(f) of the Code (or any successor section thereto).
3. SHARES SUBJECT TO THE PLAN
The total number of Shares which may be issued under the Plan is
300,000. The Shares may consist, in whole or in part, of unissued Shares or
treasury Shares. The issuance of Awards or the payment of cash upon exercise of
an Award shall reduce the total number of Shares available under the Plan, as
applicable. Shares which are (a) withheld pursuant to Section 6(d)(iv) of the
Plan or (b) subject to Awards which terminate or lapse may be granted again
under the Plan.
4. ADMINISTRATION
The Plan shall be administered by the Committee, which may delegate
its duties and powers in whole or in part to any subcommittee thereof consisting
solely of at least two "non-
<PAGE> 5
5
employee directors" within the meaning of Rule 16b-3 under the Act (or any
successor rule thereto). The Committee is authorized to interpret the Plan, to
establish, amend and rescind any rules and regulations relating to the Plan, and
to make any other determinations that it deems necessary or desirable for the
administration of the Plan. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan in the manner and to the
extent the Committee deems necessary or desirable. Any decision of the Committee
in the interpretation and administration of the Plan, as described herein, shall
lie within its sole and absolute discretion and shall be final, conclusive and
binding on all parties concerned (including, but not limited to, Participants
and their beneficiaries or successors).
5. ELIGIBILITY
All Participants shall be eligible to participate under this Plan.
6. TERMS AND CONDITIONS OF OPTIONS
Options granted under the Plan shall be non-qualified stock options
for federal income tax purposes, as evidenced by the related Option agreements,
and shall be subject to the foregoing and the following terms and conditions and
to such other terms and conditions, not inconsistent therewith, as the Committee
shall determine:
(a) Grants. A Participant may receive, on such dates as determined
by the Committee in its sole discretion, grants consisting of such number of
Options as determined by the Committee in its sole discretion.
(b) Option Price. The Option Price per Share shall be determined by
the Committee, but shall not be less than 100% of the Fair Market Value of the
Shares on the date an Option is granted.
(c) Exercisability. Options granted under the Plan shall be
exercisable at such time and upon such terms and conditions as may be determined
by the Committee, but in no event shall an Option be exercisable more than ten
years after the date it is granted.
(d) Exercise of Options. Except as otherwise provided in the Plan or
in a related Option agreement, an Option may be exercised for all, or from time
to time any part, of the Shares for which it is then exercisable. For purposes
of Section 6 of the Plan, the exercise date of an Option shall be the later of
the date a notice of exercise is received by the Company and, if applicable, the
date payment is received by the Company pursuant
<PAGE> 6
6
to clauses (i), (ii) or (iii) in the following sentence. The purchase price for
the Shares as to which an Option is exercised shall be paid to the Company in
full at the time of exercise at the election of the Participant (i) in cash,
(ii) in Shares having a Fair Market Value equal to the aggregate Option Price
for the Shares being purchased and satisfying such other requirements as may be
imposed by the Committee, (iii) partly in cash and partly in such Shares, (iv)
through the withholding of Shares (which would otherwise be delivered to the
Participant) with an aggregate Fair Market Value on the exercise date equal to
the aggregate Option Price or (v) through the delivery of irrevocable
instructions to a broker to deliver promptly to the Company an amount equal to
the aggregate Option Price for the Shares being purchased. No Participant shall
have any rights to dividends or other rights of a stockholder with respect to
Shares subject to an Option until the Participant has given written notice of
exercise of the Option, paid in full for such Shares and, if applicable, has
satisfied any other conditions imposed by the Committee pursuant to the Plan.
(e) Exercisability Upon Termination of Service by Death. If a
Participant's service with the Company and its Subsidiaries terminates by reason
of death after the date of grant of an Option, (i) the unexercised portion of
such Option shall immediately vest in full and (ii) such portion may thereafter
be exercised during the shorter of (A) the remaining stated term of the Option
or (B) five years after the date of death.
(f) Exercisability Upon Termination of Service by Disability or
Retirement. If a Participant's service with the Company and its Subsidiaries
terminates by reason of Disability or Retirement after the date of grant of an
Option, (i) the unexercised portion of such Option shall immediately vest in
full and (ii) such portion may thereafter be exercised during the shorter of (A)
the remaining stated term of the Option or (B) five years after the date of such
termination of service; provided, however, that if a Participant dies within a
period of five years after such termination of service, the unexercised portion
of the Option may thereafter be exercised, during the shorter of (i) the
remaining stated term of the Option or (ii) the period that is the longer of (A)
five years after the date of such termination of service or (B) one year after
the date of death.
(g) Effect of Other Termination of Service. If a Participant's
service with the Company and its Subsidiaries terminates for any reason other
than death, Disability or Retirement after the date of grant of an Option as
described above, the unexercised portion of an Option may thereafter be
exercised during the period ending ninety days after the date of such
termination of service, but only to the extent to which such Option was
exercisable at the time of such termination of service.
<PAGE> 7
7
7. TERMS AND CONDITIONS OF RESTRICTED STOCK
Restricted Stock granted under the Plan shall be subject to the
foregoing and the following terms and conditions and to such other terms and
conditions, not inconsistent therewith, as the Committee shall determine:
(a) Grants. A Participant may receive, on such dates as determined
by the Committee in its sole discretion, grants consisting of such amounts of
Restricted Stock as determined by the Committee in its sole discretion.
(b) Restrictions. Restricted Stock granted under the Plan may not be
sold, transferred, pledged, assigned or otherwise disposed of under any
circumstances; provided, however, that the foregoing restrictions shall elapse
at such time and upon such terms and conditions as may be specified by the
Committee in the related Award agreement(s).
(c) Acceleration. Notwithstanding anything in the Plan to the
contrary, (i) the restrictions set forth in Section 7(b) of the Plan shall
automatically elapse in the event that a Participant terminates service with the
Company as a result of death or Disability and (ii) the Committee (excluding any
member thereof whose own Award is at issue in a given case) may, in its sole
discretion, accelerate the elapsing of the restrictions set forth in Section
7(b) of the Plan in the event that a Participant terminates service with the
Company for any other reason. In the absence of such acceleration, all Shares of
Restricted Stock as to which restrictions have not previously elapsed pursuant
to Section 7(b) of the Plan shall be forfeited upon the termination of a
Participant's service with the Company for reasons other than death or
Disability.
8. ADJUSTMENTS UPON CERTAIN EVENTS
Notwithstanding any other provisions in the Plan to the contrary,
the following provisions shall apply to all Awards granted under the Plan:
(a) Generally. In the event of any change in the outstanding Shares
after the Effective Date by reason of any Share dividend or split,
reorganization, recapitalization, merger, consolidation, spin-off, combination
or exchange of Shares or other corporate exchange, or any distribution to
stockholders of Shares other than regular cash dividends, the Committee in its
sole discretion and without liability to any person may make such substitution
or adjustment, if any, as it deems to be equitable, as to (i) the number or kind
of Shares or other securities issued or reserved for issuance pursuant to the
Plan or pursuant to outstanding Awards, (ii) the Option Price and/or (iii) any
other affected terms of such Awards.
<PAGE> 8
8
(b) Change in Control. In the event of a Change in Control, the
Committee in its sole discretion and without liability to any person may take
such actions, if any, as it deems necessary or desirable with respect to any
Award (including, without limitation, (i) the acceleration of an Award, (ii) the
payment of a cash amount in exchange for the cancellation of an Award and/or
(iii) the requiring of the issuance of substitute Awards that will substantially
preserve the value, rights and benefits of any affected Awards previously
granted hereunder) as of the date of the consummation of the Change in Control.
9. SUCCESSORS AND ASSIGNS
The Plan shall be binding on all successors and assigns of the
Company and a Participant, including without limitation, the estate of such
Participant and the executor, administrator or trustee of such estate, or any
receiver or trustee in bankruptcy or representative of the Participant's
creditors.
10. AMENDMENTS OR TERMINATION
The Board may amend, alter or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which would impair the
rights of any Participant under any Award theretofore granted without such
Participant's consent.
11. NONTRANSFERABILITY OF AWARDS
An Award shall not be transferable or assignable by the Participant
otherwise than by will or by the laws of descent and distribution. During the
lifetime of a Participant, an Award shall be exercisable only by such
Participant. An Award exercisable after the death of a Participant may be
exercised by the legatees, personal representatives or distributees of the
Participant. Notwithstanding anything to the contrary herein, the Committee, in
its sole discretion, shall have the authority to waive this Section 11 (or any
part thereof) to the extent that this Section 11 (or any part thereof) is not
required under the rules promulgated under any law, rule or regulation
applicable to the Company.
12. CHOICE OF LAW
The Plan shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed
in the State of New York.
<PAGE> 9
9
13. EFFECTIVENESS OF THE PLAN
The Plan shall be effective as of the Spinoff Date.
<PAGE> 1
EXHIBIT 10(h)
1996 ACNIELSEN CORPORATION
NON-EMPLOYEE DIRECTORS' DEFERRED COMPENSATION PLAN
1. PURPOSE OF THE PLAN
The purpose of the Plan is to enhance the Company's ability to
attract and retain talented individuals to serve as members of the Board and to
promote a greater alignment of interests between non-employee directors and the
shareholders of the Company.
2. DEFINITIONS
The following capitalized terms used in the Plan have the respective
meanings set forth in this Section:
(a) Act: The Securities Exchange Act of 1934, as amended, or any
successor thereto.
(b) Annual Deferral Amount: As such term is defined in Section
5(a) of the Plan.
(c) Award: A Deferred Share Unit or Deferred Cash granted pursuant
to the Plan.
(d) Beneficial Owner: As such term is defined in Rule 13d-3 under
the Act (or any successor rule thereto).
(e) Board: The Board of Directors of the Company.
(f) Change in Control: The occurrence of any of the following
events:
(i) any Person (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company, or any company owned, directly or indirectly, by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company),
becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 20% or more of the
combined voting power of the Company's then-outstanding
securities;
(ii) during any period of twenty-four months (not including
any period prior to the Effective Date), individuals who at
the beginning of such period constitute the Board, and any new
director (other than (A) a director nominated by a Person who
has entered into an agreement with the Company to
<PAGE> 2
2
effect a transaction described in Sections 2(f)(i), (iii) or
(iv) of the Plan, (B) a director nominated by any Person
(including the Company) who publicly announces an intention to
take or to consider taking actions (including, but not limited
to, an actual or threatened proxy contest) which if
consummated would constitute a Change in Control or (C) a
director nominated by any Person who is the Beneficial Owner,
directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of the
Company's securities) whose election by the Board or
nomination for election by the Company's stockholders was
approved in advance by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors
at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason
to constitute at least a majority thereof;
(iii) the stockholders of the Company approve any transaction
or series of transactions under which the Company is merged or
consolidated with any other company, other than a merger or
consolidation (A) which would result in the voting securities
of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving
entity) more than 66 2/3% of the combined voting power of the
voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation and
(B) after which no Person holds 20% or more of the combined
voting power of the then-outstanding securities of the Company
or such surviving entity; or
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets.
(g) Code: The Internal Revenue Code of 1986, as amended, or any
successor thereto.
(h) Committee: The Compensation Committee of the Board.
(i) Company: ACNielsen Corporation, a Delaware corporation.
<PAGE> 3
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(j) D&B: The Dun & Bradstreet Corporation, a Delaware corporation.
(k) Deferred Cash: A bookkeeping entry credited in accordance with
an election made by a Participant pursuant to Section 5 of the
Plan.
(l) Deferred Share Unit: A bookkeeping entry, equivalent in value
to one Share, credited in accordance with an election made by
a Participant pursuant to Section 5 of the Plan.
(m) Determination Date: As such term is defined in Section 6 of
the Plan.
(n) Effective Date: The date on which the Plan takes effect, as
defined pursuant to Section 13 of the Plan.
(o) Election Date: The date on which a Participant files an
election with the Secretary of the Company pursuant to Section
5 of the Plan.
(p) Fair Market Value: On a given date, the arithmetic mean of the
high and low prices of the Shares as reported on such date on
the Composite Tape of the principal national securities
exchange on which such Shares are listed or admitted to
trading, or, if no Composite Tape exists for such national
securities exchange on such date, then on the principal
national securities exchange on which such Shares are listed
or admitted to trading, or, if the Shares are not listed or
admitted on a national securities exchange, the arithmetic
mean of the per Share closing bid price and per Share closing
asked price on such date as quoted on the National Association
of Securities Dealers Automated Quotation System (or such
market in which such prices are regularly quoted), or, if
there is no market on which the Shares are regularly quoted,
the Fair Market Value shall be the value established by the
Committee in good faith. If no sale of Shares shall have been
reported on such Composite Tape or such national securities
exchange on such date or quoted on the National Association of
Securities Dealers Automated Quotation System on such date,
then the immediately preceding date on which sales of the
Shares have been so reported or quoted shall be used.
<PAGE> 4
4
(q) First Trading Date: The first date on which the Shares are
traded regular way on the principal national securities
exchange on which such Shares are listed or admitted to
trading.
(r) Participant: Any director of the Company who is not an
employee of the Company or any Subsidiary of the Company (i)
as of any Election Date and (ii) during any years of service
covered by the election made on such Election Date.
(s) Person: As such term is used for purposes of Section 13(d) or
14(d) of the Act (or any successor section thereto).
(t) Plan: The 1996 ACNielsen Corporation Non-Employee Directors'
Deferred Compensation Plan.
(u) Prime Rate: The rate of interest per annum publicly announced
from time to time by The Chase Manhattan Bank as its prime
rate in effect at its principal office in New York City;
provided that each change in the Prime Rate shall be effective
from and including the date such change is publicly announced
as being effective.
(v) Shares: Shares of common stock, par value $0.01 per Share, of
the Company.
(w) Spinoff Date: The date on which the Shares that are owned by
D&B are distributed to the holders of record of shares of D&B.
(x) Subsidiary: A subsidiary corporation, as defined in Section
424(f) of the Code (or any successor section thereto).
3. ADMINISTRATION
The Plan shall be administered by the Committee, which may delegate
its duties and powers in whole or in part to any subcommittee thereof consisting
solely of at least two "non-employee directors" within the meaning of Rule 16b-3
under the Act (or any successor rule thereto). The Committee is authorized to
interpret the Plan, to establish, amend and rescind any rules and regulations
relating to the Plan, and to make any other determinations that it deems
necessary or desirable for the administration of the Plan. The Committee may
correct any defect or supply any omission or reconcile any inconsistency in the
Plan in the manner and to the extent the Committee deems necessary or desirable.
Any decision of the Committee in the interpretation and administration of the
Plan, as described herein, shall lie within its sole and absolute discretion and
shall be final,
<PAGE> 5
5
conclusive and binding on all parties concerned (including, but not limited to,
Participants and their beneficiaries or successors).
4. ELIGIBILITY
All Participants shall be eligible to participate under this Plan.
5. VOLUNTARY DEFERRAL OF CASH COMPENSATION
A Participant may voluntarily elect to defer his or her cash
compensation (including, but not limited to, annual retainer, board meeting
fees, committee meeting fees and committee chairman fees) in the following
manner:
(a) Method of Election. In order to make a voluntary election
pursuant to the Plan, the Participant must complete and deliver to the Secretary
of the Company a written election, not later than 30 days after the date on
which he or she commences service as a director of the Company (or, in
subsequent years, not later than the anniversary of the normal commencement date
for such director's term), designating (i) the portion of his or her cash
compensation for a year of service as a director that is to be deferred (the
"Annual Deferral Amount") and (ii) the portion of the Annual Deferral Amount
that is to be deferred into (A) Deferred Share Units and/or (B) Deferred Cash.
Such an election shall only be effective with respect to (i) the annual retainer
and (ii) any other fees earned after the date of the election. Such election
shall remain effective for all future years of service unless the Participant
makes a new election in a subsequent year.
(b) Deferred Share Units. If a Participant elects to defer his or
her Annual Deferral Amount into Deferred Share Units, such Participant will have
Deferred Share Units credited (as of each date on which his or her cash
compensation would otherwise have been paid) to a Deferred Share Unit account
maintained for him or her on the books of the Company. The number of Deferred
Share Units (including fractional Deferred Share Units) to be credited shall be
determined by dividing (i) the amount of cash compensation to be deferred into
Deferred Share Units by (ii) the Fair Market Value of one Share on the date
credited. Deferred Share Units shall be credited with dividend equivalents when
dividends are paid on Common Shares, and such dividend equivalents shall be
converted into additional Deferred Share Units based on the Fair Market Value of
Shares on the date credited. Notwithstanding anything to the contrary in this
Section 5(b), the Fair Market Value of one Share on any date prior to the First
Trading Date shall be the Fair Market Value of one Share on the First Trading
Date.
<PAGE> 6
6
(c) Deferred Cash. If a Participant makes a voluntary election to
defer his or her Annual Deferral Amount into Deferred Cash, such Participant
will have Deferred Cash credited (as of each date on which his or her cash
compensation would otherwise have been paid) to a Deferred Cash account
maintained for him or her on the books of the Company. The amount of Deferred
Cash to be credited shall equal the amount of cash compensation to be deferred
into Deferred Cash. A Participant's account shall be credited with additional
Deferred Cash equal to the amount of notional interest earned on the account,
assuming that such interest is earned at the Prime Rate and compounded on an
annual basis.
6. TERMINATION OF BOARD SERVICE
No later than the first business day of the calendar year
immediately following the date on which a Participant terminates service with
the Company (the "Determination Date"), the Participant shall receive (a) a lump
sum payment in Shares equal in number to the Deferred Share Units credited to
the Participant's Deferred Share Unit account (provided, however, that any
fractional Shares shall be paid in cash based on the Fair Market Value of a
Share as of the Determination Date) and (b) a lump sum payment in cash equal to
the Deferred Cash credited to the Participant's Deferred Cash account.
7. NONTRANSFERABILITY OF UNITS
Awards shall not be transferable or assignable by the Participant
otherwise than by will or by the laws of descent and distribution. During the
lifetime of a Participant, Awards shall be payable only to such Participant.
Awards payable after the death of a Participant may be paid to the legatees,
personal representatives or distributees of the Participant.
8. UNFUNDED PLAN
Unless otherwise determined by the Committee, the Plan shall be
unfunded. To the extent any individual holds any rights by virtue of an Award
granted under the Plan, such rights (unless otherwise determined by the
Committee) shall be no greater than the rights of an unsecured general creditor
of the Company.
9. ADJUSTMENTS UPON CERTAIN EVENTS
Notwithstanding any other provisions in the Plan to the contrary,
the following provisions shall apply to Awards:
(a) Generally. In the event of any change in the outstanding Shares
after the Effective Date by reason of any
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Share dividend or split, reorganization, recapitalization, merger,
consolidation, spin-off, combination or exchange of Shares or other corporate
exchange, or any distribution to stockholders of Shares other than regular cash
dividends, the Committee in its sole discretion and without liability to any
person may make such substitution or adjustment, if any, as it deems to be
equitable, as to any Deferred Share Units granted under the Plan.
(b) Change in Control. In the event of a Change in Control, the
Committee in its sole discretion and without liability to any person may take
such actions, if any, as it deems necessary or desirable with respect to any
Awards (including, without limitation, (i) the acceleration of Awards, (ii) the
payment of a cash amount in exchange for the cancellation of Awards and/or (iii)
the requiring of the issuance of substitute Awards that will substantially
preserve the value, rights and benefits of any affected Awards previously
granted hereunder) as of the date of the consummation of the Change in Control.
10. SUCCESSORS AND ASSIGNS
The Plan shall be binding on all successors and assigns of the
Company and a Participant, including without limitation, the estate of such
Participant and the executor, administrator or trustee of such estate, or any
receiver or trustee in bankruptcy or representative of the Participant's
creditors.
11. AMENDMENTS OR TERMINATION
The Board may amend, alter or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which would impair the
rights of any Participant under any Awards theretofore granted without such
Participant's consent.
12. CHOICE OF LAW
The Plan shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed
in the State of New York.
13. EFFECTIVENESS OF THE PLAN
The Plan shall be effective as of the date of its adoption by the
Board.
<PAGE> 1
EXHIBIT 10(I)
1996 ACNIELSEN CORPORATION
KEY EMPLOYEES' STOCK INCENTIVE PLAN
1. PURPOSE OF THE PLAN
The purpose of the Plan is to aid the Company and its Subsidiaries
in securing and retaining key employees of outstanding ability and to motivate
such employees to exert their best efforts on behalf of the Company and its
Subsidiaries by providing incentives through the granting of Awards. The Company
expects that it will benefit from the added interest which such key employees
will have in the welfare of the Company as a result of their proprietary
interest in the Company's success.
2. DEFINITIONS
The following capitalized terms used in the Plan have the respective
meanings set forth in this Section:
(a) Act: The Securities Exchange Act of 1934, as amended, or any
successor thereto.
(b) Award: An Option, Stock Appreciation Right or Other
Stock-Based Award granted pursuant to the Plan.
(c) Beneficial Owner: As such term is defined in Rule 13d-3 under
the Act (or any successor rule thereto).
(d) Board: The Board of Directors of the Company.
(e) Change in Control: The occurrence of any of the following
events:
(i) any Person (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company, or any company owned, directly or indirectly, by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company),
becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 20% or more of the
combined voting power of the Company's then-outstanding
securities;
(ii) during any period of twenty-four months (not including
any period prior to the Effective Date), individuals who at
the beginning of such period constitute the Board, and any new
director (other than (A) a director nominated by a Person who
has
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entered into an agreement with the Company to effect a
transaction described in Sections 2(e)(i), (iii) or (iv) of
the Plan, (B) a director nominated by any Person (including
the Company) who publicly announces an intention to take or to
consider taking actions (including, but not limited to, an
actual or threatened proxy contest) which if consummated would
constitute a Change in Control or (C) a director nominated by
any Person who is the Beneficial Owner, directly or
indirectly, of securities of the Company representing 10% or
more of the combined voting power of the Company's securities)
whose election by the Board or nomination for election by the
Company's stockholders was approved in advance by a vote of at
least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or
whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a
majority thereof;
(iii) the stockholders of the Company approve any transaction
or series of transactions under which the Company is merged or
consolidated with any other company, other than a merger or
consolidation (A) which would result in the voting securities
of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving
entity) more than 66 2/3% of the combined voting power of the
voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation and
(B) after which no Person holds 20% or more of the combined
voting power of the then-outstanding securities of the Company
or such surviving entity; or
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets.
(f) Code: The Internal Revenue Code of 1986, as amended, or any
successor thereto.
(g) Committee: The Compensation Committee of the Board.
(h) Company: ACNielsen Corporation, a Delaware corporation.
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(i) D&B: The Dun & Bradstreet Corporation, a Delaware corporation.
(j) Disability: Inability to engage in any substantial gainful
activity by reason of a medically determinable physical or
mental impairment which constitutes a permanent and total
disability, as defined in Section 22(e)(3) of the Code (or any
successor section thereto). The determination whether a
Participant has suffered a Disability shall be made by the
Committee based upon such evidence as it deems necessary and
appropriate. A Participant shall not be considered disabled
unless he or she furnishes such medical or other evidence of
the existence of the Disability as the Committee, in its sole
discretion, may require.
(k) Effective Date: The date on which the Plan takes effect, as
defined pursuant to Section 17 of the Plan.
(l) Fair Market Value: On a given date, the arithmetic mean of the
high and low prices of the Shares as reported on such date on
the Composite Tape of the principal national securities
exchange on which such Shares are listed or admitted to
trading, or, if no Composite Tape exists for such national
securities exchange on such date, then on the principal
national securities exchange on which such Shares are listed
or admitted to trading, or, if the Shares are not listed or
admitted on a national securities exchange, the arithmetic
mean of the per Share closing bid price and per Share closing
asked price on such date as quoted on the National Association
of Securities Dealers Automated Quotation System (or such
market in which such prices are regularly quoted), or, if
there is no market on which the Shares are regularly quoted,
the Fair Market Value shall be the value established by the
Committee in good faith. If no sale of Shares shall have been
reported on such Composite Tape or such national securities
exchange on such date or quoted on the National Association of
Securities Dealers Automated Quotation System on such date,
then the immediately preceding date on which sales of the
Shares have been so reported or quoted shall be used.
(m) LSAR: A limited stock appreciation right granted pursuant to
Section 8(d) of the Plan.
(n) Other Stock-Based Awards: Awards granted pursuant to Section 9
of the Plan.
<PAGE> 4
4
(o) Option: A stock option granted pursuant to Section 7 of the
Plan.
(p) Option Price: The purchase price per Share of an Option, as
determined pursuant to Section 7(a) of the Plan.
(q) Participant: An individual who is selected by the Committee to
participate in the Plan pursuant to Section 5 of the Plan.
(r) Performance-Based Awards: Certain Other Stock-Based Awards
granted pursuant to Section 9(b) of the Plan.
(s) Person: As such term is used for purposes of Section 13(d) or
14(d) of the Act (or any successor section thereto).
(t) Plan: The 1996 ACNielsen Corporation Key Employees' Stock
Incentive Plan.
(u) Retirement: Termination of employment with the Company or a
Subsidiary after such Participant has attained age 55 and ten
years of service with the Company; or, with the prior written
consent of the Committee that such termination be treated as a
Retirement hereunder, termination of employment under other
circumstances.
(v) Shares: Shares of common stock, par value $0.01 per Share, of
the Company.
(w) Spinoff Date: The date on which the Shares that are owned by
D&B are distributed to the holders of record of shares of D&B.
(x) Stock Appreciation Right: A stock appreciation right granted
pursuant to Section 8 of the Plan.
(y) Subsidiary: A subsidiary corporation, as defined in Section
424(f) of the Code (or any successor section thereto).
3. SHARES SUBJECT TO THE PLAN
The total number of Shares which may be issued under the Plan is
12,000,000. The maximum number of Shares for which Awards may be granted during
a calendar year to any Participant shall be 700,000. The Shares may consist, in
whole or in part, of unissued Shares or treasury Shares. The issuance of Shares
or the payment of cash upon the exercise of an Award shall reduce the total
number of Shares available under the Plan, as
<PAGE> 5
5
applicable. Shares which are subject to Awards which terminate or lapse may be
granted again under the Plan.
4. ADMINISTRATION
The Plan shall be administered by the Committee, which may delegate
its duties and powers in whole or in part to any subcommittee thereof consisting
solely of at least two individuals who are each "non-employee directors" within
the meaning of Rule 16b-3 under the Act (or any successor rule thereto) and
"outside directors" within the meaning of Section 162(m) of the Code (or any
successor section thereto). The Committee is authorized to interpret the Plan,
to establish, amend and rescind any rules and regulations relating to the Plan,
and to make any other determinations that it deems necessary or desirable for
the administration of the Plan. The Committee may correct any defect or supply
any omission or reconcile any inconsistency in the Plan in the manner and to the
extent the Committee deems necessary or desirable. Any decision of the Committee
in the interpretation and administration of the Plan, as described herein, shall
lie within its sole and absolute discretion and shall be final, conclusive and
binding on all parties concerned (including, but not limited to, Participants
and their beneficiaries or successors). The Committee shall require payment of
any amount it may determine to be necessary to withhold for federal, state,
local or other taxes as a result of the exercise of an Award. Unless the
Committee specifies otherwise, the Participant may elect to pay a portion or all
of such withholding taxes by (a) delivery in Shares or (b) having Shares
withheld by the Company from any Shares that would have otherwise been received
by the Participant. The number of Shares so delivered or withheld shall have an
aggregate Fair Market Value sufficient to satisfy the applicable withholding
taxes. If the chief executive officer of the Company is a member of the Board,
the Board by specific resolution may constitute such chief executive officer as
a committee of one which shall have the authority to grant Awards of up to an
aggregate of 10,000 Shares in each calendar year to each Participant who is not
subject to the rules promulgated under Section 16 of the Act (or any successor
section thereto); provided, however, that (a) such chief executive officer shall
notify the Committee of any such grants made pursuant to this Section 4 and (b)
the chairman of the Committee shall approve any such grants made pursuant to
this Section 4.
5. ELIGIBILITY
Key employees (but not members of the Committee or any person who
serves only as a director) of the Company and its Subsidiaries, who are from
time to time responsible for the management, growth and protection of the
business of the Company and its Subsidiaries, are eligible to be granted Awards
under the
<PAGE> 6
6
Plan. Participants shall be selected from time to time by the Committee, in its
sole discretion, from among those eligible, and the Committee shall determine,
in its sole discretion, the number of Shares to be covered by the Awards granted
to each Participant.
6. LIMITATIONS
No Award may be granted under the Plan after the tenth anniversary
of the Effective Date, but Awards theretofore granted may extend beyond that
date.
7. TERMS AND CONDITIONS OF OPTIONS
Options granted under the Plan shall be, as determined by the
Committee, non-qualified, incentive or other stock options for federal income
tax purposes, as evidenced by the related Award agreements, and shall be subject
to the foregoing and the following terms and conditions and to such other terms
and conditions, not inconsistent therewith, as the Committee shall determine:
(a) Option Price. The Option Price per Share shall be determined by
the Committee, but shall not be less than 100% of the Fair Market Value of the
Shares on the date an Option is granted.
(b) Exercisability. Options granted under the Plan shall be
exercisable at such time and upon such terms and conditions as may be determined
by the Committee, but in no event shall an Option be exercisable more than ten
years after the date it is granted.
(c) Exercise of Options. Except as otherwise provided in the Plan or
in an Award agreement, an Option may be exercised for all, or from time to time
any part, of the Shares for which it is then exercisable. For purposes of
Section 7 of the Plan, the exercise date of an Option shall be the later of the
date a notice of exercise is received by the Company and, if applicable, the
date payment is received by the Company pursuant to clauses (i), (ii) or (iii)
in the following sentence. The purchase price for the Shares as to which an
Option is exercised shall be paid to the Company in full at the time of exercise
at the election of the Participant (i) in cash, (ii) in Shares having a Fair
Market Value equal to the aggregate Option Price for the Shares being purchased
and satisfying such other requirements as may be imposed by the Committee, (iii)
partly in cash and partly in such Shares, (iv) through the withholding of Shares
(which would otherwise be delivered to the Participant) with an aggregate Fair
Market Value on the exercise date equal to the aggregate Option Price or (v)
through the delivery of irrevocable instructions to a broker to deliver promptly
to the Company an amount equal to
<PAGE> 7
7
the aggregate Option Price for the Shares being purchased. No Participant shall
have any rights to dividends or other rights of a stockholder with respect to
Shares subject to an Option until the Participant has given written notice of
exercise of the Option, paid in full for such Shares and, if applicable, has
satisfied any other conditions imposed by the Committee pursuant to the Plan.
(d) Exercisability Upon Termination of Employment by Death. If a
Participant's employment with the Company and its Subsidiaries terminates by
reason of death after the date of grant of an Option, (i) the unexercised
portion of such Option shall immediately vest in full and (ii) such portion may
thereafter be exercised during the shorter of (A) the remaining stated term of
the Option or (B) five years after the date of death.
(e) Exercisability Upon Termination of Employment by Disability or
Retirement. If a Participant's employment with the Company and its Subsidiaries
terminates by reason of Disability or Retirement after the date of grant of an
Option, (i) the unexercised portion of such Option shall immediately vest in
full and (ii) such portion may thereafter be exercised during the shorter of (A)
the remaining stated term of the Option or (B) five years after the date of such
termination of employment; provided, however, that if a Participant dies within
a period of five years after such termination of employment, an unexercised
Option may thereafter be exercised, during the shorter of (i) the remaining
stated term of the Option or (ii) the period that is the longer of (A) five
years after the date of such termination of employment or (B) one year after the
date of death.
(f) Effect of Other Termination of Employment. Except as otherwise
provided in an Award agreement, if a Participant's employment with the Company
and its Subsidiaries terminates for any reason other than death, Disability or
Retirement after the date of grant of an Option as described above, an
unexercised Option may thereafter be exercised during the period ending 90 days
after the date of such termination of employment, but only to the extent to
which such Option was exercisable at the time of such termination of employment.
8. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
(a) Grants. The Committee also may grant (i) a Stock Appreciation
Right independent of an Option or (ii) a Stock Appreciation Right in connection
with an Option, or a portion thereof. A Stock Appreciation Right granted
pursuant to clause (ii) of the preceding sentence (A) may be granted at the time
the related Option is granted or at any time prior to the exercise or
cancellation of the related Option, (B) shall cover the same Shares covered by
an Option (or such lesser number of Shares as the Committee may determine) and
(C) shall be subject to the same
<PAGE> 8
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terms and conditions as such Option except for such additional limitations as
are contemplated by this Section 8 (or such additional limitations as may be
included in an Award agreement).
(b) Terms. The exercise price per Share of a Stock Appreciation
Right shall be an amount determined by the Committee but in no event shall such
amount be less than the greater of (i) the Fair Market Value of a Share on the
date the Stock Appreciation Right is granted or, in the case of a Stock
Appreciation Right granted in conjunction with an Option, or a portion thereof,
the Option Price of the related Option and (ii) an amount permitted by
applicable laws, rules, by-laws or policies of regulatory authorities or stock
exchanges. Each Stock Appreciation Right granted independent of an Option shall
entitle a Participant upon exercise to an amount equal to (i) the excess of (A)
the Fair Market Value on the exercise date of one Share over (B) the exercise
price per Share, times (ii) the number of Shares covered by the Stock
Appreciation Right. Each Stock Appreciation Right granted in conjunction with an
Option, or a portion thereof, shall entitle a Participant to surrender to the
Company the unexercised Option, or any portion thereof, and to receive from the
Company in exchange therefor an amount equal to (i) the excess of (A) the Fair
Market Value on the exercise date of one Share over (B) the Option Price per
Share, times (ii) the number of Shares covered by the Option, or portion
thereof, which is surrendered. The date a notice of exercise is received by the
Company shall be the exercise date. Payment shall be made in Shares or in cash,
or partly in Shares and partly in cash, valued at such Fair Market Value, all as
shall be determined by the Committee. Stock Appreciation Rights may be exercised
from time to time upon actual receipt by the Company of written notice of
exercise stating the number of Shares subject to an exercisable Option with
respect to which the Stock Appreciation Right is being exercised. No fractional
Shares will be issued in payment for Stock Appreciation Rights, but instead cash
will be paid for a fraction or, if the Committee should so determine, the number
of Shares will be rounded downward to the next whole Share.
(c) Limitations. The Committee may impose, in its discretion, such
conditions upon the exercisability or transferability of Stock Appreciation
Rights as it may deem fit.
(d) Limited Stock Appreciation Rights. The Committee may grant LSARs
that are exercisable upon the occurrence of specified contingent events. Such
LSARs may provide for a different method of determining appreciation, may
specify that payment will be made only in cash and may provide that any related
Awards are not exercisable while such LSARs are exercisable. Unless the context
otherwise requires, whenever the term "Stock Appreciation Right" is used in the
Plan, such term shall include LSARs.
<PAGE> 9
9
9. OTHER STOCK-BASED AWARDS
(a) Generally. The Committee, in its sole discretion, may grant
Awards of Shares, Awards of restricted Shares and Awards that are valued in
whole or in part by reference to, or are otherwise based on the Fair Market
Value of, Shares ("Other Stock-Based Awards"). Such Other Stock-Based Awards
shall be in such form, and dependent on such conditions, as the Committee shall
determine, including, without limitation, the right to receive one or more
Shares (or the equivalent cash value of such Shares) upon the completion of a
specified period of service, the occurrence of an event and/or the attainment of
performance objectives. Other Stock-Based Awards may be granted alone or in
addition to any other Awards granted under the Plan. Subject to the provisions
of the Plan, the Committee shall determine to whom and when Other Stock-Based
Awards will be made, the number of Shares to be awarded under (or otherwise
related to) such Other Stock-Based Awards; whether such Other Stock-Based Awards
shall be settled in cash, Shares or a combination of cash and Shares; and all
other terms and conditions of such Awards (including, without limitation, the
vesting provisions thereof).
(b) Performance-Based Awards. Notwithstanding anything to the
contrary herein, certain Other Stock-Based Awards granted under this Section 9
may be granted in a manner which is deductible by the Company under Section
162(m) of the Code (or any successor section thereto) ("Performance-Based
Awards"). A Participant's Performance-Based Award shall be determined based on
the attainment of written performance goals approved by the Committee for a
performance period established by the Committee (i) while the outcome for that
performance period is substantially uncertain and (ii) no more than 90 days
after the commencement of the performance period to which the performance goal
relates or, if less, the number of days which is equal to 25 percent of the
relevant performance period. The performance goals, which must be objective,
shall be based upon one or more of the following criteria: (i) consolidated
earnings before or after taxes (including earnings before interest, taxes,
depreciation and amortization); (ii) net income; (iii) operating income; (iv)
earnings per Share; (v) book value per Share; (vi) return on stockholders'
equity; (vii) expense management; (viii) return on investment; (ix) improvements
in capital structure; (x) profitability of an identifiable business unit or
product; (xi) maintenance or improvement of profit margins; (xii) stock price;
(xiii) market share; (xiv) revenues or sales; (xv) costs; (xvi) cash flow;
(xvii) working capital and (xviii) return on assets. The foregoing criteria may
relate to the Company, one or more of its Subsidiaries or one or more of its
divisions or units, or any combination of the foregoing, and may be applied on
an absolute basis and/or be relative to one or more peer group companies or
indices, or any combination thereof, all as the Committee shall determine. In
addition, to the degree consistent with Section 162(m) of the Code (or any
successor section thereto), the performance goals may be calculated without
regard to
<PAGE> 10
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extraordinary items. The maximum amount of a Performance-Based Award to any
Participant with respect to a fiscal year of the Company shall be $6,000,000.
The Committee shall determine whether, with respect to a performance period, the
applicable performance goals have been met with respect to a given Participant
and, if they have, to so certify and ascertain the amount of the applicable
Performance-Based Award. No Performance-Based Awards will be paid for such
performance period until such certification is made by the Committee. The amount
of the Performance-Based Award actually paid to a given Participant may be less
than the amount determined by the applicable performance goal formula, at the
discretion of the Committee. The amount of the Performance-Based Award
determined by the Committee for a performance period shall be paid to the
Participant at such time as determined by the Committee in its sole discretion
after the end of such performance period; provided, however, that a Participant
may, if and to the extent permitted by the Committee and consistent with the
provisions of Section 162(m) of the Code, elect to defer payment of a
Performance-Based Award.
10. ADJUSTMENTS UPON CERTAIN EVENTS
Notwithstanding any other provisions in the Plan to the contrary,
the following provisions shall apply to all Awards granted under the Plan:
(a) Generally. In the event of any change in the outstanding Shares
after the Effective Date by reason of any Share dividend or split,
reorganization, recapitalization, merger, consolidation, spin-off, combination
or exchange of Shares or other corporate exchange, or any distribution to
stockholders of Shares other than regular cash dividends, the Committee in its
sole discretion and without liability to any person may make such substitution
or adjustment, if any, as it deems to be equitable, as to (i) the number or kind
of Shares or other securities issued or reserved for issuance pursuant to the
Plan or pursuant to outstanding Awards, (ii) the Option Price and/or (iii) any
other affected terms of such Awards.
(b) Change in Control. Except as otherwise provided in an Award
agreement, in the event of a Change in Control, the Committee in its sole
discretion and without liability to any person may take such actions, if any, as
it deems necessary or desirable with respect to any Award (including, without
limitation, (i) the acceleration of an Award, (ii) the payment of a cash amount
in exchange for the cancellation of an Award and/or (iii) the requiring of the
issuance of substitute Awards that will substantially preserve the value, rights
and benefits of any affected Awards previously granted hereunder) as of the date
of the consummation of the Change in Control.
<PAGE> 11
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11. NO RIGHT TO EMPLOYMENT
The granting of an Award under the Plan shall impose no obligation
on the Company or any Subsidiary to continue the employment of a Participant and
shall not lessen or affect the Company's or Subsidiary's right to terminate the
employment of such Participant.
12. SUCCESSORS AND ASSIGNS
The Plan shall be binding on all successors and assigns of the
Company and a Participant, including without limitation, the estate of such
Participant and the executor, administrator or trustee of such estate, or any
receiver or trustee in bankruptcy or representative of the Participant's
creditors.
13. NONTRANSFERABILITY OF AWARDS
An Award shall not be transferable or assignable by the Participant
otherwise than by will or by the laws of descent and distribution. During the
lifetime of a Participant, an Award shall be exercisable only by such
Participant. An Award exercisable after the death of a Participant may be
exercised by the legatees, personal representatives or distributees of the
Participant. Notwithstanding anything to the contrary herein, the Committee, in
its sole discretion, shall have the authority to waive this Section 13 (or any
part thereof) to the extent that this Section 13 (or any part thereof) is not
required under the rules promulgated under any law, rule or regulation
applicable to the Company.
14. AMENDMENTS OR TERMINATION
The Board may amend, alter or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which, (a) without the
approval of the stockholders of the Company, would (except as is provided in
Section 10 of the Plan), increase the total number of Shares reserved for the
purposes of the Plan or change the maximum number of Shares for which Awards may
be granted to any Participant or (b) without the consent of a Participant, would
impair any of the rights or obligations under any Award theretofore granted to
such Participant under the Plan; provided, however, that the Committee may amend
the Plan in such manner as it deems necessary to permit the granting of Awards
meeting the requirements of the Code or other applicable laws. Notwithstanding
anything to the contrary herein, the Board may not amend, alter or discontinue
the provisions relating to Section 10(b) of the Plan after the occurrence of a
Change in Control.
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15. INTERNATIONAL PARTICIPANTS
With respect to Participants who reside or work outside the United
States of America and who are not (and who are not expected to be) "covered
employees" within the meaning of Section 162(m) of the Code, the Committee may,
in its sole discretion, amend the terms of the Plan or Awards with respect to
such Participants in order to conform such terms with the requirements of local
law.
16. CHOICE OF LAW
The Plan shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed
in the State of New York.
17. EFFECTIVENESS OF THE PLAN
The Plan shall be effective as of the Spinoff Date. If the Plan is
not approved by the stockholders of the Company prior to the first anniversary
of the Spinoff Date, no Awards may be granted thereafter.
<PAGE> 1
EXHIBIT 10(J)
1996 ACNIELSEN CORPORATION REPLACEMENT PLAN
FOR CERTAIN EMPLOYEES HOLDING
THE DUN & BRADSTREET CORPORATION EQUITY-BASED AWARDS
1. PURPOSE OF THE PLAN
The purpose of the 1996 ACNielsen Corporation Replacement Plan for
Certain Employees Holding The Dun & Bradstreet Corporation Equity-Based Awards
(the "Plan") is to provide for the award of substantially identical replacement
stock options and replacement limited stock appreciation rights to certain
employees (the "Eligible Holders") of ACNielsen Corporation (the "Company")
whose awards under the 1991 Key Employees Stock Option Plan for The Dun &
Bradstreet Corporation and Subsidiaries and the 1982 Key Employees Stock Option
Plan for The Dun & Bradstreet Corporation (the "D&B Plans") were cancelled
pursuant to the spinoff of the Company from The Dun & Bradstreet Corporation
("D&B"). The Company expects that the Plan will allow it to retain such
employees and to motivate them to exert their best efforts on behalf of the
Company and its subsidiaries by providing incentives through the replacement
awards. The Company also expects that it will benefit from the added interest
which such employees will have in the welfare of the Company as a result of
their proprietary interest in the Company's success. It is the intention of the
Company that the terms of the replacement awards will (i) preserve the economic
value of the cancelled D&B awards and (ii) except for the terms described in
Sections 6, 7 and 9 of this Plan, remain substantially identical to the terms of
the cancelled D&B awards.
2. STOCK SUBJECT TO THE PLAN
The total number of shares of common stock of the Company ("Common
Stock") which may be issued under the Plan is equal to the aggregate number of
shares subject to replacement awards, as calculated pursuant to Sections 6(a)
and 7(a) of this Plan. The shares may consist, in whole or in part, of unissued
shares or treasury shares. Issuance of shares of Common Stock upon exercise of
an option or reduction of the number of shares of Common Stock subject to an
option upon exercise of a stock appreciation right shall reduce the total number
of shares of Common Stock available under the Plan. In addition, shares which
are subject to unexercised stock options which terminate or lapse may not be
optioned again under the Plan.
3. ADMINISTRATION
The Board of Directors of the Company shall appoint a Compensation
Committee (herein called the "Committee") consisting of at least two members of
the Board of Directors who shall administer the Plan and serve at the pleasure
of the Board. Each member of the Committee shall not be eligible to participate
in
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the Plan and shall not at any time within one year prior to appointment have
been eligible for selection as a person to whom stock may have been allocated or
to whom stock options or stock appreciation rights of the Company or any of its
affiliates may have been granted pursuant to the Plan or any other plan of the
Company or its affiliates, except as permitted under regulations adopted under
Section 16 of the Securities Exchange Act of 1934 (the "Act"). Each member of
the Committee shall be an "outside director" as defined in Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code") and a "non-employee
director" as defined in the rules promulgated under Section 16 of the Act. The
Committee shall have the authority, consistent with the Plan, to determine the
provisions of the stock options and stock appreciation rights to be granted, to
interpret the Plan and the stock options and the stock appreciation rights
granted under the Plan, to adopt, amend and rescind rules and regulations for
the administration of the Plan, the stock options and the stock appreciation
rights and generally to conduct and administer the Plan and to make all
determinations in connection therewith which may be necessary or advisable, and
all such actions of the Committee shall be binding upon all Eligible Holders.
The Committee shall require payment of any amount the Company may determine to
be necessary to withhold for federal, state or local taxes as a result of the
exercise of a stock option or a stock appreciation right. Fair market value of
the Common Stock as of a given date shall be determined in accordance with
procedures established by the Committee.
4. ELIGIBILITY
Only Eligible Holders shall receive grants of replacement stock
options and replacement stock appreciation rights under the Plan. The granting
of a stock option or stock appreciation right under the Plan shall impose no
obligation on the Company or any subsidiary to continue the employment of an
Eligible Holder and shall not lessen or affect the right to terminate the
employment of such Eligible Holder.
5. LIMITATIONS
Options hereunder shall only be granted in replacement of D&B Stock
Options (as defined in Section 6(a) of the Plan) held by Eligible Holders
immediately prior to the date on which the Common Stock owned by D&B is
distributed to the holders of record of shares of D&B (the "Spinoff Date").
6. TERMS AND CONDITIONS OF STOCK OPTIONS
Stock options granted under the Plan shall be non-qualified or
incentive stock options for federal income tax purposes (as appropriate, based
upon the type of options granted
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under the D&B Plans), as evidenced by option grants, and shall be subject to the
foregoing and the following terms and conditions and to such other terms and
conditions, not inconsistent therewith, as the Committee shall determine:
(a) Generally. As of the Spinoff Date, each unexercised stock option
held by an Eligible Holder that was granted under the D&B Plans (a "D&B Stock
Option") shall be cancelled, and such Eligible Holder shall receive a
replacement stock option pursuant to this Plan. The option price of each
replacement stock option shall be determined by multiplying the option price of
the cancelled D&B Stock Option by a fraction, the numerator of which is the
average of the Daily Average Trading Prices of Common Stock for the five
consecutive trading days starting on the first date on which the Common Stock is
traded regular way, and the denominator of which is the average of the Daily
Average Trading Prices of D&B common stock for the five consecutive trading days
immediately preceding the first date on which D&B common stock is traded
ex-dividend. The number of shares of Common Stock covered by each replacement
stock option shall be determined by (i) multiplying the number of shares of D&B
common stock covered by the cancelled D&B Stock Option by a fraction, the
numerator of which is the average of the Daily Average Trading Prices of D&B
common stock for the five consecutive trading days immediately preceding the
first date on which D&B common stock is traded ex-dividend, and the denominator
of which is the average of the Daily Average Trading Prices of Common Stock for
the five consecutive trading days starting on the first date on which Common
Stock is traded regular way and (ii) rounding down the result to a whole number
of shares. Unless otherwise specified in this Plan, all other terms of the
replacement stock options shall remain substantially identical to those of the
cancelled D&B Stock Options as set forth in the applicable D&B Plan and related
option agreement(s). For purposes of this Paragraph 6(a), the "Daily Average
Trading Price" of a given stock on a given day shall mean the average of the
high and low trading prices for such stock (as reported on the Composite Tape of
the principal national securities exchange on which such stock is listed or
admitted to trading) on such date.
(b) Exercisability. Except as set forth in the Plan, stock options
granted under the Plan shall have substantially identical terms as those of the
stock options originally granted under the D&B Plans; provided, however, that in
no event shall a replacement stock option be exercisable more than ten years
after the date the original option was granted under the D&B Plans.
(c) First Year Non-Exercisability. Except as provided in Paragraph 9
of the Plan, no replacement stock option shall be exercisable during the year
ending on the first anniversary date of the granting of the original option
under the D&B Plans.
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(d) Exercise of Stock Options. Except as otherwise provided in the
Plan or the option, a stock option may be exercised for all, or from time to
time any part, of the shares for which it is then exercisable. The purchase
price for the shares as to which an option is exercised shall be paid to the
Company in full at the time of exercise at the election of the optionee (i) in
cash, (ii) in shares of Common Stock of the Company having a fair market value
equal to the option price for the shares being purchased and satisfying such
other requirements as may be imposed by the Committee or (iii) partly in cash
and partly in such shares of Common Stock of the Company. The Committee may
permit the optionee to elect, subject to such terms and conditions as the
Committee shall determine, to have the number of shares deliverable to the
optionee as a result of the exercise reduced by a number sufficient to pay the
amount the Company determines to be necessary to withhold for federal, state or
local taxes as a result of the exercise of the option. No optionee shall have
any rights to dividends or other rights of a shareowner with respect to shares
subject to an option until the optionee has given written notice of exercise of
the option, paid in full for such shares and, if requested, given the
representation described in Paragraph 6(h) of the Plan.
(e) Exercisability Upon Termination of Employment by Death. If an
optionee's employment by the Company or a subsidiary terminates by reason of
death one year or more after the date of grant of the original stock option
under the D&B Plans, the replacement stock option thereafter may be exercised,
during the three years after the date of death or the remaining stated period of
the option, whichever period is shorter, to the extent to which such option was
exercisable at the time of death or thereafter would become exercisable during
the three-year period after the date of death in accordance with its terms.
(f) Exercisability Upon Termination of Employment by Disability or
Retirement. If an optionee's employment by the Company or a subsidiary
terminates by reason of disability or retirement one year or more after the date
of grant of the original stock option under the D&B Plans, the replacement stock
option thereafter may be exercised, during the five years after the date of such
termination of employment or the remaining stated period of the option,
whichever period is shorter, to the extent to which such option was exercisable
at the time of such termination of employment or thereafter would become
exercisable during such period in accordance with its terms; provided, however,
that if the optionee dies within a period of five years after such termination
of employment, any unexercised stock option may be exercised thereafter, during
either (1) the period ending on the later of (i) five years after such
termination of employment and (ii) one year after the date of death or (2) the
period remaining in the stated term of the option, whichever period is shorter,
to the extent to which such option was exercisable at the time of death or
thereafter would become exercisable during the remainder of the five-year period
after
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such termination of employment in accordance with its terms. For purposes of
this Section 6, "retirement" shall mean termination of employment with the
Company or a subsidiary after the optionee has attained age 55 and completed ten
or more years of employment with D&B and/or the Company; or after the optionee
has attained age 65, regardless of the length of such optionee's employment with
D&B and/or the Company. An optionee shall not be considered disabled for
purposes of this Section 6, unless he or she furnishes such medical or other
evidence of the existence of the disability as the Committee, in its sole
discretion, may require.
(g) Effect of Other Termination of Employment. Except as otherwise
provided in a related option agreement, if an Eligible Holder's employment
terminates for any reason, other than disability, death or retirement one year
or more after the date of grant of the original stock option or stock
appreciation right under the D&B Plans as described above, each stock option and
stock appreciation right held by such Eligible Holder shall thereupon terminate.
(h) Additional Agreements of Optionee and Restrictions on Transfer.
The Committee may require each person purchasing shares pursuant to exercise of
a stock option to represent to and agree with the Company in writing that the
shares are being acquired without a view to distribution thereof. The
certificates for shares so purchased may include any legend which the Committee
deems appropriate to reflect any restrictions on transfers. The Committee also
may impose, in its discretion, as a condition of any option, any restrictions on
the transferability of shares acquired through the exercise of such option as it
may deem fit. Without limiting the generality of the foregoing, the Committee
may impose conditions restricting absolutely the transferability of shares
acquired through the exercise of options for such periods as the Committee may
determine and, further, in the event the optionee's employment by the Company or
a subsidiary terminates during the period in which such shares are
nontransferable, the optionee may be required, if required by the related option
agreement, to sell such shares back to the Company at such price and on such
other terms as the Committee may have specified in the option agreement.
(i) Nontransferability of Stock Options. A stock option shall not be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution. During the lifetime of an optionee an option shall be
exercisable only by the optionee. An option exercisable after the death of an
optionee may be exercised by the legatees, personal representatives or
distributees of the optionee.
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7. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
Stock appreciation rights (including limited stock appreciation
rights) granted under the Plan shall be subject to the foregoing and the
following terms and conditions and to such other terms and conditions, not
inconsistent therewith, as the Committee shall determine:
(a) Replacement Stock Appreciation Rights. As of the Spinoff Date,
each unexercised stock appreciation right (including a limited stock
appreciation right) held by an Eligible Holder that was granted under the D&B
Plans (a "D&B SAR") shall be cancelled, and such Eligible Holder shall receive a
replacement stock appreciation right pursuant to this Plan. The exercise price
of each replacement stock appreciation right shall be determined by multiplying
the exercise price of the cancelled D&B SAR by a fraction, the numerator of
which is the average of the Daily Average Trading Prices of Common Stock for the
five consecutive trading days starting on the first date on which Common Stock
is traded regular way, and the denominator of which is the average of the Daily
Average Trading Prices of D&B common stock for the five consecutive trading days
immediately preceding the first date on which D&B common stock is traded
ex-dividend. The number of Company stock appreciation rights covered by each
replacement stock appreciation right shall be determined by (i) multiplying the
number of D&B Stock Options covered by the cancelled D&B SAR by a fraction, the
numerator of which is the average of the Daily Average Trading Prices of D&B
common stock for the five consecutive trading days immediately preceding the
first date on which D&B common stock is traded ex- dividend, and the denominator
of which is the average of the Daily Average Trading Prices of Common Stock for
the five consecutive trading days starting on the first date on which Common
Stock is traded regular way and (ii) rounding down the result to a whole number
of stock appreciation rights. Unless otherwise specified in this Plan, all other
terms of the replacement stock appreciation rights shall remain substantially
identical to those of the cancelled D&B SARs as set forth in the applicable D&B
Plans and related D&B SAR agreement(s). For purposes of this Paragraph 7(a), the
"Daily Average Trading Price" of a given stock on a given day shall mean the
average of the high and low trading prices for such stock (as reported on the
Composite Tape of the principal national securities exchange on which such stock
is listed or admitted to trading) on such date.
(b) Terms. Stock appreciation rights shall cover the same shares
covered by a related option (or such lesser number of shares of Common Stock as
the Committee may determine) and shall be subject to the same terms and
conditions as the option except for such additional limitations as are
contemplated by this Paragraph 7 (or as may be included in a stock appreciation
right granted hereunder). Each stock appreciation right shall entitle an
optionee to surrender to the Company an unexercised option, or
<PAGE> 7
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any portion thereof, and to receive from the Company in exchange therefor an
amount equal to the excess of the fair market value on the exercise date of one
share of Common Stock over the option price per share times the number of shares
covered by the option, or portion thereof, which is surrendered. The date a
notice of exercise is received by the Company shall be the exercise date.
Payment shall be made in shares of Common Stock or in cash, or partly in shares
and party in cash, valued at such fair market value, all as shall be determined
by the Committee. Stock appreciation rights may be exercised from time to time
upon actual receipt by the Company of written notice of exercise stating the
number of shares of Common Stock subject to an exercisable option with respect
to which the stock appreciation right is being exercised. No fractional shares
of Common Stock will be issued in payment for stock appreciation rights, but
instead cash will be paid for a fraction or, if the Committee should so
determine, the number of shares will be rounded downward to the next whole
share.
(c) Limitations on Exercisability. The Committee shall impose such
conditions upon the exercisability of stock appreciation rights as will result,
except upon the occurrence of an event contemplated by replacement limited stock
appreciation rights granted pursuant to this Paragraph 7 or contemplated by the
provisions of Paragraph 9, in the amount to be charged against the Company's
consolidated income by reason of stock appreciation rights not to exceed, in any
one calendar year, two percent of the Company's prior calendar year's
consolidated income before income taxes. The Committee also may impose, in its
discretion, such other conditions upon the exercisability of stock appreciation
rights as it may deem fit.
(d) Replacement Limited Stock Appreciation Rights. The Committee
shall grant replacement limited stock appreciation rights in substantially the
same manner in which replacement stock appreciation rights are awarded pursuant
to this Section 7 of the Plan. Unless the context otherwise requires, whenever
the term "stock appreciation right" is used in the Plan, such term shall include
limited stock appreciation rights.
8. TRANSFERS AND LEAVES OF ABSENCE
For purposes of the Plan: (a) a transfer of an employee from the
Company to a 50% or more owned subsidiary, partnership, venture or other
affiliate (whether or not incorporated) or vice versa, or from one such
subsidiary, partnership, venture or other affiliate to another, (b) a leave of
absence, duly authorized in writing by the Company, for military service or
sickness or for any other purpose approved by the Company if the period of such
leave does not exceed 90 days, or (c) a leave of absence in excess of 90 days,
duly authorized in writing by the Company, provided the employee's right to
<PAGE> 8
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re-employment is guaranteed either by statute or by contract, shall not be
deemed a termination of employment under the Plan.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR OTHER EVENTS
Upon changes in the Common Stock of the Company after the Spinoff
Date by reason of a stock dividend, stock split, reverse split,
recapitalization, merger, consolidation, combination or exchange of shares,
separation, reorganization or liquidation, the number and class of shares
available under the Plan as to which stock options or stock appreciation rights
may be granted (both in the aggregate and to any one optionee), the number and
class of shares under each option and the option price per share, and the terms
of stock appreciation rights shall be correspondingly adjusted by the Committee,
such adjustments to be made in the case of outstanding options without change in
the total price applicable to such options. In the event of a merger,
consolidation, combination, reorganization or other transaction after the
Spinoff Date in which the Company will not be the surviving corporation, an
optionee shall be entitled to options on that number of shares of stock in the
new corporation which the optionee would have received had the optionee
exercised all of the unexercised options available to the optionee under the
Plan, whether or not then exercisable, at the instant immediately prior to the
effective date of such transaction, and if such unexercised options had related
stock appreciation rights the optionee also will receive new stock appreciation
rights related to the new options. Thereafter, adjustments as provided above
shall relate to the options or stock appreciation rights of the new corporation.
Except as otherwise specifically provided in the stock option agreement or stock
appreciation right agreement, in the event of a Change in Control, merger,
consolidation, combination, reorganization or other transaction after the
Spinoff Date in which the shareowners of the Company will receive cash or
securities (other than common stock) or in the event that an offer is made to
the holders of Common Stock of the Company to sell or exchange such Common Stock
for cash, securities or stock of another corporation and such offer, if
accepted, would result in the offeror becoming the owner of (a) at least 50% of
the outstanding Common Stock of the Company or (b) such lesser percentage of the
outstanding Common Stock which the Committee in its sole discretion determines
will materially adversely affect the market value of the Common Stock after the
tender or exchange offer, the Committee, prior to the shareowners' vote on such
transaction or prior to the expiration date (without extensions) of the tender
or exchange offer, (i) shall accelerate the time of exercise so that all stock
options and stock appreciation rights which are outstanding shall become
immediately exercisable in full without regard to any limitations of time or
amount otherwise contained in the Plan or the options or stock appreciation
rights and (ii) may determine that the options and stock appreciation rights
shall be adjusted and make such adjustments by substituting for Common Stock of
the Company
<PAGE> 9
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subject to options and stock appreciation rights, common stock of the surviving
corporation or offeror if such stock of such corporation is publicly traded or,
if such stock is not publicly traded, by substituting common stock of a parent
of the surviving corporation or offeror if the stock of such parent is publicly
traded, in which event the aggregate option price shall remain the same and the
number of shares subject to option shall be the number of shares which could
have been purchased on the closing day of such transaction or the expiration
date of the offer with the proceeds which would have been received by the
optionee if the option had been exercised in full prior to such transaction or
expiration date and the optionee had exchanged all of such shares in the
transaction or sold or exchanged all of such shares pursuant to the tender or
exchange offer, and if any such option has related stock appreciation rights,
the stock appreciation rights shall likewise be adjusted. For purposes of this
Paragraph 9, "Change in Control" means (i) any "person", as such term is used in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any corporation
owned, directly or indirectly, by the shareowners of the Company in
substantially the same proportion as their ownership of stock of the Company),
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
30% or more of the combined voting power of the Company's then outstanding
securities; (ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement with
the Company to effect a transaction described in clause (i), (iii), or (iv) of
this sentence) whose election by the Board or nomination for election by the
Company's shareowners was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved
cease for any reason to constitute at least a majority thereof, (iii) the
shareowners of the Company approve a merger or consolidation of the Company with
any other company, other than (1) a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (2) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as hereinabove defined) acquires more
than 50% of the combined voting power of the Company's then outstanding
securities; or (iv) the shareowners of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
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disposition by the Company of all or substantially all of the Company's assets.
10. USE OF PROCEEDS
Proceeds from the sale of shares of Common Stock pursuant to
exercise of stock options granted under the Plan shall constitute general funds
of the Company.
11. AMENDMENTS
The Board of Directors may amend, alter or discontinue the Plan, but
no amendment, alteration or discontinuation shall be made which would impair the
rights of any Eligible Holder under any award theretofore granted, without the
Eligible Holder's consent, or which, without the approval of the shareowners of
the Company, would:
(a) Except as is provided in Paragraph 9 of the Plan, increase the
total number of shares reserved for the purposes of the Plan
or change the maximum number of shares for which awards may be
granted to any Eligible Holder.
(b) Decrease the option price to less than the replacement
exercise prices as determined pursuant to Paragraphs 6(a) and
7(a) of the Plan.
(c) Change the employees (or class of employees) eligible to
receive awards under the Plan.
(d) Materially increase the benefits accruing to employees
participating under the Plan.
12. EFFECTIVENESS OF THE PLAN
The Plan shall become effective as of the Spinoff Date.
13. CHOICE OF LAW
The Plan shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed
in the State of New York.
<PAGE> 1
EXHIBIT 10(K)
1996 ACNIELSEN CORPORATION
SENIOR EXECUTIVE INCENTIVE PLAN
1. PURPOSE OF THE PLAN
The purpose of the Plan is to advance the interests of the Company
and its stockholders by providing incentives in the form of periodic cash and/or
equity-based bonus awards to certain senior executive employees of the Company
and its subsidiaries, thereby motivating such executives to attain corporate
performance goals articulated under the Plan.
2. DEFINITIONS
The following capitalized terms used in the Plan have the respective
meanings set forth in this Section:
(a) Act: The Securities Exchange Act of 1934, as amended, or any
successor thereto.
(b) Award: (i) A periodic cash bonus award granted pursuant to the
Plan or (ii) a periodic equity-based bonus award (A) issued
pursuant to an equity-based plan of the Company and (B)
granted pursuant to the Plan.
(c) Beneficial Owner: As such term is defined in Rule 13d-3 under
the Act (or any successor rule thereto).
(d) Board: The Board of Directors of the Company.
(e) Change in Control: The occurrence of any of the following
events:
(i) any Person (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company, or any company owned, directly or indirectly, by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company),
becomes the Beneficial Owner, directly or indirectly, of
securities of the
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Company representing 20% or more of the combined voting power
of the Company's then-outstanding securities;
(ii) during any period of twenty-four months (not including
any period prior to the Effective Date), individuals who at
the beginning of such period constitute the Board, and any new
director (other than (A) a director nominated by a Person who
has entered into an agreement with the Company to effect a
transaction described in Sections 2(e)(i), (iii) or (iv) of
the Plan, (B) a director nominated by any Person (including
the Company) who publicly announces an intention to take or to
consider taking actions (including, but not limited to, an
actual or threatened proxy contest) which if consummated would
constitute a Change in Control or (C) a director nominated by
any Person who is the Beneficial Owner, directly or
indirectly, of securities of the Company representing 10% or
more of the combined voting power of the Company's securities)
whose election by the Board or nomination for election by the
Company's stockholders was approved in advance by a vote of at
least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or
whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a
majority thereof;
(iii) the stockholders of the Company approve any transaction
or series of transactions under which the Company is merged or
consolidated with any other company, other than a merger or
consolidation (A) which would result in the voting securities
of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving
entity) more than 66 2/3% of the combined voting power of the
voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation and
(B) after which no Person
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holds 20% or more of the combined voting power of the
then-outstanding securities of the Company or such surviving
entity; or
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets.
(f) Code: The Internal Revenue Code of 1986, as amended, or any
successor thereto.
(g) Committee: The Compensation Committee of the Board.
(h) Company: ACNielsen Corporation, a Delaware corporation.
(i) D&B: The Dun & Bradstreet Corporation, a Delaware corporation.
(j) Effective Date: The date on which the Plan takes effect, as
defined pursuant to Section 13 of the Plan.
(k) Fair Market Value: On a given date, the arithmetic mean of the
high and low prices of the Shares as reported on such date on
the Composite Tape of the principal national securities
exchange on which such Shares are listed or admitted to
trading, or, if no Composite Tape exists for such national
securities exchange on such date, then on the principal
national securities exchange on which such Shares are listed
or admitted to trading, or, if the Shares are not listed or
admitted on a national securities exchange, the arithmetic
mean of the per Share closing bid price and per Share closing
asked price on such date as quoted on the National Association
of Securities Dealers Automated Quotation System (or such
market in which such prices are regularly quoted), or, if
there is no market on which the Shares are regularly quoted,
the Fair Market Value shall be
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the value established by the Committee in good faith. If no
sale of Shares shall have been reported on such Composite Tape
or such national securities exchange on such date or quoted on
the National Association of Securities Dealers Automated
Quotation System on such date, then the immediately preceding
date on which sales of the Shares have been so reported or
quoted shall be used.
(l) Participant: A senior executive of the Company or any of its
Subsidiaries who (i) is (or is anticipated to become) a
"covered employee" as defined in Section 162(m) of the Code
(or any successor section thereof) and (ii) is selected by the
Committee to participate in the Plan.
(m) Person: As such term is used for purposes of Section 13(d) or
14(d) of the Act (or any successor section thereto).
(n) Plan: The 1996 ACNielsen Corporation Senior Executive
Incentive Plan.
(o) Shares: Shares of common stock, par value $0.01 per Share, of
the Company.
(p) Spinoff Date: The date on which the Shares that are owned by
D&B are distributed to the holders of record of shares of D&B.
(q) Subsidiary: A subsidiary corporation, as defined in Section
424(f) of the Code (or any successor section thereto).
3. ADMINISTRATION
The Plan shall be administered by the Committee or such other
persons designated by the Board. The Committee may delegate its duties and
powers in whole or in part to any subcommittee thereof consisting solely of at
least two individuals who are each "non-employee directors" within the meaning
of Rule 16b-3 of the Act (or any successor rule thereto)
<PAGE> 5
5
and "outside directors" within the meaning of Section 162(m) of the Code (or any
successor section thereto). The Committee shall have the exclusive authority to
select the senior executives to be granted Awards under the Plan, to determine
the size and terms of an Award (subject to the limitations imposed on Awards in
Section 5 below), to modify the terms of any Award that has been granted (except
for any modification that would increase the amount of the Award payable to an
executive), to determine the time when Awards will be made and the performance
period to which they relate, to establish performance objectives in respect of
such performance periods and to certify that such performance objectives were
attained; provided, however, that any such action shall be consistent with the
applicable provisions of Section 162(m) of the Code. The Committee is authorized
to interpret the Plan, to establish, amend and rescind any rules and regulations
relating to the Plan, and to make any other determinations that it deems
necessary or desirable for the administration of the Plan. The Committee may
correct any defect or supply any omission or reconcile any inconsistency in the
Plan in the manner and to the extent the Committee deems necessary or desirable.
Any decision of the Committee in the interpretation and administration of the
Plan, as described herein, shall lie within its sole and absolute discretion and
shall be final, conclusive and binding on all parties concerned. Determinations
made by the Committee under the Plan need not be uniform and may be made
selectively among Participants, whether or not such Participants are similarly
situated. The Committee shall have the right to deduct from any payment made
under the Plan any federal, state, local or foreign income or other taxes
required by law to be withheld with respect to such payment. Unless the
Committee specifies otherwise, the Participant may elect to pay a portion or all
of such withholding taxes by (a) delivery in Shares or (b) having Shares
withheld by the Company from any Shares that would have otherwise been received
by the Participant. The number of Shares so delivered or withheld shall have an
aggregate Fair Market Value sufficient to satisfy the applicable withholding
taxes.
4. ELIGIBILITY
Only Participants shall be eligible to receive awards under the
Plan.
<PAGE> 6
6
5. AWARDS
(a) Performance Goals. A Participant's Award shall be determined
based on the attainment of written performance goals approved by the Committee
for a performance period established by the Committee (i) while the outcome for
that performance period is substantially uncertain and (ii) no more than 90 days
after the commencement of the performance period to which the performance goal
relates or, if less, the number of days which is equal to 25 percent of the
relevant performance period. The performance goals, which must be objective,
shall be based upon one or more of the following criteria: (i) consolidated
earnings before or after taxes (including earnings before interest, taxes,
depreciation and amortization); (ii) net income; (iii) operating income; (iv)
earnings per Share; (v) book value per Share; (vi) return on stockholders'
equity; (vii) expense management; (viii) return on investment; (ix) improvements
in capital structure; (x) profitability of an identifiable business unit or
product; (xi) maintenance or improvement of profit margins; (xii) stock price;
(xiii) market share; (xiv) revenues or sales; (xv) costs; (xvi) cash flow;
(xvii) working capital and (xviii) return on assets. The foregoing criteria may
relate to the Company, one or more of its Subsidiaries or one or more of its
divisions or units, or any combination of the foregoing, and may be applied on
an absolute basis and/or be relative to one or more peer group companies or
indices, or any combination thereof, all as the Committee shall determine. In
addition, to the degree consistent with Section 162(m) of the Code (or any
successor section thereto), the performance goals may be calculated without
regard to extraordinary items. The maximum amount of an Award to any Participant
with respect to a fiscal year of the Company shall be $6,000,000.
(b) Payment. The Committee shall determine whether, with respect to
a performance period, the applicable performance goals have been met with
respect to a given Participant and, if they have, to so certify and ascertain
the amount of the applicable Award. No Awards will be paid for such performance
period until such certification is made by the Committee. The amount of the
Award actually paid to a given Participant may be less than the amount
determined by the applicable performance goal formula, at the discretion of the
Committee. The amount of the Award determined by the Committee for a performance
period
<PAGE> 7
7
shall be paid to the Participant at such time as determined by the Committee in
its sole discretion after the end of such performance period; provided, however,
that a Participant may, if and to the extent permitted by the Committee and
consistent with the provisions of Section 162(m) of the Code, elect to defer
payment of an Award.
(c) Compliance with Section 162(m) of the Code. The provisions of
this Section 5 shall be administered and interpreted in accordance with Section
162(m) of the Code to ensure the deductibility by the Company or its
Subsidiaries of the payment of Awards.
6. AMENDMENTS OR TERMINATION
The Board may amend, alter or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which would impair any of
the rights or obligations under any Award theretofore granted to a Participant
under the Plan without such Participant's consent; provided, however, that the
Committee may amend the Plan in such manner as it deems necessary to permit the
granting of Awards meeting the requirements of the Code or other applicable
laws. Notwithstanding anything to the contrary herein, the Board may not amend,
alter or discontinue the provisions relating to Section 10(b)(ii) of the Plan
after the occurrence of a Change in Control.
7. NO RIGHT TO EMPLOYMENT
Neither the Plan nor any action taken hereunder shall be construed
as giving any Participant or other person any right to continue to be employed
by or perform services for the Company or any Subsidiary, and the right to
terminate the employment of or performance of services by any Participant at any
time and for any reason is specifically reserved to the Company and its
Subsidiaries.
<PAGE> 8
8
8. NONTRANSFERABILITY OF AWARDS
An Award shall not be transferable or assignable by the Participant
otherwise than by will or by the laws of descent and distribution.
9. REDUCTION OF AWARDS
Notwithstanding anything to the contrary herein, the Committee, in
its sole discretion (but subject to applicable law), may reduce any amounts
payable to any Participant hereunder in order to satisfy any liabilities owed to
the Company or any of its Subsidiaries by the Participant.
10. ADJUSTMENTS UPON CERTAIN EVENTS
(a) Generally. In the event of any change in the outstanding Shares
after the Effective Date by reason of any Share dividend or split,
reorganization, recapitalization, merger, consolidation, spin-off, combination
or exchange of Shares or other corporate exchange, or any distribution to
stockholders of Shares other than regular cash dividends, the Committee in its
sole discretion and without liability to any person may make such substitution
or adjustment, if any, as it deems to be equitable, as to (i) the number or kind
of Shares or other securities issued or reserved for issuance pursuant to the
Plan or pursuant to outstanding Awards and/or (ii) any other affected terms of
such Awards.
<PAGE> 9
9
(b) Change in Control. Notwithstanding any other provisions in the
Plan to the contrary, in the event of a Change in Control, (i) the Committee in
its sole discretion and without liability to any person may take such actions,
if any, as it deems necessary or desirable with respect to any Award (including,
without limitation, (A) the acceleration of an Award, (B) the payment of a cash
amount in exchange for the cancellation of an Award and/or (C) the requiring of
the issuance of substitute Awards that will substantially preserve the value,
rights and benefits of any affected Awards previously granted hereunder) as of
the date of the consummation of the Change in Control and (ii) any Participant
who, as a result of a Change in Control, receives payments pursuant to a
Change-in-Control agreement shall receive, subject to the same terms and
conditions under which such payments are made, an amount in cash equal to (A)
the annual target bonus under the Plan for the year in which the Change in
Control occurs, multiplied by a fraction, (I) the numerator of which equals the
number of full or partial days in such annual performance period during which he
or she was employed by the Company and (II) the denominator of which is 365, and
(B) the entire target bonus opportunity with respect to all other performance
periods in progress under this Plan at the time of his or her termination of
employment from the Company.
11. MISCELLANEOUS PROVISIONS
The Company is the sponsor and legal obligor under the Plan and
shall make all payments hereunder, other than any payments to be made by any of
the Subsidiaries (in which case such payments shall be made by such Subsidiary,
as appropriate). The Company shall not be required to establish any special or
separate fund or to make any other segregation of assets to ensure the payment
of any amounts under the Plan, and the Participants' rights to the payment
hereunder shall be no greater than the rights of the Company's (or subsidiary's)
unsecured creditors. All expenses involved in administering the Plan shall be
borne by the Company.
<PAGE> 10
10
12. CHOICE OF LAW
The Plan shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed
in the State of New York.
13. EFFECTIVENESS OF THE PLAN
The Plan shall be effective as of the Spinoff Date. If the Plan is
not approved by the stockholders of the Company prior to the first meeting of
the stockholders following the first anniversary of the Spinoff Date, no Awards
shall be payable or granted thereafter.
<PAGE> 1
EXHIBIT 10(l)
1996 ACNIELSEN CORPORATION
MANAGEMENT INCENTIVE PLAN
1. PURPOSE OF THE PLAN
The purpose of the Plan is to attract and retain the services of
selected employees who are in a position to make a material contribution to the
successful operation of the business of the Company and one or more of its
Subsidiaries.
2. DEFINITIONS
The following capitalized terms used in the Plan have the respective
meanings set forth in this Section:
(a) Act: The Securities Exchange Act of 1934, as amended, or any
successor thereto.
(b) Award: (i) A periodic cash bonus award granted pursuant to the
Plan or (ii) a periodic equity-based bonus award (A) issued
pursuant to an equity-based plan of the Company and (B)
granted pursuant to the Plan.
(c) Beneficial Owner: As such term is defined in Rule 13d-3 under
the Act (or any successor rule thereto).
(d) Board: The Board of Directors of the Company.
(e) Change in Control: The occurrence of any of the following
events:
(i) any Person (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company, or any company owned, directly or indirectly, by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company),
becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 20% or more of the
combined voting power of the Company's then-outstanding
securities;
<PAGE> 2
2
(ii) during any period of twenty-four months (not including
any period prior to the Effective Date), individuals who at
the beginning of such period constitute the Board, and any new
director (other than (A) a director nominated by a Person who
has entered into an agreement with the Company to effect a
transaction described in Sections 2(e)(i), (iii) or (iv) of
the Plan, (B) a director nominated by any Person (including
the Company) who publicly announces an intention to take or to
consider taking actions (including, but not limited to, an
actual or threatened proxy contest) which if consummated would
constitute a Change in Control or (C) a director nominated by
any Person who is the Beneficial Owner, directly or
indirectly, of securities of the Company representing 10% or
more of the combined voting power of the Company's securities)
whose election by the Board or nomination for election by the
Company's stockholders was approved in advance by a vote of at
least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or
whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a
majority thereof;
(iii) the stockholders of the Company approve any transaction
or series of transactions under which the Company is merged or
consolidated with any other company, other than a merger or
consolidation (A) which would result in the voting securities
of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving
entity) more than 66 2/3% of the combined voting power of the
voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation and
(B) after which no Person holds 20% or more of the combined
voting power of the then-outstanding securities of the Company
or such surviving entity; or
<PAGE> 3
3
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets.
(f) Code: The Internal Revenue Code of 1986, as amended, or any
successor thereto.
(g) Committee: The Compensation Committee of the Board.
(h) Company: ACNielsen Corporation, a Delaware corporation.
(i) Effective Date: The date on which the Plan takes effect, as
defined pursuant to Section 14 of the Plan.
(j) Fair Market Value: On a given date, the arithmetic mean of the
high and low prices of the Shares as reported on such date on
the Composite Tape of the principal national securities
exchange on which such Shares are listed or admitted to
trading, or, if no Composite Tape exists for such national
securities exchange on such date, then on the principal
national securities exchange on which such Shares are listed
or admitted to trading, or, if the Shares are not listed or
admitted on a national securities exchange, the arithmetic
mean of the per Share closing bid price and per Share closing
asked price on such date as quoted on the National Association
of Securities Dealers Automated Quotation System (or such
market in which such prices are regularly quoted), or, if
there is no market on which the Shares are regularly quoted,
the Fair Market Value shall be the value established by the
Committee in good faith. If no sale of Shares shall have been
reported on such Composite Tape or such national securities
exchange on such date or quoted on the National Association of
Securities Dealers Automated Quotation System on such date,
then the
<PAGE> 4
4
immediately preceding date on which sales of the Shares have
been so reported or quoted shall be used.
(k) Participant: An employee of the Company or any of its
Subsidiaries who has been designated by the Committee,
pursuant to Section 4 of the Plan, as eligible to receive an
Award under the Plan for a Performance Period.
(l) Performance Period: The calendar year or any other period that
the Committee, in its sole discretion, may determine.
(m) Person: As such term is used for purposes of Section 13(d) or
14(d) of the Act (or any successor section thereto).
(n) Plan: The 1996 ACNielsen Corporation Management Incentive
Plan.
(o) Shares: Shares of common stock, par value $0.01 per Share, of
the Company.
(p) Spinoff Date: The date on which the Shares that are owned by
D&B are distributed to the holders of record of shares of D&B.
(q) Subsidiary: A subsidiary corporation, as defined in Section
424(f) of the Code (or any successor section thereto).
3. ADMINISTRATION
The Plan shall be administered by the Committee or such other
persons designated by the Board. The Committee may delegate its duties and
powers in whole or in part to any subcommittee thereof consisting solely of at
least two individuals who are each "non-employee directors" within the meaning
of Rule 16b-3 of the Act (or any successor rule thereto). The Committee shall
have the authority to select the Participants to be granted Awards under the
Plan, to determine the size and terms of an Award, to modify the terms of any
Award
<PAGE> 5
5
that has been granted, to determine the time when Awards will be made and the
Performance Period to which they relate, to establish performance objectives in
respect of such performance periods and to certify that such performance
objectives were attained. The Committee is authorized to interpret the Plan, to
establish, amend and rescind any rules and regulations relating to the Plan, and
to make any other determinations that it deems necessary or desirable for the
administration of the Plan. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan in the manner and to the
extent the Committee deems necessary or desirable. Any decision of the Committee
in the interpretation and administration of the Plan, as described herein, shall
lie within its sole and absolute discretion and shall be final, conclusive and
binding on all parties concerned. Determinations made by the Committee under the
Plan need not be uniform and may be made selectively among Participants, whether
or not such Participants are similarly situated. The Committee shall have the
right to deduct from any payment made under the Plan any federal, state, local
or foreign income or other taxes required by law to be withheld with respect to
such payment. Unless the Committee specifies otherwise, the Participant may
elect to pay a portion or all of such withholding taxes by (a) delivery in
Shares or (b) having Shares withheld by the Company from any Shares that would
have otherwise been received by the Participant. The number of Shares so
delivered or withheld shall have an aggregate Fair Market Value sufficient to
satisfy the applicable withholding taxes. Notwithstanding anything in the Plan
to the contrary, the Committee may delegate to one or more employees of the
Company or any of its Subsidiaries the authority to take actions on its behalf
pursuant to the Plan.
<PAGE> 6
6
4. ELIGIBILITY AND PARTICIPATION
Prior to the end of each Performance Period, the Committee shall
designate those persons who shall be Participants for such Performance Period.
Participants shall be selected from among the employees of the Company and any
of its Subsidiaries who are in a position to have a material impact on the
results of the operations of the Company or of one or more of its Subsidiaries.
The designation of Participants may be made individually or by groups or
classifications of employees, as the Committee deems appropriate. Participants
may be designated at any time during a Performance Period, and it shall not be
required that all Participants be designated at the same meeting of the
Committee.
5. GRANT OF AWARDS
(a) Tentative Guidelines. Prior to the end of each Performance
Period, the Committee may establish tentative guidelines under which Awards
payable to designated Participants may be determined for the Performance Period.
The Committee may also, in its sole discretion, make a preliminary decision as
to the amount that will be available as Awards for the Performance Period and
impose any conditions on the payment of an Award.
(b) Final Determination. The Committee shall, in its sole
discretion, determine the final amount of each Participant's Award with respect
to a Performance Period. Subject to Section 6 of this Plan, a Participant's
final Award, if any, will be payable in cash and/or in the form of an
equity-based award issued pursuant to an equity-based plan of the Company.
Determination of the final amount that may be granted to each Participant as an
Award for the Performance Period may be made at any time before or after the
close of the Performance Period.
<PAGE> 7
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6. PAYMENT OF AWARDS
The amount of the Award determined by the Committee for a
performance period shall be paid to the Participant at such time as determined
by the Committee in its sole discretion after the end of such performance
period; provided, however, that a Participant may, if and to the extent
permitted by the Committee, elect to defer payment of an Award.
7. AMENDMENTS OR TERMINATION
The Board may amend, alter or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which would impair any of
the rights or obligations under any Award theretofore granted to a Participant
under the Plan without such Participant's consent; provided, however, that the
Committee may amend the Plan in such manner as it deems necessary to permit the
granting of Awards meeting the requirements of the Code or other applicable
laws.
8. NO RIGHT TO EMPLOYMENT
Neither the Plan nor any action taken hereunder shall be construed
as giving any Participant or other person any right to continue to be employed
by or perform services for the Company or any Subsidiary, and the right to
terminate the employment of or performance of services by any Participant at any
time and for any reason is specifically reserved to the Company and its
Subsidiaries.
9. NONTRANSFERABILITY OF AWARDS
An Award shall not be transferable or assignable by the Participant
otherwise than by will or by the laws of descent and distribution.
<PAGE> 8
8
10. REDUCTION OF AWARDS
Notwithstanding anything to the contrary herein, the Committee, in
its sole discretion (but subject to applicable law), may reduce any amounts
payable to any Participant hereunder in order to satisfy any liabilities owed to
the Company or any of its Subsidiaries by the Participant.
11. ADJUSTMENTS UPON CERTAIN EVENTS
(a) Generally. In the event of any change in the outstanding Shares
after the Effective Date by reason of any Share dividend or split,
reorganization, recapitalization, merger, consolidation, spin-off, combination
or exchange of Shares or other corporate exchange, or any distribution to
stockholders of Shares other than regular cash dividends, the Committee in its
sole discretion and without liability to any person may make such substitution
or adjustment, if any, as it deems to be equitable, as to (i) the number or kind
of Shares or other securities issued or reserved for issuance pursuant to the
Plan or pursuant to outstanding Awards and/or (ii) any other affected terms of
such Awards.
(b) Change in Control. Notwithstanding any other provisions in the
Plan to the contrary, in the event of a Change in Control, the Committee in its
sole discretion and without liability to any person may take such actions, if
any, as it deems necessary or desirable with respect to any Award (including,
without limitation, (i) the acceleration of an Award, (ii) the payment of a cash
amount in exchange for the cancellation of an Award and/or (iii) the requiring
of the issuance of substitute Awards that will substantially preserve the value,
rights and benefits of any affected Awards previously granted hereunder) as of
the date of the consummation of the Change in Control.
<PAGE> 9
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12. MISCELLANEOUS PROVISIONS
The Company is the sponsor and legal obligor under the Plan and
shall make all payments hereunder, other than any payments to be made by any of
the Subsidiaries (in which case such payments shall be made by such Subsidiary,
as appropriate). The Company shall not be required to establish any special or
separate fund or to make any other segregation of assets to ensure the payment
of any amounts under the Plan, and the Participants' rights to the payment
hereunder shall be no greater than the rights of the Company's (or subsidiary's)
unsecured creditors. All expenses involved in administering the Plan shall be
borne by the Company.
13. CHOICE OF LAW
The Plan shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed
in the State of New York.
14. EFFECTIVENESS OF THE PLAN
The Plan shall be effective as of the Spinoff Date.
<PAGE> 1
Exhibit 10(m)
ACNIELSEN CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Effective November 1, 1996
<PAGE> 2
ACNIELSEN CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Effective November 1, 1996
Effective November 1, 1996, the ACNielsen Corporation Supplemental Executive
Retirement Plan (the "Plan") is established to provide a means of ensuring the
payment of a competitive level of retirement income and disability and survivor
benefits, and thereby attract, retain and motivate selected executives of
ACNielsen Corporation and its affiliated employers.
SECTION 1
DEFINITIONS
1.1 "Actuarial Equivalent Value" shall mean a benefit of equivalent value
computed on the basis of the 1983 Group Annuity Mortality Table and
interest equal to the yield on 30-year Treasury Bonds as of the last
business day of the Plan Year prior to the year in which the relevant
calculation date occurs.
1.2 "Affiliated Employer" shall mean the Corporation and any other
affiliated entity.
1.3 "Average Final Compensation" shall mean a Member's average annual
Compensation during the five consecutive 12 month periods in the last
ten consecutive 12 month periods of his or her Credited Service (or
during the total number of consecutive 12 month periods if fewer than
five), immediately prior to the Member's termination of or removal from
participation under this Plan, affording the highest such Average Final
Compensation. If actual monthly
2
<PAGE> 3
Compensation for any month during the 120 month computational period is
unavailable, Compensation for such month shall be determined by
dividing the Member's Compensation (annualized, if necessary, due to
the Member's employment for less than one year) for the calendar year
in which such month occurs by 12.
1.4 "Basic Disability Plan" shall mean as to any Member the long-term
disability plan of the Corporation or an Affiliated Employer pursuant
to which long-term disability benefits are payable to such Member.
1.5 "Basic Disability Plan Benefit" shall mean the amount of benefits
payable to a Member from the Basic Disability Plan. A disability
benefit shall not be treated as payable to a Member unless such Member
is covered by a long-term disability plan of the Corporation or an
Affiliated Employer.
1.7 "Basic Plan" shall mean as to any Member or Vested Former Member the
defined benefit pension plan of the Corporation or an Affiliated
Employer intended to meet the requirements of Code Section 401(a)
pursuant to which retirement benefits are payable to such Member or
Vested Former Member or to the Surviving Spouse or designated
beneficiary of a deceased Member or Vested Former Member.
1.8 "Basic Plan Benefit" shall mean the amount of benefits payable from the
Basic Plan to a Member or Vested Former Member.
1.9 "Board" shall mean the board of directors of ACNielsen Corporation,
except that any action authorized to be taken by the Board hereunder
may also be taken by a duly authorized committee of the Board or its
duly authorized delegees.
3
<PAGE> 4
1.10 "Change in Control" shall mean:
(a) any "Person," as such term is used for purposes of Section 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than the Corporation, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Corporation, or any company owned, directly or indirectly, by the
stockholders of the Corporation in substantially the same
proportions as their ownership of stock of the Corporation),
becomes the "Beneficial Owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Corporation representing 20% or more of the combined voting power
of the Corporation's then-outstanding securities;
(b) during any period of 24 months (not including any period prior to
the Effective Date), individuals who at the beginning of such
period constitute the Board, and any new director (other than (i)
a director nominated by a Person who has entered into an agreement
with the Corporation to effect a transaction described in Sections
1.10(a), (c) or (d) hereof, (ii) a director nominated by any
Person (including the Corporation) who publicly announces an
intention to take or to consider taking actions (including, but
not limited to, an actual or threatened proxy contest) which if
consummated would constitute a Change in Control or (iii) a
director nominated by any Person who is the Beneficial Owner,
directly or indirectly, of securities of the Corporation
representing 10% or more of the combined voting power of the
Corporation's securities) whose election by the Board or
nomination for election by the Corporation's stockholders was
approved in advance by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute at least a majority thereof;
4
<PAGE> 5
(c) the stockholders of the Corporation approve any transaction or
series of transactions under which the Corporation is merged or
consolidated with any other company, other than a merger or
consolidation (i) which would result in the voting securities of
the Corporation outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more
than 66_% of the combined voting power of the voting securities of
the Corporation or such surviving entity outstanding immediately
after such merger or consolidation and (ii) after which no Person
holds 20% or more of the combined voting power of the
then-outstanding securities of the Corporation or such surviving
entity; or
(d) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets.
1.11 "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
1.12 "Committee" shall mean the Compensation Committee of the Board; except
that any action authorized to be taken by the Committee hereunder may
also be taken by another duly authorized committee or other duly
authorized delegees.
1.13 "Compensation" shall mean a Member's earnings received as an employee
of the Corporation or an Affiliated Employer as base salary and regular
annual cash bonuses, including any amounts deferred under a plan
qualified under Section 401(k) of the Code, and amounts contributed on
a Member's behalf on a salary reduction basis to a cafeteria plan
described in Code Section 125, and commissions. Such earnings shall not
include, among other things, any pension,
5
<PAGE> 6
retainers, severance pay, income derived from stock options, stock
appreciation rights and restricted stock awards and dispositions of
stock acquired thereunder, payments dependent upon any contingency
after the period of Credited Service, bonuses based on a performance
period of longer than one year, and other special remuneration.
1.14 "Corporation" shall mean ACNielsen Corporation, a Delaware corporation,
and any successor or assigns thereto.
1.15 "Covered Earnings" shall mean a Member's Compensation in the 12 months
immediately preceding the onset of the Member's Disability.
1.16 "Credited Service" shall mean a Member's service under the ACNielsen
Corporation Balance Account for Retirement Plan which is taken into
account for vesting purposes thereunder (including any such service
prior to the date such individual becomes a Member but not including
any such service after participation hereunder terminates), except that
it will also include service while the Member is receiving Disability
Benefits under this Plan. Notwithstanding the foregoing, (i) if a
Member was employed by a company acquired by the Corporation or an
Affiliated Employer after the Effective Date, such Member's service
with that company prior to the date of acquisition will not be taken
into account hereunder and (ii) upon commencement of participation
hereunder in accordance with Section 2.1 hereof, the CEO (as defined in
such section) may limit any service otherwise to be taken into account
hereunder with respect to periods prior to the date of participation in
the Plan.
1.17 "Deferred Vested Benefit" shall mean the benefits described in Section
3.2(b) hereof.
1.18 "Disability or "Disabled" shall mean disability or disabled for
purposes of the
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<PAGE> 7
Basic Disability Plan.
1.19 "Disability Benefits" shall mean the benefits described in Section
4.1(b) hereof.
1.20 "Effective Date" shall mean November 1, 1996.
1.21 "Former Member" shall mean (i) a Member whose employment with the
Corporation or an Affiliated Employer terminates before he or she has
completed five or more years of Credited Service, or (ii) a Member who
was removed from the Plan in accordance with Section 2.2 hereof, before
he or she has completed five or more years of Credited Service.
1.22 "Lump Sum Election" shall mean an election to receive all or a portion
of the benefits payable hereunder in a lump sum pursuant to Section 3.4
of the Plan.
1.23 "Member" shall mean an employee of the Corporation or an Affiliated
Employer who is a participant in the Plan pursuant to Section 2.
1.24 "Other Disability Income" shall mean (i) the disability insurance
benefit that the Member is entitled to receive under the Federal Social
Security Act while he or she is receiving the Basic Disability Plan
Benefit and (ii) the disability income payable to a Member from any
supplemental executive disability plan of the Corporation or any
Affiliated Employer or from any other contract, agreement or other
arrangement with the Corporation or an Affiliated Employer (excluding
any Basic Disability Plan).
1.25 "Other Retirement Income" shall mean:
(a) the Social Security retirement benefit that the Member or Former
Member is entitled to receive under the Federal Social Security
Act, assuming that for
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<PAGE> 8
years prior to the Member's employment with the Corporation and
for years following the Member's termination of employment with
the Corporation until the Member attains age 62, the Member earned
compensation so as to accrue the maximum Social Security benefits;
and
(b) the retirement income payable to a Member or Vested Former Member
from any "excess benefit plan" as that term is defined in Section
3(36) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), any plan described in Section 201(2) of ERISA,
and any other contract, agreement or other arrangement, in any
case, maintained by or entered into with the Corporation or an
Affiliated Employer (excluding any Basic Plan and any defined
contribution plan intended to meet the requirements of Code
Section 401(a)).
1.26 "Plan" shall mean the ACNielsen Corporation Supplemental Executive
Retirement Plan , as embodied herein, and any amendments thereto.
1.27 "Predecessor to this Plan" shall mean the Supplemental Executive
Benefit Plan of The Dun & Bradstreet Corporation, as amended effective
December 21, 1994.
1.28 "Retirement" shall mean the termination of a Member's or Vested Former
Member's employment with the Corporation or an Affiliated Employer
other than by reason of death or Disability (i) after reaching age 55
and completing ten years of Credited Service, or (ii) immediately
following the cessation of the payment of Disability Benefits under the
Plan to such Member or Vested Former Member while he or she is
Disabled.
1.29 "Retirement Benefits" shall mean the benefits described in Section
3.1(b) hereof.
1.30 "Surviving Spouse" shall mean the spouse of a deceased Member or Vested
Former Member to whom such Member or Vested
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<PAGE> 9
Former Member is legally married immediately preceding such Member's or
Vested Former Member's death.
1.31 "Surviving Spouse's Benefits" shall mean the benefits described in
Section 5 hereof.
1.32 "Vested Former Member" shall mean (i) a Member whose employment with
the Corporation or an Affiliated Employer terminates on or after the
date on which he or she has completed five or more years of Credited
Service, or (ii) a Member who was removed from the Plan in accordance
with Section 2.2 hereof on or after the date on which he or she has
completed five or more years of Credited Service.
SECTION 2
PARTICIPATION
2.1 Commencement of Participation. The Chief Executive Officer ("CEO") of
the Corporation and such other key executives of the Corporation and
its Affiliated Employers as are designated by the CEO in writing and
approved by the Committee shall participate in the Plan as of a date
determined by the CEO.
2.2 Termination of Participation. A Member's participation in the Plan
shall terminate upon termination of his or her employment. Prior to
termination of employment, a Member may be removed, upon written notice
by the CEO as approved by the Committee, from further participation in
the Plan. As of the date of termination or removal, no further benefits
shall accrue to such individual hereunder.
9
<PAGE> 10
SECTION 3
AMOUNT AND FORM OF BENEFITS
3.1 Retirement Benefit.
(a) Eligibility. Upon the Retirement of a Member or Vested Former
Member from the Corporation or an Affiliated Employer, he or she
shall be entitled to the Retirement Benefit described in Section
3.1(b) hereof.
(b) Amount. The Retirement Benefit of a Member or Vested Former Member
shall be an annual benefit equal to the excess of (i) over the sum
of (ii), (iii), and (iv), where:
(i) is 50% of his or her Average Final Compensation, plus 2%
of such Average Final Compensation multiplied by the
number of his or her years of Credited Service in excess
of ten but not in excess of 15;
(ii) is the Basic Plan Benefit of the Member or Vested Former
Member as of the date of his or her Retirement, expressed
in the form of an annual straight life annuity, or if the
Basic Plan Benefit becomes payable before or after the
Member's or Vested Former Member's Retirement, the
Actuarial Equivalent Value as of the date of Retirement of
the Basic Plan Benefit, expressed in the form of an annual
straight life annuity starting on the earliest possible
date under the terms of the Basic Plan;
(iii) is the Other Retirement Income payable to the Member or
Vested Former Member as of the date of his or her
Retirement, expressed in the form of an annual straight
life annuity, or if the Other Retirement Income becomes
payable before or after the Member's or Vested
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<PAGE> 11
Former Member's Retirement, the Actuarial Equivalent Value
as of the date of Retirement of the Other Retirement
Income that becomes payable, expressed in the form of an
annual straight life annuity starting on the earliest
possible date under the terms of the appropriate
retirement arrangement; and
(iv) is the annual benefit payable to the Member or Vested
Former Member under the terms of the Predecessor to this
Plan as of the date of his or her Retirement, expressed in
the form of an annual straight life annuity.
3.2 Deferred Vested Benefit.
(a) Eligibility. Each Member and Vested Former Member who has
completed five or more years of Credited Service and whose
employment with the Corporation or an Affiliated Employer
terminates prior to Retirement, other than by reason of death or
Disability, shall be entitled to the Deferred Vested Benefit
described in Section 3.2(b) hereof.
(b) Amount. The Deferred Vested Benefit of a Member or Vested Former
Member shall be an annual benefit equal to the excess of (i) over
the sum of (ii), (iii), and (iv), where:
(i) is 25% of his or her Average Final Compensation, plus 5%
of such Average Final Compensation multiplied by the
number of his or her years of Credited Service in excess
of five but not in excess of ten, plus 2% of such Average
Final Compensation multiplied by the number of his or her
years of Credited Service in excess of ten but not in
excess of 15;
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<PAGE> 12
(ii) is the Basic Plan Benefit of the Member or Vested Former
Member as of the date his or her Deferred Vested Benefit
commences, expressed in the form of an annual straight
life annuity, or if the Basic Plan Benefit becomes payable
before or after the Member's or Vested Former Member's
Deferred Vested Benefit commences, the Actuarial
Equivalent Value as of such commencement date of the Basic
Plan Benefit, expressed in the form of an annual straight
life annuity starting on the earliest possible date under
the terms of the Basic Plan;
(iii) is the Other Retirement Income payable to the Member or
Vested Former Member as of the date his or her Deferred
Vested Benefit commences, expressed in the form of an
annual straight life annuity, or if the Other Retirement
Income becomes payable before or after the Member's or
Vested Former Member's Deferred Vested Benefit commences,
the Actuarial Equivalent Value as of such commencement
date of the Other Retirement Income that becomes
payable, expressed in the form of an annual straight life
annuity starting on the earliest possible date under the
terms of the appropriate retirement arrangement; and
(iv) is the annual benefit payable to the Member or Vested
Former Member under the terms of the Predecessor to this
Plan as of the date his or her Deferred Vested Benefit
commences, expressed in the form of an annual straight
life annuity.
3.3 Form of Payment.
(a) Except as provided under Section 3.3 (b) or Section 3.3(c), the
Retirement Benefit or Deferred Vested Benefit under this Plan, as
the case may be, shall be payable in monthly installments in the
form of a straight life annuity and
12
<PAGE> 13
without regard to any optional form of benefits elected under the
Basic Plan. Payments will commence on the first day of the
calendar month coinciding with or next following (i) the Member's
or Vested Former Member's Retirement, in the case of Retirement
Benefits or (ii) the later of the date the Member or Former Vested
Member attains age 55 or terminates employment, in the case of
Deferred Vested Benefits.
(b) If a Member or Vested Former Member made a Lump Sum Election
pursuant to Section 3.4 and such Lump Sum Election became
effective (i) prior to the date of such Member's or Vested Former
Member's Retirement or termination of employment with the
Corporation or an Affiliated Employer, the Retirement Benefit or
Deferred Vested Benefit under this Plan, as the case may be, shall
be payable in the form or combination of forms of payment elected
pursuant to such Lump Sum Election under Section 3.4 and without
regard to any optional form of benefits elected under the Basic
Plan. Any portion of the benefits hereunder payable in a lump sum
shall be paid as soon as practicable following (i) the Member's or
Vested Former Member's Retirement, in the case of Retirement
Benefits or (ii) the later of the date the Member or Vested Former
Member attains age 55 or terminates employment, in the case of
Deferred Vested Benefits.
(c) Notwithstanding the foregoing provisions of this Section 3.3, if
the lump sum value, determined in the same manner as provided
under Section 3.4(a), of a Member's or Vested Former Member's
Normal Retirement, Early Retirement or Deferred Vested Benefit is
$10,000 or less at the time such benefit is payable under this
Plan, such benefit shall be paid as a lump sum.
3.4 Lump Sum Election.
(a) A Member or Vested Former Member may elect to receive all, none,
or a
13
<PAGE> 14
specified portion, as provided in Section 3.4(c), of his or her
Retirement Benefit or Deferred Vested Benefit under the Plan as a
lump sum and to receive any balance of such benefit in the form of
an annuity; provided that any such Lump Sum Election shall be
effective for purposes of this Plan only if the conditions of
Section 3.4(b) are satisfied. A Member or Vested Former Member may
elect a payment form different than the payment form previously
elected by him or her under this Section 3.4(a) by filing a
revised election form; provided that any such new election shall
be effective only if the conditions of Section 3.4(b) are
satisfied with respect to such new election. Any prior Lump Sum
Election made by a Member that has satisfied the conditions of
Section 3.4(b) remains effective for purposes of the Plan until
such Member has made a new election satisfying the conditions of
Section 3.4(b). The amount of any portion of a Member's or a
Vested Former Member's Retirement Benefit or Deferred Vested
Benefit payable as a lump sum under this Section 3.4 will equal
the present value of such portion of the benefit, and such present
value shall be determined (i) based on a discount rate equal to
85% of the average of the 15-year non-callable U.S. Treasury bond
yields as of the close of business on the last business day of
each of the three months immediately preceding the date the
annuity value is determined and (ii) using the 1983 Group Annuity
Mortality Table.
(b) A Member's Lump Sum Election under Section 3.4(a) becomes
effective only if the following conditions are satisfied: (i) such
Member remains in the employment of the Corporation or an
Affiliated Employer, as the case may be, for the full 12 calendar
months immediately following the date of such election (the
"Election Date"), except in the case of death or Disability of
such Member as provided in Section 3.4(d) and (ii) such member
complies with the administrative procedures set forth by the
Committee with respect to the making of a Lump Sum Election.
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<PAGE> 15
(c) A Member making an election under Section 3.4(a) may specify the
portion of his Retirement Benefit or Deferred Vested Benefit under
the Plan to be received in a lump sum as follows: 0%, 25%, 50%,
75%, or 100%.
(d) In the event a Member who has made a Lump Sum Election pursuant to
Section 3.4(a) dies or becomes Disabled while employed by the
Corporation or an Affiliated Employer and such death or Disability
occurs during the 12 calendar-month period, immediately following
the Election Date, the condition under Section 3.4(b)(i) shall be
deemed satisfied with respect to such Member.
3.5 Cessation of Benefits. Notwithstanding any other provision of the Plan
(except as provided in Section 3.8 hereof), no benefits or no further
benefits, as the case may be, shall be paid to a Member, Vested Former
Member or Surviving Spouse if the Member or Vested Former Member has:
(a) become a stockholder (unless such stock is listed on a national
securities exchange or traded on a daily basis in the
over-the-counter market and the Member's or Vested Former Member's
ownership interest is not in excess of 2% of the company whose
shares are being purchased), employee, officer, director or
consultant of or to a corporation, or a member or an employee of
or a consultant to a partnership or any other business or firm,
which competes with any of the businesses owned or operated by the
Corporation, or if the Member or Vested Former Member becomes
associated with a company, partnership or individual which
company, partnership or individual acts as a consultant to
businesses in competition with the Corporation, such Member or
Vested Former Member provided services to such competing
businesses, whether or not, in any of the foregoing cases, such
Member or Vested Former Member accepts any form of compensation
from such competing entity or consultant; or
15
<PAGE> 16
(b) been discharged from employment with the Corporation or any
Affiliated Employer for "cause." "Cause" means (i) willful
malfeasance or willful misconduct by the Member or Former Vested
Member in connection with his or her employment, (ii) continuing
failure to perform such duties as are requested by any employee to
whom the Member or Vested Former Member reports or the Board or
(iii) the commission by a Member or Vested Former Member of (I)
any felony or (II) any misdemeanor involving moral turpitude.
3.6 Notification of Cessation of Benefits. In any case described in Section
3.5, the Member, Vested Former Member or Surviving Spouse shall be
given prior written notice that no benefits or no further benefits, as
the case may be, will be paid to such Member, Vested Former Member or
Surviving Spouse. Such written notice shall specify the particular
act(s), or failures to act, on the basis of which the decision to cease
paying his or her benefits has been made.
16
<PAGE> 17
3.7 Repayment of Benefits Paid as Lump Sum.
(a) Notwithstanding any other provision of the Plan, a Member or
Vested Former Member who receives in a lump sum any portion of his
or her Retirement Benefit or Deferred Vested Benefit pursuant to a
Lump Sum Election, shall receive such lump sum portion of such
Retirement Benefit or Deferred Vested Benefit subject to the
condition that if such Member or Vested Former Member engages in
any of the acts described in Section 3.5(a), then such Member or
Vested Former Member shall within 60 days after written notice by
the Corporation repay to the Corporation the amount described in
Section 3.7 (b).
(b) The amount described in this section shall equal the amount of the
Member's or Vested Former Member's lump sum benefit paid under
this Plan to which such Member or Vested Former Member would not
have been entitled, if such lump sum benefit had instead been
payable in the form of an annuity under this Plan and such annuity
payments were subject to the provisions of Section 3.5.
3.8 Change in Control. Notwithstanding anything to the contrary contained
herein, the provisions of Sections 3.5 through 3.7 shall be of no force
or effect from and after a Change in Control with respect to any Member
and Vested Former Member then employed by the Corporation or an
Affiliated Employer.
SECTION 4
DISABILITY BENEFITS
4.1 (a) Eligibility A Member who is enrolled for the maximum disability
insurance coverage available under the Basic Disability Plan and
who has become
17
<PAGE> 18
Disabled shall be entitled to the Disability Benefit described in
Section 4.1(b).
18
<PAGE> 19
(b) Amount. The Disability Benefit of a Member entitled thereto shall
be an annual benefit payable in monthly installments under this
Plan during the same period as disability benefits are actually
paid by the Basic Disability Plan, in an amount equal to 60% of
the Member's Covered Earnings, offset by the Member's (i) Basic
Disability Plan Benefit, (ii) Basic Plan Benefit, if the Basic
Disability Plan Benefit does not already include an offset for
such Basic Plan Benefit, and (iii) Other Disability Income.
SECTION 5
SURVIVING SPOUSE'S BENEFITS
5.1 Death Prior to Benefit Commencement. Upon the death of a Member or
Vested Former Member prior to the commencement of his or her Retirement
Benefit or Deferred Vested Benefit hereunder, his or her Surviving
Spouse will be entitled to an annual Surviving Spouse's Benefit under
this Plan equal to 50% of the Retirement Benefit or Deferred Vested
Benefit that would have been provided from the Plan had the Member or
Vested Member retired from or terminated employment with the
Corporation or an Affiliated Employer on the date of death.
5.2 Death on or After Benefit Commencement. Upon the death of a Member or
Vested Former Member while he or she is receiving Retirement Benefits
or Deferred Vested Benefits, his or her Surviving Spouse shall receive
a Surviving Spouse's Benefit equal to 50% of the Retirement Benefit, or
Deferred Vested Benefit, as the case may be, he or she was receiving at
the time of his or her death. Notwithstanding the foregoing, no benefit
shall be payable under this Section 5.2 to the extent a Retirement
Benefit or Deferred Vested Benefit was previously paid to a Member or
Vested Former Member in the form of a lump sum.
19
<PAGE> 20
5.3 Commencement of Surviving Spouse's Benefit. Except as provided in
Section 5.4, the Surviving Spouse's Benefit provided under Sections 5.1
or 5.2 will be payable monthly, commencing on the first day of the
month coincident with or next following the Member or Vested Former
Member's date of death, or, if the Member or Vested Former Member had
not attained age 55 at such time, on the date such Member or Vested
Former Member would have attained age 55, if he or she had lived. Such
benefits shall continue until the first day of the month in which the
Surviving Spouse dies.
5.4 Lump Sum Payment.
(a) If a Member or a Vested Former Member made a Lump Sum Election
under Section 3.4 but such Member or Vested Former Member died
prior to such lump sum payment, the Surviving Spouse's Benefit
payable under Section 5.1 hereof will be payable in the form or
combination of forms of payment so elected by such Member or
Vested Former Member pursuant to such Lump Sum Election. The
amount of any lump sum payment under the Plan, shall be determined
using the actuarial assumptions set forth in Section 3.4(a).
(b) If the lump sum value, determined in the same manner as provided
under Section 3.4(a), of a Surviving Spouse's Benefit is $10,000
or less at the time such Surviving Spouse's Benefit is payable
under this Plan, such benefit shall be paid as a lump sum.
(c) Any Surviving Spouse's Benefit which is payable as a lump sum
shall be paid, as soon as practicable, after the date when any
portion of such benefit payable in annuity form commences, or
would commence if any portion of such Surviving Spouse's Benefit
were payable as an annuity as set forth in Section 5.3.
20
<PAGE> 21
5.5 Reduction. Notwithstanding the foregoing provisions of this Section 5,
the amount of a Surviving Spouse's Benefit shall be reduced by one
percentage point for each year (including a half year or more as a full
year) in excess of ten that the age of the Member or Vested Former
Member exceeds the age of the Surviving Spouse.
21
<PAGE> 22
SECTION 6
THE COMMITTEE
6.1 Authority. The Committee shall be responsible for the administration of
the Plan and may delegate to any management committee, employee,
director or agent its responsibility to perform any act hereunder,
including without limitation those matters involving the exercise of
discretion, provided that such delegation shall be subject to
revocation at any time at its discretion. The Committee shall have the
authority to determine all questions arising in connection with the
Plan, to interpret the provisions of the Plan and construe all of its
terms, to adopt, amend, and rescind rules and regulations for the
administration of the Plan, and generally to conduct and administer the
Plan and to make all determinations in connection with the Plan as may
be necessary or advisable. All such actions of the Committee shall be
conclusive and binding upon all Members, Former Members, Vested Former
Members and Surviving Spouses.
SECTION 7
MISCELLANEOUS
7.1 Amendment; Termination. The Committee may, in its sole discretion,
terminate, suspend or amend this Plan at any time or from time to time,
in whole or in part; provided, however, that no termination, suspension
or amendment of the Plan may adversely affect a Member's or Vested
Former Member's benefit to which he or she is entitled under, or a
Vested Former Member's right or the right of a Surviving Spouse to
receive or to continue to receive a benefit in accordance with, the
Plan as in effect on the date immediately preceding the date of such
termination, suspension or amendment.
7.2 No Employment Rights. Nothing contained herein will confer upon any
Member,
22
<PAGE> 23
Former Member or Vested Former Member the right to be retained in the
service of the Corporation or any Affiliated Employer, nor will it
interfere with the right of the Corporation or any Affiliated Employer
to discharge or otherwise deal with Members, Former Members or Vested
Former Members with respect to matters of employment.
7.3 Payout in Discretion of the Committee. Notwithstanding anything herein
to the contrary, at any time following the termination of service of
the Member or Vested Former Member, the Committee may authorize, under
uniform rules applicable to all Members, Vested Former Members and
Surviving Spouses under the Plan, a lump sum distribution of a
Member's, Vested Former Member's and/or Surviving Spouse's Retirement
Benefit or Surviving Spouse's Benefit under the Plan in an amount equal
to the present value of such Retirement Benefit or Surviving Spouse's
Benefit, using the actuarial assumptions then in use for funding
purposes under the ACNielsen Corporation Balance Account for Retirement
Plan, in full satisfaction of all present and future Plan liability
with respect to such Member, Vested Former Member and/or Surviving
Spouse if the amount of such present value is less than $250,000. Such
lump sum distribution may be made without the consent of the Member,
Vested Former Member or Surviving Spouse.
7.4 Unfunded Status. Members and Vested Former Members shall have the
status of general unsecured creditors of the Corporation and this Plan
constitutes a mere promise by the Corporation to make benefit payments
at the time or times required hereunder. It is the intention of the
Corporation that this Plan be unfunded for tax purposes and for
purposes of Title I of ERISA and any trust created by the Corporation
and any assets held by such trust to assist the Corporation in meeting
its obligations under the Plan shall meet the requirements necessary to
retain such unfunded status.
7.5 Arbitration. Any dispute or controversy arising under or in connection
with the
23
<PAGE> 24
Plan shall be settled exclusively by arbitration in New York, New York
in accordance with the rules of the American Arbitration Association
then in effect. The Corporation shall pay the entire costs of any
proceeding brought by a Member, Vested Former Member, Former Member, or
Surviving Spouse hereunder, including the fees and expenses of counsel
and pension experts engaged by such person, and such expenses shall be
reimbursed promptly upon evidence that such expenses have been incurred
without awaiting the outcome of the proceedings; provided, however,
that such costs and expenses shall be repaid to the Corporation by the
recipient of same if it is finally determined by the arbitrators that
the position taken by such person was without merit. Failure of such
person to prevail in any dispute or controversy shall not be the sole
basis on which such determination shall be made.
7.6 No Alienation. A Member's or Vested Former Member's right to benefit
payments under the Plan are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment
or garnishment by creditors or such Member or Vested Former Member or
his or her Surviving Spouse.
7.7 Withholding. The Corporation may withhold from any benefit under the
Plan an amount sufficient to satisfy its tax withholding obligations.
7.8 Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of New York applicable to
contracts made and to be performed in such state to the extent not
preempted by federal law.
24
<PAGE> 25
In witness whereof, the Corporation has caused this document to be executed by
its officer effective November 1, 1996.
ACNielsen Corporation
/s/ Michael P. Connors
By:_______________________________
Its:______________________________
25
<PAGE> 1
Exhibit 10(n)
ACNIELSEN CORPORATION
RETIREMENT BENEFIT EXCESS PLAN
Effective January 1, 1997
<PAGE> 2
ACNIELSEN CORPORATION
RETIREMENT BENEFIT EXCESS PLAN
Effective January 1, 1997
INTRODUCTION
Effective January 1, 1997, the ACNielsen Corporation Retirement Benefit Excess
Plan (the "Plan") is established by ACNielsen Corporation (the "Corporation") to
provide participating employees with retirement benefits in excess of those
permitted to be paid under the ACNielsen Corporation Balance Account for
Retirement Plan (the "Qualified Plan") due to the limitations imposed by
Sections 401(a)(17) and 415 of the Internal Revenue Code of 1986, as amended
(the "Code"). For purposes of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), this Plan is intended to be unfunded and maintained
primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees.
Section I. Participation in the Plan
All participants in the Qualified Plan shall participate in this Plan whenever
their benefits under the Qualified Plan as from time to time in effect would
have exceeded the limitations on benefits imposed by Sections 401(a)(17) and 415
of the Code if such benefits were determined as though no provision were
contained in the Qualified Plan incorporating such limitations.
<PAGE> 3
Section II. Benefits
The Corporation shall pay to each participant in the Qualified Plan (or his or
her beneficiaries designated to receive benefits from the Qualified Plan) a
benefit equal to the excess of (a) over (b), where:
(a) equals the amount that would be payable to the participant (or his or
her beneficiaries) under the Qualified Plan in the absence of any
provision reducing benefits due to the benefit limitations imposed by
Sections 401(a)(17) and 415 of the Code; and
(b) equals the sum of (i) the actual benefits payable to the participant
(or his or her beneficiaries) from the Qualified Plan, and (ii) the
benefits payable to the participant (or his or her beneficiaries) from
the Pension Benefit Equalization Plan of The Dun & Bradstreet
Corporation, as in effect on October 31, 1996 (whether or not such
benefits are actually paid and whether or not such plan is actually in
existence), as determined by the Corporation in accordance with the
methods and assumptions specified in Appendix A of this Plan.
Notwithstanding the foregoing, no benefits shall be payable hereunder unless the
participant has a nonforfeitable right to benefits under the Qualified Plan.
Benefits hereunder shall be payable at the same time and in the same form as the
participant's (or his or her beneficiaries') benefits under the Qualified Plan;
provided, however, if an Election (as defined in Section IV of this Plan) has
been made and becomes effective prior to the date when benefits under this Plan
would otherwise be payable to the participant, the form of payment of benefits
under this Plan shall be in the form so elected pursuant to such Election. If an
Election becomes effective and the participant dies prior to the date when
benefits would otherwise be payable hereunder, his or her beneficiaries
designated to receive benefits from the Qualified Plan shall receive benefits in
the form so elected pursuant to such Election. If the participant has not
designated a beneficiary under the Qualified Plan, or if no such beneficiary is
living at the time of the participant's death, the amount, if any, payable
<PAGE> 4
hereunder upon his or her death shall be distributed to the person or persons
who would otherwise be entitled to receive a distribution of the participant's
Qualified Plan benefits.
Notwithstanding any Election, if the lump sum value, determined in the same
manner as provided under Section IV below, of the benefits payable to the
participant or his or her beneficiaries under this Plan, after the payment of
any lump sum described in this Section, is $10,000 or less at the time such
benefits are payable under this Plan, such benefits shall be payable as a lump
sum.
Any portion of the benefits payable under this Plan as a lump sum shall be paid
at the same time as benefits payable in any other form hereunder would otherwise
commence.
Section III. Unfunded Status
Participants hereunder shall have the status of general unsecured creditors of
the Corporation and this Plan constitutes a mere promise by the Corporation to
make benefit payments at the time or times required hereunder. It is the
intention of the Corporation that this Plan be unfunded for tax purposes and for
purposes of Title I of ERISA and any trust created by the Corporation and any
assets held by such trust to assist the Corporation in meeting its obligations
under the Plan shall meet the requirements necessary to retain such unfunded
status.
Section IV. Election of Form of Payment
A participant under this Plan may elect to receive all, none, or a specified
portion, as provided below, of his benefits hereunder as a lump sum and to
receive any balance of such benefits in the form of an annuity (an "Election");
provided that any such Election shall be effective for purposes of this Plan
only if (i) such participant remains in the employment of the Corporation or an
affiliate, as the case may be, for the full 12 calendar months immediately
following the Election Date of such Election, except in the case of such
<PAGE> 5
participant's death or disability as provided below and (ii) such participant
complies with the administrative procedures set forth by the Committee with
respect to the making of an Election.
Any portion of the benefit payable to the participant (or his or her
beneficiaries) in the form of an annuity shall be paid at the same time and in
the same form as his or her benefits under the Qualified Plan. Any portion of
the benefit payable to the participant (or his or her beneficiaries) in the form
of a lump sum shall be paid at the same time as the benefits under the Qualified
Plan commence.
A participant may elect a payment form different than the payment form
previously elected by him or her by filing a revised election form; provided
that any such new Election shall be effective only if the conditions in clauses
(i) and (ii) of the immediately preceding paragraph are satisfied with respect
to such new Election. Any prior Election made by a participant that has
satisfied such conditions remains effective for purposes of this Plan until such
participant has made a new Election satisfying such conditions.
A participant making an election under this Section IV may specify the portion
of his benefits under this Plan to be received in a lump sum as follows: 0
percent, 25 percent, 50 percent, 75 percent or 100 percent.
In the event a participant who has made an Election dies or becomes disabled
within the meaning of the Corporation's long-term disability plan while employed
by the Corporation or an affiliate and such death or disability occurs during
the 12-calendar-month period immediately following the Election Date of such
Election, the condition that such participant remain employed with the
Corporation or an affiliate for such 12-month period shall be deemed to be
satisfied and such Election shall be effective with respect to benefits payable
to such participant or participant's beneficiaries under this Plan.
The amount of any portion of the benefits payable as a lump sum under this
Section IV will equal the present value of such portion of such benefits, and
the present value shall be determined (i) based on a discount rate equal to the
average of 85% of the 15-year non-callable U.S. Treasury bond yields as of the
close of business on the last business day of each of the three months
immediately preceding the date the annuity value is determined and (ii) using
the 1983 Group Annuity Mortality Table.
<PAGE> 6
"Election Date" for purposes of this Plan means the date that a properly
completed election form with respect to an Election is received by the
Corporation.
Section V. Cessation of Benefits
Notwithstanding any other provision of the Plan (except as provided below in
this Section V), no benefits or no further benefits, as the case may be, shall
be paid to a participant or his or her beneficiary if the participant has:
(a) become a stockholder (unless such stock is listed on a national
securities exchange or traded on a daily basis in the over-the-counter
market and the participant's ownership interest is not in excess of 2%
of the company whose shares are being purchased), employee, officer,
director or consultant of or to a corporation, or a member or an
employee of or a consultant to a partnership or any other business or
firm, which competes with any of the businesses owned or operated by
the Corporation, or if the participant becomes associated with a
company, partnership or individual which company, partnership or
individual acts as a consultant to businesses in competition with the
Corporation, such participant provided services to such competing
businesses, whether or not, in any of the foregoing cases, such
participant accepts any form of compensation from such competing entity
or consultant; or
(b) been discharged from employment with the Corporation or any affiliate
for "cause." "Cause" means (i) willful malfeasance or willful
misconduct by the participant in connection with his or her employment,
(ii) continuing failure to perform such duties as are requested by any
employee to whom the participant reports or the board of directors of
the Corporation, or (iii) the commission by a participant of (I) any
felony or (II) any misdemeanor involving moral turpitude.
In any case described in this Section V, the participant or beneficiary shall be
given prior written notice that no benefits or no further benefits, as the case
may be, will be paid to such participant or beneficiary. Such written notice
shall specify the particular act(s), or failures to act, on the basis of which
the decision to cease paying his or her benefits has been made.
Notwithstanding any other provision of the Plan, a participant who receives in a
lump sum any portion of his or her benefits hereunder shall receive such lump
sum portion of such benefits subject to the condition that if such participant
engages in any of the acts described in this
<PAGE> 7
Section V, then such participant shall within 60 days after written notice by
the Corporation repay to the Corporation the amount described in the immediately
succeeding sentence. The amount described in this sentence shall equal the
amount of the participant's lump sum benefit under this Plan to which such
participant would not have been entitled, if such lump sum benefit had instead
been payable in the form of an annuity under this Plan and such annuity payments
were subject to the provisions of this Section V.
Notwithstanding anything to the contrary contained herein, the provisions of
this Section V shall be of no further force or effect from and after a "Change
in Control" with respect to participants then employed by the Corporation or its
affiliates. For this purpose, a "Change in Control" shall mean:
(a) any "Person," as such term is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than the Corporation, any trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation,
or any company owned, directly or indirectly, by the stockholders of
the Corporation in substantially the same proportions as their
ownership of stock of the Corporation), becomes the "Beneficial Owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing 20% or more
of the combined voting power of the Corporation's then-outstanding
securities;
(b) during any period of 24 months (not including any period prior to the
effective date of this Plan), individuals who at the beginning of such
period constitute the board of directors of the Corporation (the
"Board"), and any new director (other than (i) a director nominated by
a Person who has entered into an agreement with the Corporation to
effect a transaction described in paragraphs (a), (c) or (d) of this
definition, (ii) a director nominated by any Person (including the
Corporation) who publicly announces an intention to take or to consider
taking actions (including, but not limited to, an actual or threatened
proxy contest) which if consummated would constitute a Change in
Control or (iii) a director nominated by any Person who is the
Beneficial Owner, directly or indirectly, of securities of the
Corporation representing 10% or more of the combined voting power of
the Corporation's securities) whose election by the Board or nomination
for election by the Corporation's stockholders was approved in advance
by a vote of at least two-thirds of the directors then still in office
who either were directors at the
<PAGE> 8
beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute at least
a majority thereof;
(c) the stockholders of the Corporation approve any transaction or series
of transactions under which the Corporation is merged or consolidated
with any other company, other than a merger or consolidation (i) which
would result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than 66 % of the combined voting powers of the
voting securities of the Corporation or such surviving entity
outstanding immediately after such merger or consolidation and (ii)
after which no Person holds 20% or more of the combined voting power of
the then-outstanding securities of the Corporation or such surviving
entity; or
(d) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets.
<PAGE> 9
Section VI. Miscellaneous
The Compensation Committee of the board of directors of the Corporation shall be
responsible for the administration of the Plan and may delegate to any
management committee, employee, director or agent its responsibility to perform
any act hereunder, including without limitation those matters involving the
exercise of discretion, provided that such delegation shall be subject to
revocation at any time at its discretion. The Committee shall have the authority
to determine all questions arising in connection with the Plan, to interpret the
provisions of the Plan and construe all of its terms, to adopt, amend, and
rescind rules and regulations for the administration of the Plan, and generally
to conduct and administer the Plan and to make all determinations in connection
with the Plan as may be necessary or advisable. All such actions of the
Committee shall be conclusive and binding upon all participants and
beneficiaries.
The Committee may, in its sole discretion, terminate, suspend or amend this Plan
at any time or from time to time, in whole or in part; provided, however, that
in the event of termination, the rights of participants to their accrued
benefits hereunder shall become nonforfeitable. No termination, suspension or
amendment of the Plan may adversely affect a participant's or beneficiary's
benefit to which he or she is entitled under the Plan as in effect on the date
immediately preceding the date of such termination, suspension or amendment.
Nothing contained herein will confer upon any participant the right to be
retained in the service of the Corporation or any affiliate, nor will it
interfere with the right of the Corporation or any affiliate to discharge or
otherwise deal with participants with respect to matters of employment.
A participant's right to benefit payments under the Plan are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment or garnishment by creditors of such participant or his
or her beneficiary.
The Corporation may withhold from any benefit under the Plan an amount
sufficient to satisfy its tax withholding obligations.
The Plan shall be governed by and constructed in accordance with the laws of
the State of New York applicable to contracts made and to be performed in such
state to the extent not preempted by federal law.
<PAGE> 10
In witness whereof, the Corporation has caused this document to be executed by
its officer effective January 1, 1997.
ACNielsen Corporation
By: Michael P. Connors
---------------------------------
Its:
<PAGE> 11
APPENDIX A
The benefits payable from the Pension Benefit Equalization Plan of The Dun &
Bradstreet Corporation (the "PBEP") to participants in this Plan shall be
determined as amounts payable monthly in the form of a single life annuity
commencing on the first day of the month coincident with or next following the
date the participant attains age 65 (the "Normal Retirement Date").
In the event a participant's benefit from this Plan is paid in a form other than
a single life annuity, however, the benefits payable from the PBEP shall be
adjusted to equal the actuarial equivalent value of the single life annuity
amount computed on the basis of mortality rates shown in Appendix B of this Plan
and 6.75% interest. In the event a participant's benefit from this Plan
commences prior to the participant's Normal Retirement Date, and the participant
terminated employment with the Corporation on or after he or she attained age
55, the benefits payable from the PBEP commencing on the first day of the month
coincident with or next following the participant's Normal Retirement Date shall
be reduced by 3/12% for each month prior to the Normal Retirement Date that
benefits commence. In the event a participant's benefit from this Plan commences
prior to the participant's Normal Retirement Date, and the participant
terminated employment with the Corporation before he or she attained age 55, the
benefits payable from the PBEP as determined in accordance with the provisions
set forth above shall be adjusted to equal the actuarial equivalent value of
such amount computed on the basis of mortality rates shown in Appendix B of this
Plan and 6.75% interest.
<PAGE> 12
APPENDIX B
MORTALITY RATES
<TABLE>
<CAPTION>
Age Participant Beneficiary Age Participant Beneficiary
<C> <C> <C> <C> <C> <C>
25 .000581 .000470 68 .024559 .018359
26 .000610 .000497 69 .026871 .020335
27 .000644 .000526 70 .029559 .022766
28 .000681 .000557 71 .032952 .025919
29 .000720 .000591 72 .036762 .029529
30 .000763 .000629 73 .040907 .033496
31 .000811 .000669 74 .045427 .037808
32 .000866 .000714 75 .050298 .042428
33 .000923 .000762 76 .055809 .047551
34 .000988 .000814 77 .062080 .053217
35 .001059 .000873 78 .069068 .059419
36 .001136 .000936 79 .076746 .066152
37 .001223 .001077 80 .084955 .073330
38 .001318 .001084 81 .093582 .080901
39 .001423 .001168 82 .102603 .088868
40 .001539 .001261 83 .111984 .097236
41 .001682 .001369 84 .121754 .106074
42 .001869 .001497 85 .131910 .115436
43 .002097 .001647 86 .142522 .125403
44 .002364 .001815 87 .153693 .136075
45 .002670 .002005 88 .165518 .147557
46 .003011 .002216 89 .178093 .159954
47 .003388 .002449 90 .191529 .173397
48 .003797 .002705 91 .203702 .185997
49 .004241 .002983 92 .216646 .199614
50 .004717 .003289 93 .230478 .214387
51 .005216 .003594 94 .245331 .230463
52 .005746 .003926 95 .261353 .248008
53 .006310 .004288 96 .278704 .267202
</TABLE>
<PAGE> 13
<TABLE>
<CAPTION>
Age Participant Beneficiary Age Participant Beneficiary
<C> <C> <C> <C> <C> <C>
54 .006907 .004683 97 .297562 .288242
55 .007538 .005112 98 .318124 .311344
56 .008206 .005588 99 .340598 .336741
57 .008916 .006123 100 .365204 .364688
58 .009679 .006729 101 .392179 .395460
59 .010510 .007415 102 .421772 .429358
60 .011426 .008190 103 .455805 .467222
61 .012449 .009063 104 .496440 .510917
62 .013608 .010042 105 .545840 .562310
63 .014928 .011131 106 .606167 .623265
64 .016449 .012338 107 .679585 .695646
65 .018207 .013671 108 .768255 .781319
66 .020245 .015129 109 .874340 .882150
67 .022388 .016662 110 .999999 .999999
</TABLE>
<PAGE> 1
Exhibit. 10(o)
THE ACNIELSEN CORPORATION EXECUTIVE TRANSITION PLAN
ACNielsen Corporation (the "Company") wishes to define those
circumstances under which it will provide assistance to an Eligible Employee in
the event of his or her Eligible Termination (as such terms are defined herein).
Accordingly, the Company hereby establishes The ACNielsen Executive Transition
Plan (the "Plan").
SECTION 1 - DEFINITIONS
1.1 "Cause" shall mean (a) willful malfeasance or willful
misconduct by the Eligible Employee in connection with his or her employment,
(b) continuing failure to perform such duties as are requested by any employee
to whom the Eligible Employee reports or the Company's board of directors, (c)
failure by the Eligible Employee to observe material policies of the Company
applicable to the Eligible Employee or (d) the commission by an Eligible
Employee of (i) any felony or (ii) any misdemeanor involving moral turpitude.
1.2 "Change in Control" shall mean (a) any "Person," as such
term is used for purposes of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (other than the Company, any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, or any company owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of stock
of the Company), becomes the "Beneficial Owner" (as such term is defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of the Company's
then-outstanding securities;
(b) during any period of twenty-four months (not including any
period prior to the effective date of this Plan), individuals who at the
beginning of such period constitute the board of directors of the Company (the
"Board"), and any new director (other than (i) a director nominated by a Person
who has entered into an agreement with the Company to effect a transaction
described in paragraphs (a), (c), or (d) hereof, (ii) a director nominated by
any Person (including the Company) who publicly announces an intention to take
or to consider taking
<PAGE> 2
2
actions (including, but not limited to, an actual or threatened proxy contest)
which if consummated would constitute a Change in Control or (iii) a director
nominated by any Person who is the Beneficial Owner, directly or indirectly, of
securities of the Company representing 10% or more of the combined voting power
of the Company's securities) whose election by the Board or nomination for
election by the Company's stockholders was approved in advance by a vote of at
least two thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at least
a majority thereof;
(c) the stockholders of the Company approve any transaction or
series of transactions under which the Company is merged or consolidated with
any other company, other than a merger or consolidation (i) which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 66 2/3% of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation and (ii) after
which no Person holds 20% or more of the combined voting power of the
then-outstanding securities of the Company or such surviving entity; or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
1.3 "Change in Control Period" shall mean the period beginning
upon a Change in Control and ending on the first anniversary thereof.
1.4 "Cognizant" shall mean Cognizant Corporation.
1.5 "Compensation Committee" shall mean the Compensation
Committee of the Board of Directors of the Company.
1.6 "Dun & Bradstreet" shall mean The Dun & Bradstreet
Corporation.
<PAGE> 3
3
1.7 "Eligible Employee" shall mean the Chief Executive Officer
of the Company and such other executive officers of the Company or its
affiliates as are designated in writing by the Chief Executive Officer.
1.8 "Eligible Termination" shall mean (a) an involuntary
termination of employment with the Company by reason of a reduction in force
program, job elimination or unsatisfactory performance in the execution of an
Eligible Employee's duties or (b) a resignation mutually agreed to in writing by
the Company and the Eligible Employee. Notwithstanding the foregoing, an
Eligible Termination shall not include (w) a unilateral resignation, (x) a
termination by the Company for Cause, (y) a termination as a result of a sale
(whether in whole or in part, of stock or assets), merger or other combination,
spinoff, reorganization or liquidation, dissolution or other winding up or other
similar transactions involving the Company; provided however, that a termination
of employment as a result of a Change in Control and during the Change in
Control Period shall not be covered by this clause (y), or (z) any termination
where an offer of employment is made to the Eligible Employee of a comparable
position at the Company or, if such termination occurs within six months
following the effective date of this Plan (as set forth in Section 5.8 hereof),
at Cognizant or Dun & Bradstreet, in any case concurrently with his or her
termination.
1.9 "Employee Benefits Committee" shall mean a committee of
Company management employees heretofore established by the Compensation
Committee.
1.10 "Salary" shall mean an Eligible Employee's annual base
salary at the time his or her employment terminates, except as otherwise
provided in Schedule A hereto.
1.11 "Severance and Release Agreement" shall mean an agreement
signed by the Eligible Employee substantially in the form attached hereto as
Exhibit 1. Notwithstanding the foregoing, the Company may, at any time other
than during the Change in Control Period, by action of its chief human resources
officer or chief legal counsel, modify the form of Severance and Release
Agreement to be signed by any Eligible Employee in a manner approved by the
Employee Benefits Committee.
1.12 "Spinoff Date" shall mean the date on which is effected
the distribution of (i) common stock of the Company
<PAGE> 4
4
owned by Dun & Bradstreet and (ii) common stock of Cognizant owned by Dun &
Bradstreet, to holders of record of shares of common stock, par value $1.00 per
share of, Dun & Bradstreet.
SECTION 2 - SEVERANCE BENEFITS
2.1 Subject to the provisions of this Section 2, in the event
of an Eligible Termination, an Eligible Employee shall be entitled to receive
from the Company the benefits set forth on Schedule A hereto.
2.2 The grant of severance benefits pursuant to Section 2.1
hereof is conditioned upon an Eligible Employee's (a) signing a Severance and
Release Agreement and the expiration of any revocation period set forth therein
and, (b) relinquishment of any right to benefits under The ACNielsen Corporation
Career Transition Plan.
2.3 Notwithstanding any other provision contained herein
(except as set forth in this Section 2.3), the Chief Executive Officer of the
Company may, at any time, take such action as such officer, in such officer's
sole discretion, deems appropriate to reduce or increase by any amount the
benefits otherwise payable to an Eligible Employee pursuant to Schedule A or
otherwise modify the terms and conditions applicable to an Eligible Employee
under this Plan provided that the Chief Executive Officer reports any reduction
or increase in benefits or other modification of the terms and conditions hereof
to the Compensation Committee and provided further that with respect to benefits
payable, or other modifications applicable, to the Chief Executive Officer, only
the Compensation Committee may take such action. Notwithstanding the foregoing,
during the Change in Control period, the Chief Executive Officer may not reduce
by any amount the benefits otherwise payable to an Eligible Employee pursuant to
Schedule A or otherwise modify the terms and conditions applicable to an
Eligible Employee under the Plan. Benefits granted hereunder may not exceed an
amount nor be paid over a period which would cause the Plan to be other than a
"welfare benefit plan" under section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
2.4 In the event the Company, in its sole discretion, grants
an Eligible Employee a period of inactive employee status, then, in such event,
any amounts paid to such Eligible Employee during any such period shall offset
the benefits payable under this Plan. For this purpose, a period of inactive
employee
<PAGE> 5
5
status shall mean the period beginning on the date such status commences (of
which the Eligible Employee shall be notified) and ending on the date of such
Eligible Employee's termination of employment.
SECTION 3 - AMENDMENT AND TERMINATION
3.1 The Company reserves the right to terminate the Plan at
any time and without any further obligation by action of its board of directors
or such other person or persons to whom the board properly delegates such
authority; provided however, that during the Change in Control Period, the
Company may not terminate the Plan.
3.2 The Company shall have the right to modify or amend the
terms of the Plan at any time, or from time to time, to any extent that it may
deem advisable by action of its board of directors, the Compensation Committee
or such other person or persons to whom the board or the Compensation Committee
properly delegates such authority; provided, however, that during the Change in
Control Period, the Company may not modify or amend the terms of the Plan in a
manner which reduces the compensation or benefits otherwise payable hereunder.
3.3 All modifications of or amendments to the Plan shall be in
writing.
SECTION 4 - ADMINISTRATION OF THE PLAN
4.1 The Employee Benefits Committee shall be the Plan
Administrator and shall have the exclusive right, power and authority to:
(a) interpret, in its sole discretion, any and all of
the provisions of the Plan;
(b) establish a claims and appeals procedure; and
(c) consider and decide conclusively any questions (whether of
fact or otherwise) arising in connection with the administration of the Plan or
any claim for severance benefits arising under the Plan.
<PAGE> 6
6
Any decision or action of the Employee Benefits Committee pursuant to this
Section 4.1 shall be conclusive and binding on any affected person.
4.2 The Employee Benefits Committee may, in its sole
discretion, designate any person(s) or committee to function as the Employee
Benefits Committee for purposes of any part or all of this Section 4.
4.3 The Company shall indemnify any individual who is a
director, officer or employee of the Company or any affiliate, or his or her
heirs and legal representatives, against all liability and reasonable expense,
including counsel fees, amounts paid in settlement and amounts of judgments,
fines or penalties, incurred or imposed upon him or her in connection with any
claim, action, suit or proceeding, whether civil, criminal, administrative or
investigative, in connection with his or her duties with respect to the Plan,
provided that any act or omission giving rise to such claim, action, suit or
proceeding does not constitute willful misconduct or is not performed or omitted
in bad faith.
SECTION 5 - MISCELLANEOUS
5.1 Neither the establishment of the Plan nor any action of
the Company, the Compensation Committee, Employee Benefits Committee or any
fiduciary shall be held or construed to confer upon any person any legal right
to continue employment with the Company. The Company expressly reserves the
right to discharge any employee whenever the interest of the Company, in its
sole judgment, may so require, without any liability on the part of the Company,
the Compensation Committee, Employee Benefits Committee or any fiduciary.
5.2 Benefits payable under the Plan shall be paid out of the
general assets of the Company or an affiliate. The Company need not fund the
benefits payable under this Plan; however, nothing in this Section 5.2 shall be
interpreted as precluding the Company from funding or setting aside amounts in
anticipation of paying such benefits. Any benefits payable to an Eligible
Employee under this Plan shall represent an unsecured claim by such Eligible
Employee against the general assets of the Company that employed such Eligible
Employee.
5.3 The Company shall deduct from the amount of any severance
benefits payable hereunder the amount required by law
<PAGE> 7
7
to be withheld for the payment of any taxes and any other amount, properly to be
withheld.
5.4 Benefits payable under the Plan shall not be subject to
assignment, alienation, transfer, pledge, encumbrance, commutation or
anticipation by the Eligible Employee. Any attempt to assign, alienate,
transfer, pledge, encumber, commute or anticipate Plan benefits shall be void.
5.5 This Plan shall be interpreted and applied in accordance
with the laws of the State of New York, except to the extent superseded by
applicable federal law.
5.6 This Plan will be of no force or effect to the extent
superseded by foreign law.
5.7 This Plan supersedes any and all prior severance
arrangements, policies, plans or practices of the Company (whether written or
unwritten). Notwithstanding the preceding sentence, the Plan does not affect the
severance provisions of any written individual employment contracts or written
agreements between an Eligible Employee and the Company. Benefits payable under
the Plan shall be offset by any other severance or termination payment made by
the Company including, but not limited to, amounts paid pursuant to any
agreement or law.
5.8 This Plan shall be effective as of the Spinoff Date.
<PAGE> 8
SCHEDULE A
An Eligible Employee entitled to benefits hereunder shall,
subject to Section 2 of the Plan, receive the following:
1. Salary Continuation
The Eligible Employee shall receive 104 weeks of Salary
continuation, provided, however, that for purposes of determining the Salary
continuation amount, in the event the Eligible Employee has incurred an Eligible
Termination other than by reason of unsatisfactory performance, "Salary" shall
include the Eligible Employee's guideline annual bonus opportunity under the
applicable Annual Incentive Plan (as defined in paragraph 3 hereof) for the year
of termination, payment of which will be prorated annually over a period equal
to the number of weeks of Salary continuation (the "Salary Continuation Period")
and made at the same time as other Salary continuation amounts. Salary
continuation hereunder shall be paid at the times the Eligible Employee's Salary
would have been paid if employment had not terminated, over the Salary
Continuation Period. In the event the Eligible Employee performs services for an
entity other than the Company or a Participating Company during the Salary
Continuation Period, such employee shall notify the Company on or prior to the
commencement thereof. For purposes of this Schedule A, to "perform services"
shall mean employment or services as a full-time employee, consultant, owner,
partner, associate, agent or otherwise on behalf of any person, principal,
partnership, firm or corporation (other than the Company or a Participating
Company). All Salary continuation payments shall cease upon re-employment by the
Company or a Participating Company or, if such re-employment occurs within six
months following the Spinoff Date, by Cognizant or Dun & Bradstreet. For
purposes of this paragraph 1, a "Participating Company" shall have the meaning
set forth in The ACNielsen Corporation Career Transition Plan.
2. Welfare Benefit Continuation
Medical, dental and life insurance benefits shall be provided
throughout the Salary Continuation Period at the levels in effect for the
Eligible Employee immediately prior to termination of employment but in no event
greater than the levels in effect for active employees generally during the
Salary Continuation Period, provided that the Eligible Employee shall pay the
employee portion of any required premium payments at the
<PAGE> 9
2
level in effect for employees generally of the Company for such benefits. For
purposes of determining an Eligible Employee's entitlement to continuation
coverage as required by Title I, Subtitle B, Part 6 of ERISA, such employee's
18-month or other period of coverage shall commence on his or her termination of
employment.
3. Annual Bonus Payment
Subject to the provisions of this paragraph 3, a cash bonus
for the calendar year of termination may be paid in an amount equal to the
actual bonus which would have been payable to the Eligible Employee under the
annual bonus plan in which he or she participates (the "Annual Incentive Plan")
had such employee remained employed through the end of the year of such
termination multiplied by a fraction the numerator of which is the number of
full months of employment during the calendar year of termination and the
denominator of which is 12. Such bonus shall be payable at the time otherwise
payable under the Annual Incentive Plan had employment not terminated.
Notwithstanding the foregoing, no amount shall be paid under this paragraph in
the event the Eligible Employee incurred an Eligible Termination by reason of
unsatisfactory performance. The foregoing provisions of this paragraph 3 shall
be appropriately modified in the case of any plan not on a calendar year basis.
4. Long-Term Bonus Payments
Subject to the provisions of this paragraph 4, a cash bonus
may be paid with respect to the performance cycle(s) in progress at the time of
termination under any bonus plan with a performance cycle of greater than one
year in which the Eligible Employee participates immediately prior to
termination (the "Long-Term Plan"), in the event the Eligible Employee was
employed by a Participating Company for at least half the period of such
performance cycle. In such event, the Eligible Employee shall receive a bonus in
an amount equal to the actual bonus which would have been payable under the
Long-Term Plan had such employee remained employed through the end of the cycle
during which his or her employment terminates multiplied by a fraction the
numerator of which is the number of full months of employment during the
applicable cycle and the denominator of which is the number of months in such
cycle. Such bonus shall be payable in cash at the time otherwise payable under
the Long-Term Plan had employment not terminated whether or not the bonus under
the Long-Term Plan was otherwise payable in cash, stock, restricted
<PAGE> 10
3
stock or any combination of the foregoing. Notwithstanding the foregoing, no
amount shall be paid under this paragraph in the event the Eligible Employee
incurred an Eligible Termination by reason of unsatisfactory performance.
5. Death
Upon the death of an Eligible Employee during the Salary
Continuation Period, the benefits described in paragraphs 1, 3 and 4 of this
Schedule shall continue to be paid to his or her estate, as applicable, at the
time or times otherwise provided for herein.
6. Other Benefits
The Eligible Employee shall be entitled to such executive
outplacement services during the Salary Continuation Period as shall be provided
by the Company. During the Salary continuation period, financial
planning/counseling shall be afforded to the Eligible Employee to the same
extent afforded immediately prior to termination of employment in the event the
Eligible Employee incurred an Eligible Termination other than by reason of
unsatisfactory performance.
7. No Further Grants, Etc.
Following an Eligible Employee's termination of employment, no
further grants, awards, contributions, accruals or continued participation
(except as otherwise provided for herein) shall be made to or on behalf of such
employee under any plan or program maintained by the Company including, but not
limited to, any Annual Incentive Plan, any Long-Term Plan or any qualified or
nonqualified retirement, profit sharing, stock option or restricted stock plan
of the Company. Any unvested or unexercised options, unvested restricted stock
and all other benefits under any plan or program maintained by the Company
(including, but not limited to, any Annual Incentive Plan, any Long-Term Plan or
any qualified or nonqualified retirement, profit sharing, stock option or
restricted stock plan) which are held or accrued by an Eligible Employee at the
time of his or her termination of employment, shall be treated in accordance
with the terms of such plans and programs under which such options, restricted
stock or other benefits were granted or accrued.
<PAGE> 11
Exhibit 1
SEVERANCE AGREEMENT AND RELEASE
THIS SEVERANCE AGREEMENT AND RELEASE, made by and between
(hereinafter referred to as "Employee"), and
ACNielsen Corporation (hereinafter deemed to include its worldwide subsidiaries
and affiliates and referred to as "the Company").
WITNESSETH THAT:
WHEREAS, Employee has been employed by the Company since the
date specified in the Appendix; and
WHEREAS, the parties to this Agreement desire to enter into an
agreement in order to provide certain benefits and salary continuation to
Employee;
NOW, THEREFORE, in consideration of the mutual covenants and
promises hereinafter provided and of the actions taken pursuant thereto, the
parties agree as follows:
1. Employee's employment with the Company, and Employee's
membership on any committees, is terminated effective on the date specified in
the Appendix.
2. Effective on the date set forth in the Appendix, Employee
will incur an "Eligible Termination" under The ACNielsen Corporation Executive
Transition Plan (the "Plan"), a summary plan description of which Employee
hereby acknowledges receipt, and will, accordingly, be entitled to the benefits
set forth therein subject to the terms and conditions of such Plan. A summary of
the benefits to which Employee is entitled under the Plan is set forth in the
Appendix.
3. Through the Termination Date specified in the Appendix,
Employee will be reasonably available to consult on matters, and will cooperate
fully with respect to any claims, litigations or investigations, relating to the
Company. No reimbursement for expenses incurred after the commencement of a
<PAGE> 12
2
period of inactive employee status, or if there is no such period, after
termination of employment, shall be made to Employee unless authorized in
advance by the Company.
4. Employee agrees that until the Termination Date Employee
will not become a stockholder (unless such stock is listed on a national
securities exchange or traded on a daily basis in the over-the-counter market
and the Employee's ownership interest is not in excess of 2% of the company
whose shares are being purchased), employee, officer, director or consultant of
or to a corporation, or a member or an employee of or a consultant to a
partnership or any other business or firm, which competes with any of the
businesses owned or operated by the Company; nor if Employee becomes associated
with a company, partnership or individual which company, partnership or
individual acts as a consultant to businesses in competition with the Company
will Employee provide services to such competing businesses. The restrictions
contained in this paragraph shall apply whether or not Employee accepts any form
of compensation from such competing entity or consultant. Employee also agrees
that until the Termination Date Employee will not recruit or solicit any
customers of the Company to become customers of any business entity which
competes with any of the businesses owned or operated by the Company. In
addition, Employee agrees that until the Termination Date neither Employee nor
any company or entity Employee controls or manages, shall recruit or solicit any
employee of the Company to become an employee of any business entity.
5. If Employee performs services for an entity other than the
Company at any time prior to the Termination Date (whether or not such entity is
in competition with the Company), Employee shall notify the Company on or prior
to the commencement thereof. To "perform services" shall mean employment or
services as a full-time employee, consultant, owner, partner, associate, agent
or otherwise on behalf of any person, principal, partnership, firm or
corporation. For purposes of this paragraph 5 only, "Company" shall mean
ACNielsen Corporation and any other affiliated entity which has been designated
to participate in The ACNielsen Corporation Career Transition Plan by action of
the Employee Benefits Committee.
6. Employee agrees that Employee will not directly or
indirectly disclose any proprietary or confidential information, records, data,
formulae, specifications and other trade secrets owned by the Company, whether
oral or written, to any person or
<PAGE> 13
3
use any such information, except pursuant to court order (in which case Employee
will first provide the Company with written notice of such). All records, files,
drawings, documents, models, disks, equipment and the like relating to the
businesses of the Company shall remain the sole property of the Company and
shall not be removed from the premises of the Company. Employee further agrees
to return to the Company any property of the Company which Employee may have, no
matter where located, and not to keep any copies or portions thereof.
7. Employee shall not make any derogatory statements about the
Company and shall not make any written or oral statement, news release or other
announcement relating to Employee's employment by the Company or relating to the
Company, its subsidiaries, customers or personnel, which is designed to
embarrass or criticize any of the foregoing.
8. Employee agrees that in the event of any breach of the
covenants contained in paragraphs 3, 4, 5, 6 or 7 in addition to any remedies
that may be available to the Company, the Company may cease all payments
required to be made to Employee under the Plan and recover all such payments
previously made to Employee pursuant to the Plan. The parties agree that any
such breach would cause injury to the Company which cannot reasonably or
adequately be quantified and that such relief does not constitute in any way a
penalty or a forfeiture.
9. Employee, for Employee, Employee's family, representatives,
successors and assigns releases and forever discharges the Company and its
successors, assigns, subsidiaries, affiliates, directors, officers, employees,
attorneys, agents and trustees or administrators of any Company plan from any
and all claims, demands, debts, damages, injuries, actions or rights of action
of any nature whatsoever, whether known or unknown, which Employee had, now has
or may have against the Company, its successors, assigns, subsidiaries,
affiliates, directors, officers, employees, attorneys, agents and trustees or
administrators of any Company plan, from the beginning of Employee's employment
to and including the date of this Agreement relating to or arising out of
Employee's employment with the Company or the termination of such employment
other than a claim with respect to a vested right Employee may have to receive
benefits under any plan maintained by the Company. Employee represents that
Employee has not filed any action, complaint, charge, grievance or arbitration
against the Company or any of its successors, assigns, subsidiaries, affiliates,
directors,
<PAGE> 14
4
officers, employees, attorneys, agents and trustees or administrators of any
Company plan.
10. Employee covenants that neither Employee, nor any of
Employee's respective heirs, representatives, successors or assigns, will
commence, prosecute or cause to be commenced or prosecuted against the Company
or any of its successors, assigns, subsidiaries, affiliates, directors,
officers, employees, attorneys, agents and trustees or administrators of any
Company plan any action or other proceeding based upon any claims, demands,
causes of action, obligations, damages or liabilities which are being released
by this Agreement, nor will Employee seek to challenge the validity of this
Agreement, except that this covenant not to sue does not affect Employee's
future right to enforce appropriately the terms of this Agreement in a court of
competent jurisdiction.
11. Employee acknowledges that (a) Employee has been advised
to consult with an attorney at Employee's own expense before executing this
Agreement and that Employee has been advised by an attorney or has knowingly
waived Employee's right to do so, (b) Employee has had a period of at least
twenty-one (21) days within which to consider this Agreement, (c) Employee has a
period of seven (7) days from the date that Employee signs this Agreement within
which to revoke it and that this Agreement will not become effective or
enforceable until the expiration of this seven (7) day revocation period, (d)
Employee fully understands the terms and contents of this Agreement and freely,
voluntarily, knowingly and without coercion enters into this Agreement, (e)
Employee is receiving greater consideration hereunder than Employee would
receive had Employee not signed this Agreement and that the consideration
hereunder is given in exchange for all of the provisions hereof and (f) the
waiver or release by Employee of rights or claims Employee may have under Title
VII of the Civil Rights Act of 1964, The Employee Retirement Income Security Act
of 1974, the Age Discrimination in Employment Act of 1967, the Older Workers
Benefit Protection Act, the Fair Labor Standards Act, the Americans with
Disabilities Act, the Rehabilitation Act, the Worker Adjustment and Retraining
Act (all as amended) and/or any other local, state or federal law dealing with
employment or the termination thereof is knowing and voluntary and, accordingly,
that it shall be a breach of this Agreement to institute any action or to
recover any damages that would be in conflict with or contrary to this
acknowledgment or the releases Employee has granted hereunder. Employee
understands and agrees that the Company's payment of money and
<PAGE> 15
5
other benefits to Employee and Employee's signing of this Agreement does not in
any way indicate that Employee has any viable claims against the Company or that
the Company admits any liability whatsoever.
12. This Agreement constitutes the entire agreement of the
parties and all prior negotiations or representations are merged herein. It
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors, assigns, heirs and legal representatives but
neither this Agreement nor any rights hereunder shall be assignable by Employee
without the other Company's written consent. In addition, this Agreement
supersedes any prior employment or compensation agreement, whether written, oral
or implied in law or implied in fact between Employee and the Company, other
than those contracts and agreements excepted from the application of section 5.7
of the Plan pursuant to the terms of such section, which prior agreements are
hereby terminated.
13. If for any reason any one or more of the provisions of
this Agreement shall be held or deemed to be inoperative, unenforceable or
invalid by a court of competent jurisdiction, such circumstances shall not have
the effect of rendering such provision invalid in any other case or rendering
any other provisions of this Agreement inoperative, unenforceable or invalid.
14. This Agreement shall be construed in accordance with the
laws of the State of _____________, except to the extent superseded by
applicable federal law.
15. This Agreement shall terminate in its entirety the Change
in Control Severance Agreement between the Company and Employee. [USE PROVISION
IF APPLICABLE]
<PAGE> 16
6
IN WITNESS WHEREOF, Employee and ACNielsen Corporation, by its
duly authorized agent, have hereunder executed this Agreement.
Dated:
----------------------------------------------
Employee
ACNIELSEN CORPORATION
----------------------------------------------
Title:
<PAGE> 17
Appendix
Summary of Benefit Entitlements
Under The ACNielsen Corporation
Executive Transition Plan
<TABLE>
<CAPTION>
<S> <C>
Employment with ______________________________
Company Since:
Effective Date ______________________________
of Resignation:
Positions Resigned: ______________________________
Effective Date of ______________________________
Eligible Termination:
Termination Date: ______________________________
Salary Continuation: $____ per week for ____ weeks
Welfare Benefit Continuation: [LIST NAMES OF MEDICAL, DENTAL,
LIFE PLANS UNDER WHICH EMPLOYEE
COVERED]
Annual Bonus Payment: [x]/12 of the annual bonus
otherwise payable to you at time
of normal payment.
Long-Term Bonus Payments: [x]/[y] of the long-term bonus
otherwise payable to you for the
_______ cycles at time of normal
payment.
Executive Outplacement: As provided by the Company.
[FINANCIAL PLANNING/
COUNSELING:]
</TABLE>
THE DESCRIPTION OF BENEFITS CONTAINED IN THIS APPENDIX IS ONLY A
SUMMARY AND IS SUBJECT TO THE TERMS AND CONDITIONS OF THE PLAN. REFER
TO YOUR SUMMARY PLAN DESCRIPTION FOR MORE DETAIL.
<PAGE> 1
EXHIBIT 10(p)
TIER I
CHANGE-IN-CONTROL AGREEMENT
FOR CERTAIN EXECUTIVES
OF ACNIELSEN CORPORATION
November 1, 1996
PERSONAL AND CONFIDENTIAL
[NAME]
[ADDRESS]
Dear [NAME]:
ACNielsen Corporation (the "Company") considers it essential to the best
interests of its stockholders to foster the continued employment of key
management personnel. In this connection, the Board of Directors of the Company
(the "Board") recognizes that the possibility of a change in ownership or
control of the Company may result in the departure or distraction of such
personnel to the detriment of the Company and its stockholders. As you are a
skilled and dedicated executive with important management responsibilities and
talents, the Company believes that its best interests will be served if you are
encouraged to remain with the Company.
The Company has determined that your ability to perform your
responsibilities and utilize your talents for the benefit of the Company, and
the Company's ability to retain you as an employee, will be significantly
enhanced if you are provided with fair and reasonable protection from the risks
of a change in ownership or control of the Company. Accordingly, in order to
induce you to remain in the employ of the Company, you and the Company agree as
follows:
1. Term of Agreement.
(a) Generally. Except as provided in Section 1(b) hereof, (i) this
Agreement shall be effective as of the date on which the shares of common stock
of the Company that are owned by The Dun & Bradstreet Corporation ("D&B") are
distributed to the holders of record of shares of D&B, and shall continue in
effect through December 31, 1999, and (ii) commencing on January 1, 2000, and
each January 1 thereafter, this Agreement shall be automatically extended for
one additional year unless, not later than September 30th of the preceding year,
either party to this Agreement gives notice to the other that the Agreement
shall not be extended; provided, however, that no such notice by the Company
shall be effective if a Change in Control or Potential Change in Control (both
as defined herein) shall have occurred prior to the date of such notice.
<PAGE> 2
2
(b) Upon a Change in Control. If a Change in Control shall have
occurred at any time during the period in which this Agreement is effective,
this Agreement shall continue in effect for (i) the remainder of the month in
which the Change in Control occurred and (ii) a term of 15 months beyond the
month in which such Change in Control occurred (such entire period hereinafter
referred to as the "Protected Period").
2. Change in Control; Potential Change in Control.
(a) A "Change in Control" shall be deemed to have occurred if:
(i) any "Person," as such term is used for purposes of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than the Company, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or any company owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), becomes the "Beneficial
Owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company's then-outstanding securities;
(ii) during any period of twenty-four months (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other than
(A) a director nominated by a Person who has entered into an agreement with the
Company to effect a transaction described in Sections 2(a)(i), (iii) or (iv)
hereof, (B) a director nominated by any Person (including the Company) who
publicly announces an intention to take or to consider taking actions
(including, but not limited to, an actual or threatened proxy contest) which if
consummated would constitute a Change in Control or (C) a director nominated by
any Person who is the Beneficial Owner, directly or indirectly, of securities of
the Company representing 10% or more of the combined voting power of the
Company's securities) whose election by the Board or nomination for election by
the Company's stockholders was approved in advance by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
thereof;
(iii) the stockholders of the Company approve any transaction or
series of transactions under which the Company is merged or consolidated with
any other company, other than a merger or consolidation (A) which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity)
<PAGE> 3
3
more than 66 2/3% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation and (B) after which no Person holds 20% or more of the combined
voting power of the then-outstanding securities of the Company or such surviving
entity; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
(b) A "Potential Change in Control" shall be deemed to have
occurred if:
(i) the Company enters in an agreement, the consummation of
which would result in the occurrence of a Change in Control;
(ii) any Person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated would
constitute a Change in Control; or
(iii) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
(c) Employee Covenants. You agree that, subject to the terms and
conditions of this Agreement, in the event of a Potential Change in Control, you
will remain in the employ of the Company until the earliest of (i) a date which
is 180 days from the occurrence of such Potential Change in Control, (ii) the
termination of your employment by reason of Disability (as defined herein) or
(iii) the date on which you first become entitled under this Agreement to
receive the benefits provided in Section 3(b) hereof.
3. Termination.
(a) Termination by the Company for Cause, by You Without Good Reason,
or by Reason of Death or Disability. If during the Protected Period your
employment by the Company is terminated by the Company for Cause, by you without
Good Reason or because of your death or Disability, the Company shall be
relieved of its obligation to make any payments to you other than (i) its
payment of amounts otherwise accrued and owing but not yet paid and (ii) any
amounts payable under then-existing employee benefit programs at the time such
amounts are due.
(b) Termination by the Company Without Cause or by You for Good Reason.
If during the Protected Period your employment by the Company is terminated by
the Company without Cause or by you for Good Reason, you shall be entitled to
the compensation and benefits described in this Section 3(b). If your employment
<PAGE> 4
4
by the Company is terminated prior to a Change in Control at the request of a
Person engaging in a transaction or series of transactions that would result in
a Change in Control, the Protected Period shall commence upon the subsequent
occurrence of a Change in Control, your actual termination shall be deemed a
termination occurring during the Protected Period and covered by this Section
3(b), your Date of Termination shall be deemed to have occurred immediately
following the Change in Control, and Notice of Termination shall be deemed to
have been given by the Company immediately prior to your actual termination.
Your continued employment shall not constitute consent to, or a waiver of rights
with respect to, any circumstances constituting Good Reason hereunder. The
compensation and benefits provided under this Section 3(b) are as follows:
(i) The Company shall pay you your full base salary through the
Date of Termination at the rate in effect at the time Notice of Termination is
given, no later than the fifth day following the Date of Termination, and you
shall receive all other amounts to which you are entitled under any compensation
or benefit plan of the Company, at the time such payments are due.
(ii) At the time specified in Section 3(d) hereof, the Company
shall pay you, in lieu of any further salary, bonus or severance payments for
periods subsequent to the Date of Termination, a lump sum amount in cash equal
to three times the sum of:
(A) the greater of (I) your annual base salary in effect immediately prior
to the Change in Control of the Company or (II) your annual base salary in
effect at the time Notice of Termination is given; and
(B) the greater of (I) your annual target bonus for the year in which the
Change in Control occurs or, if no such target bonus has yet been
determined for such year, your annual target bonus for the immediately
preceding year or (II) the annual bonus actually earned by you in the year
immediately preceding the year in which the Change in Control occurs.
(iii) You shall be deemed fully vested under any nonqualified
pension plan of a type described in Section 201(2) of the Employee Retirement
Income Security Act of 1974, as amended, in which you participate at the time of
the Change in Control (except for any such plan established for the sole purpose
of restoring qualified pension benefits that were reduced due to limitations
imposed by Sections 415 and 401(a)(17) of the Internal Revenue Code of 1986, as
amended (the "Code")), and such nonqualified pension plan shall be referred to
as a "Covered Top-Hat Plan" for purposes of this Section 3(b)(iii). The benefit
to which you shall be entitled under any Covered Top-Hat Plan (the "Covered
Top-Hat Plan Benefit") shall be determined using:
<PAGE> 5
5
(A) the maximum credited service allowed to be taken into account under
the Covered Top-Hat Plan's benefit formula; and
(B) your salary and bonus taken into account under Section 3(b)(ii) hereof
as your final average compensation.
Your Covered Top-Hat Plan Benefit shall be payable upon the later of (A) the
date on which you turn 55 or (B) the date on which you terminate employment from
the Company. For purposes of calculating your Covered Top-Hat Plan Benefit, you
shall be deemed to have retired from the Company at normal retirement age as if
the Company had consented to such retirement. Exhibit A to this Agreement sets
forth an example of how the compensation and benefits provided under this
Section 3(b)(iii) shall be determined.
(iv) At the time specified in Section 3(d) hereof, the Company
shall pay to you, in lieu of amounts which may otherwise be payable to you under
any bonus plan (a "Bonus Plan"), an amount in cash equal to (A) your annual
target bonus for the year in which the Change in Control occurs, multiplied by a
fraction, (I) the numerator of which equals the number of full or partial days
in such annual performance period during which you were employed by the Company
and (II) the denominator of which is 365, and (B) the entire target bonus
opportunity with respect to each performance period in progress under all other
Bonus Plans in effect at the time of termination. Notwithstanding the foregoing,
this Section 3(b)(iv) shall not apply with respect to any amounts which may
otherwise be payable to you under the Company's Senior Executive Incentive Plan
or any other Bonus Plan of the Company that applies primarily to "covered
employees" within the meaning of Section 162(m) of the Code.
(v) The Company shall provide you with a cash allowance, at the
time specified in Section 3(d) hereof, for outplacement and job search
activities (including, but not limited to, office and secretarial expenses) in
the amount of 20% of your annual base salary and annual target bonus taken into
account under Section 3(b)(ii) hereof, provided that (A) such cash allowance
shall not exceed $100,000 and (B) such cash allowance shall apply only to those
costs or obligations that are incurred by you during the 36-month period
following your termination of employment.
(vi) For a 36-month period following your termination of
employment, the Company shall arrange to provide you with life and health
insurance benefits no less favorable than those which you were receiving
immediately prior to the Notice of Termination. Notwithstanding the foregoing,
any benefit described in the preceding sentence shall constitute secondary
coverage with respect to any life and health insurance
<PAGE> 6
6
benefits actually received by you in connection with any subsequent employment
(or self-employment) during the 36-month period following your termination.
(vii) Starting at age 55, you shall receive retiree medical and
life benefits from the Company. Such benefits shall be no less favorable than
the benefits that you would have received had you, at the time Notice of
Termination is given, both (A) attained age 55 and (B) retired from the Company.
Notwithstanding the foregoing, any benefit described in the preceding sentence
shall constitute secondary coverage with respect to retiree medical and life
benefits actually received by you in connection with any subsequent employment
(or self-employment) following your termination.
(c) Excise Tax. In the event you become entitled to any amounts payable
in connection with a change in control (whether or not such amounts are payable
pursuant to this Agreement) (the "Severance Payments"), if any of such Severance
Payments are subject to the tax (the "Excise Tax") imposed by Section 4999 of
the Code (or any similar federal, state or local tax that may hereafter be
imposed), the Company shall pay to you at the time specified in Section 3(d)
hereof an additional amount (the "Gross-Up Payment") such that the net amount
retained by you, after deduction of any Excise Tax on the Total Payments (as
hereinafter defined) and any federal, state and local income tax and Excise Tax
upon the payment provided for by this Section 3(c), shall be equal to the Total
Payments. For purposes of determining whether any of the Severance Payments will
be subject to the Excise Tax and the amount of such Excise Tax: (i) any other
payments or benefits received or to be received by you in connection with a
Change in Control or your termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with the
Company, any Person whose actions result in a Change in Control or any Person
affiliated with the Company or such Person) (which, together with the Severance
Payments, constitute the "Total Payments") shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280G(b)(1) of the Code shall
be treated as subject to the Excise Tax, unless in the opinion of
nationally-recognized tax counsel selected by you such other payments or
benefits (in whole or in part) do not constitute parachute payments, or such
excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4) of the Code in excess of the base amount within the meaning of
Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax;
(ii) the amount of the Total Payments which shall be treated as subject to the
Excise Tax shall be equal to the lesser of (A) the total amount of the Total
Payments and (B) the amount of excess parachute payments within the meaning of
Section 280G(b)(1) of the Code (after applying Section 3(c)(i) hereof); and
(iii) the value of any non-cash benefits or any deferred
<PAGE> 7
7
payments or benefit shall be determined by a nationally-recognized accounting
firm selected by you in accordance with the principles of Sections 280G(d)(3)
and (4) of the Code. For purposes of determining the amount of the Gross-Up
Payment, you shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest marginal
rate of taxation in the state and locality of your residence on the Date of
Termination, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes. In the event that the
Excise Tax is subsequently determined to be less than the amount taken into
account hereunder at the time of termination of your employment, you shall repay
to the Company within ten days after the time that the amount of such reduction
in Excise Tax is finally determined the portion of the Gross-Up Payment
attributable to such reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal and state and local income tax
imposed on the Gross-Up Payment being repaid by you if such repayment results in
a reduction in Excise Tax and/or federal and state and local income tax
deduction) plus interest on the amount of such repayment at the rate provided in
Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the time of the
termination of your employment (including by reason of any payment the existence
or amount of which cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional gross-up payment in respect of such excess)
within ten days after the time that the amount of such excess is finally
determined.
(d) Time of Payment. The payments provided for in Sections 3(b)(ii),
3(b)(iv) and 3(c) hereof shall be made not later than the fifth day following
the Date of Termination; provided, however, that if the amount of such payments
cannot be finally determined on or before such day, the Company shall pay to you
on such day an estimate, as determined in good faith by the Company, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in Section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to you, payable on the
fifth day after the demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code). The payments provided for in
Section 3(b)(v) hereof shall be made not later than the fifth day following the
submission of each receipt to the Company evidencing costs or obligations
incurred by you in connection with outplacement counseling and job search
activities.
<PAGE> 8
8
(e) Notice. During the Protected Period, any purported termination of
your employment by the Company or by you shall be communicated by written Notice
of Termination to the other party hereto.
(f) Certain Definitions. Except as otherwise indicated in this
Agreement, all definitions in this Section 3(f) shall be applicable during
the Protected Period only.
(i) Disability. "Disability" shall mean your absence from the
full-time performance of your duties with the Company for six consecutive months
as a result of your incapacity due to physical or mental illness or disability,
and within 30 days after written Notice of Termination is thereafter given you
shall not have returned to the full-time performance of your duties.
(ii) Cause. "Cause" shall mean termination on account of (A) the
willful and continued failure by you to substantially perform your duties with
the Company (other than any such failure resulting from your incapacity due to
physical or mental illness or disability or any failure after the issuance of a
Notice of Termination by you for Good Reason) after a written demand for
substantial performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that you have not
substantially performed your duties or (B) the willful engaging by you in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise. No act, or failure to act, on your part shall be deemed
"willful" unless done, or omitted to be done, by you not in good faith and
without reasonable belief that your action or omission was in the best interest
of the Company. Notwithstanding the foregoing, you shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
you a copy of the resolution duly adopted by the affirmative vote of not less
than three-quarters (3/4) of the entire membership of the Board at a meeting of
the Board (after reasonable notice to you and an opportunity for you, together
with your counsel, to be heard before the Board) finding that, in the good faith
opinion of the Board, you were guilty of conduct set forth above in this Section
3(f)(ii) and specifying the particulars thereof in detail.
(iii) Good Reason. "Good Reason" shall mean, without your express
written consent, the occurrence upon or after a Change in Control of any of the
following circumstances unless, in the case of Sections 3(f)(iii)(A), (E), (F)
or (G) hereof, such circumstances are fully corrected prior to the Date of
Termination specified in the Notice of Termination given in respect thereof:
(A) the assignment to you of any duties inconsistent with the position in
the Company that you held immediately prior to the Change in Control, or
an adverse alteration in
<PAGE> 9
9
the nature or status of your responsibilities or the conditions of your
employment from those in effect immediately prior to such Change in
Control;
(B) a reduction by the Company in your annual base salary, any target
bonus or perquisites as in effect immediately prior to the Change in
Control or as the same may be increased from time to time except for
across-the-board perquisite reductions similarly affecting all senior
executives of the Company and all senior executives of any Person in
control of the Company;
(C) the relocation of the principal place of your employment to a
location outside of (I) New York City, (II) Westchester County, New York,
or (III) Fairfield County, Connecticut; except for required travel on the
Company's business to an extent substantially consistent with your
business travel obligations prior to the Change in Control;
(D) the failure by the Company to pay to you any portion of your
compensation or to pay to you any portion of an installment of deferred
compensation under any deferred compensation program of the Company within
seven days of the date such compensation is due;
(E) the failure by the Company to continue in effect any material
compensation or benefit plan in which you participated immediately prior
to the Change in Control, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to such
plan, or the failure by the Company to continue your participation therein
(or in such substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the level
of your participation relative to other participants, as existed at the
time of the Change in Control;
(F) the failure of the Company to obtain a satisfactory agreement from
any successor to assume and agree to perform this Agreement, as
contemplated in Section 6 hereof;
(G) any purported termination of your employment that is not effected
pursuant to a Notice of Termination satisfying the requirements of Section
3(f)(iv) hereof (and, if applicable, the requirements of Section 3(f)(ii)
hereof), which purported termination shall not be effective for purposes
of this Agreement; or
(H) the lapse of twelve months following the last day of the month in
which the Change in Control occurs.
(iv) Notice of Termination. "Notice of Termination" shall mean
notice indicating the specific
<PAGE> 10
10
termination provision in this Agreement relied upon and setting forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(v) Date of Termination. "Date of Termination" shall mean (A) if
your employment is terminated for Disability, 30 days after Notice of
Termination is given (provided that you shall not have returned to the full-time
performance of your duties during such 30-day period) or (B) if your employment
is terminated for any other reason, the date specified in the Notice of
Termination (which, in the case of a termination for Cause, shall not be less
than 30 days from the date such Notice of Termination is given and, in the case
of a termination for Good Reason, shall not be less than 15 nor more than 60
days from the date such Notice of Termination is given).
4. Mitigation. Except as provided in Sections 3(b)(vi) and (vii) hereof, you
shall not be required to mitigate the amount of payment provided for under this
Agreement by seeking other employment or otherwise, nor shall the amount of
payment or benefit provided for under this Agreement be reduced by any
compensation earned by you as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Company, or otherwise.
5. Costs of Proceedings. The Company shall pay all costs and expenses,
including all attorneys' fees and disbursements, of the Company and, at least
monthly, you in connection with any legal proceedings, whether or not instituted
by the Company or you, relating to the interpretation or enforcement of any
provision of this Agreement; provided that if you instituted the proceeding and
a finding (no longer subject to appeal) is entered that you instituted the
proceeding in bad faith, you shall pay all of your costs and expenses, including
attorneys' fees and disbursements. The Company shall pay prejudgment interest on
any money judgment obtained by you as a result of such proceeding, calculated at
the prime rate of The Chase Manhattan Bank as in effect from time to time from
the date that payment should have been made to you under this Agreement.
6. Successors; Binding Agreement.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
<PAGE> 11
11
(b) This Agreement shall inure to the benefit of and be enforceable by
you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. In the event of your
death, all amounts otherwise payable to you hereunder shall, unless otherwise
provided herein, be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there is no such designee, to your
estate.
7. Notice. Notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
(a) personally delivered or (b) mailed by United States certified or registered
mail, return receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement; provided that all
notice to the Company shall be directed to the attention of the Board with a
copy to the General Counsel of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
8. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by you and such officer as may be designated by the Board. No waiver
by either party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the time or at any prior or subsequent time. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of New York without regard to its conflicts of law
principles. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law. The obligations of the Company under this
Agreement shall survive the expiration of this Agreement to the extent necessary
to give effect to this Agreement.
9. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and during the
term of this Agreement supersedes
<PAGE> 12
12
the provisions of all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto with respect to the
subject matter contained herein. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
Notwithstanding anything to the contrary in this Agreement, the procedural
provisions of this Agreement shall apply to all benefits payable as a result of
a Change in Control (or other change in control) under any employee benefit
plan, agreement, program, policy or arrangement of the Company.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter, which
will then constitute our agreement on this subject.
Sincerely,
ACNIELSEN CORPORATION
BY: _________________________
Earl H. Doppelt
Executive Vice President
and General Counsel
Agreed to this _______ day
of ____________, 1996.
________________________
[NAME]
<PAGE> 13
EXHIBIT A
Covered Top Hat Plan
Sample Illustration
Name of Participant Sample Employee
Social Security Number 123-45-6789
Date of Birth 01/01/48
Date of Hire 01/01/91
Current Age 50
<TABLE>
<CAPTION>
Calculation as of: 01/01/98 01/01/98
No Change Change in
in Control Control
---------- -------
<S> <C> <C>
1) Final Average
Earnings * 250,000 300,000
2) Credited Service
(for Covered Top
Hat Plan) 7 15
3) Benefit Percentage
(5% x (2) up to 10
years of service
plus 2% x (2) from
10 to 15 years of
service) 35% 60%
4) Total Gross Benefit
((1) x (3)) 87,500 180,000
5) Retirement Plan
Offset ** 9,400 9,400
6) Social Security
Benefit Offset 6,700 6,700
7) Accrued Covered
Top Hat Plan Benefit
((4) - (5) - (6)) 71,400 163,900
8) Early Retirement
Reduction Factor *** 50% 100%
9) Vested Percentage
**** 100% 100%
</TABLE>
<PAGE> 14
10) Vested Covered Top
Hat Plan Benefit
((7) * (8) * (9))
***** 35,700 163,900
- - ------------------------------
* The calculations based on "No Change in Control" reflect the terms
of the proposed covered top hat plan including five-year final
average earnings; "Change in Control" calculations are based on
earnings as determined under Section 3(b)(ii) of the agreement.
** The retirement plan offset is based on the terms of D&B's current
Master Retirement Plan. It is equal to the vested benefit payable
from that plan. For participants with less than 5 years of service,
the vested benefit is 0.
*** If a participant terminates prior to retirement eligibility (age 55
and 10 years of service) and without the Corporate consent, benefits
are reduced 10% for each year that commencement precedes age 60.
**** "No Change in Control" calculations reflect full vesting after 5
years; "Change in Control" calculations reflect automatic 100%
vesting regardless of service.
***** Annual benefit payable for life starting at age 55, or immediately
if over age 55.
9/30/96
<PAGE> 1
Exhibit 10(q)
NONQUALIFIED STOCK OPTION AGREEMENT
UNDER THE
1996 ACNIELSEN CORPORATION
KEY EMPLOYEES' STOCK INCENTIVE PLAN
This nonqualified stock option agreement (the "Award Agreement") confirms the
nonqualified stock option award (the "Award") made as of November 4, 1996, by
the Compensation Committee (the "Committee") of the Board of Directors of
ACNielsen Corporation (the "Company") under the 1996 ACNielsen Corporation Key
Employees' Stock Incentive Plan (the "Plan") to
[EMPLOYEE] (the "Participant")
of nonqualified stock options ("Options") to purchase the number of shares of
the Company's common stock, par value $0.01 per share, prior to the expiration
date(s) and at the Option price(s) per share, all as set forth below.
The Options are not intended to be incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). These
Options may be exercised in whole or in part, from time to time, on or after the
date(s) indicated below with respect to (i) those number of shares set forth
opposite such date(s), plus (ii) those number of shares as to which the Options
could have been exercised earlier but were not so exercised.
<TABLE>
<CAPTION>
Price Vesting Number of Expiration
Per Share Date Shares Date
- - --------- ---- ------ ----
<S> <C> <C>
$15.75 11/04/97 11/03/06
$15.75 11/04/98 11/03/06
$15.75 11/04/99 11/03/06
$15.75 11/04/00 11/03/06
</TABLE>
Notwithstanding anything to the contrary in this Award Agreement, (i) if the
"Fair Market Value" (as defined in the Plan) of the Company's common stock
attains $23.625 and such Fair Market Value
<PAGE> 2
2
maintains (or exceeds) such price for the following four consecutive trading
days, then (A) 50% of the unvested Options (rounded up to the nearest whole
number of Options) will become immediately exercisable and (B) a pro-rata
portion of the remaining unvested Options will become exercisable on each of the
remaining dates in the vesting schedule set forth above (provided, however, that
no Option may become exercisable with respect to any fractional shares), and
(ii) if the Fair Market Value of the Company's common stock attains $31.50 and
such Fair Market Value maintains (or exceeds) such price for the following four
consecutive trading days, then all unvested Options will become immediately
exercisable.
Notwithstanding anything to the contrary in this Award Agreement, upon the
acquisition of 80% or more of all outstanding shares of Company common stock
pursuant to any tender or exchange offer for shares of Company common stock
(other than one made by the Company), whether the Company does or does not
support the offer, then all unvested Options will become immediately
exercisable. A tender or exchange offer filed with the Securities and Exchange
Commission on Form 14D-1 (or successor form) will be treated conclusively as a
tender or exchange offer for purposes of this Agreement.
[Notwithstanding anything to the contrary in this Award Agreement, upon the
occurrence of a "Change in Control" (as such term is defined in the
change-in-control agreement entered into by the Participant and the Company),
then all unvested Options will become immediately exercisable.] [APPLICABLE ONLY
TO PPC AND OLC MEMBERS]
[Notwithstanding anything to the contrary in this Award Agreement, upon the
termination of the Participant's employment from the Company without "Cause" (as
such term is defined in The ACNielsen Corporation Executive Transition Plan),
then all unvested Options will (i) become immediately exercisable, (ii) remain
exercisable for a two-year period and (iii) terminate thereafter.] [APPLICABLE
ONLY TO PPC MEMBERS]
The Options are issued in accordance with and are subject to the terms of the
Plan, which Plan is incorporated herein by reference, and are exercisable only
in accordance with the terms of this Award Agreement and the Plan. In accordance
with the terms of the Plan, except as waived by the Committee, these Options are
not transferable otherwise than by will or the laws
<PAGE> 3
3
of descent and distribution and are exercisable during the lifetime of the
Participant only by the Participant.
IN WITNESS WHEREOF, ACNielsen Corporation has caused this Award Agreement to be
executed in duplicate by its officer thereunto duly authorized.
ACNIELSEN CORPORATION
By
----------------------------
Michael P. Connors
Vice Chairman
The undersigned hereby accepts and agrees to all the terms and provisions of the
foregoing Award Agreement and acknowledges receipt of (i) a copy of the
prospectus related to the Plan and (ii) a copy of the Information Statement of
the Company dated October 17, 1996.
[I understand that should I die owning shares of Company stock or rights to
acquire such shares, the shares or rights may subject my estate to United States
federal income taxes. I understand that I should seek my own tax advice
regarding this potential tax. I acknowledge that I am receiving the grant of an
Award under the Plan and have received and understood a description of this
Plan. I understand that the Company has reserved the right to amend or terminate
the Plan at any time, and that the grant of an Award in one year or at one time
does not in any way obligate the Plan or any affiliate to make a grant in any
future year or in any given amount. I acknowledge and understand that the grant
is wholly discretionary in nature and is not to be considered part of my normal
or expected compensation subject to severance, resignation, redundancy or
similar pay. I hereby authorize and direct my employer to disclose to the
Company or any of its subsidiaries such information regarding my employment, the
nature and amount of my compensation and the fact and conditions of my
participation in the Plan my employer deems necessary to facilitate the
administration of such Plan. I authorize the Company and my employer to store
and transmit such information in electronic form.] [APPLICABLE ONLY TO
INTERNATIONAL PARTICIPANTS]
<PAGE> 4
4
[Notwithstanding any terms or conditions to the contrary contained in this
Agreement or in the Plan, I understand that no acceleration of vesting of an
Award will occur upon my termination of employment from the Company without
cause or as a result of my death, disability or retirement. I understand that if
my employment with the Company terminates for any reason, any unexercised
Options held by me may thereafter be exercised during the period ending 90 days
after the date of such termination of employment, but only to the extent to
which such Options were vested at the time of my termination of employment.]
[APPLICABLE ONLY TO HONG KONG PARTICIPANTS]
- - -------------- ---------------------------
Date Participant
<PAGE> 1
Exhibit 10(r)
LIMITED STOCK APPRECIATION RIGHTS AGREEMENT
UNDER THE
1996 ACNIELSEN CORPORATION
KEY EMPLOYEES' STOCK INCENTIVE PLAN
This limited stock appreciation rights agreement (the "Award Agreement")
confirms the limited stock appreciation rights award (the "Award") made as of
November 4, 1996, by the Compensation Committee (the "Committee") of the Board
of Directors of ACNielsen Corporation (the "Company") under the 1996 ACNielsen
Corporation Key Employees' Stock Incentive Plan (the "Plan") to
[EMPLOYEE] (the "Participant")
of limited stock appreciation rights ("LSARs") with respect to the following
options to purchase shares of Company common stock, par value $0.01 per share,
granted to the Participant contemporaneously herewith under the Plan:
Date of Option Grant Number of Shares Option Price
. . . . . . . . .
Each LSAR represents the right to receive, in cash, upon exercise, the excess of
the Tender Offer Price (as defined below) over the option price of the stock
option to which the LSAR relates, such excess constituting the "Appreciation."
The LSARs are issued in accordance with and are subject to the terms of the
Plan, which Plan is incorporated herein by reference, and the following
additional terms and conditions:
1. Each LSAR is related to a stock option (the "Related Option") to
purchase the number of shares of Company common stock at the option
price per share indicated above.
2. The LSARs may be exercised, in whole or in part, only during the 30-day
period beginning on the first day following the
<PAGE> 2
2
acquisition of at least 20% of all outstanding shares of Company common
stock pursuant to any tender or exchange offer for shares of Company
common stock (other than one made by the Company), whether the Company
does or does not support the offer. A tender or exchange offer filed
with the Securities and Exchange Commission on Form 14D-1 (or successor
form) shall be treated conclusively as a tender or exchange offer for
purposes of this provision. Each LSAR is exercisable only if and to the
extent the Related Option is exercisable.
3. To the extent exercisable, the LSARs may be exercised from time to time
by notice to the Company. The date a notice of exercise is received by
the Company shall be the exercise date. At the time of payment of the
Appreciation to the Participant, the Company shall require payment of
any amount the Company may determine to be necessary to withhold for
federal, state, local or other taxes as a result of the exercise of an
LSAR.
4. Exercise of an LSAR shall reduce the number of shares of Company common
stock covered by the Related Option on a share-for-share basis. The
exercise of a Related Option shall reduce the number of related LSARs
on the same basis.
5. The term "Tender Offer Price" when used herein shall mean the highest
price paid for shares of Company common stock in any tender or exchange
offer of the kind contemplated in Paragraph 2 above which is in effect
at any time during the 60-day period preceding the date of exercise of
an LSAR, provided that any securities or property which are part or all
of the consideration paid for shares of Company common stock in any
such tender or exchange offer shall be valued at the higher of (i) the
valuation placed on such securities or property by the person making
such offer or (ii) the valuation (for purposes hereof) placed on such
securities or property by the Committee.
6. The LSARs are not transferable by the Participant and shall terminate
when the Participant is no longer subject to the provisions of Section
16(b) of the Securities Exchange Act of 1934, as amended.
7. All terms defined in the Plan and used herein shall have the same
meaning, unless the context otherwise requires.
<PAGE> 3
3
IN WITNESS WHEREOF, ACNielsen Corporation has caused this Award Agreement to be
executed in duplicate by its officer thereunto duly authorized.
ACNIELSEN CORPORATION
By
-----------------------------
Michael P. Connors
Vice Chairman
The undersigned hereby accepts and agrees to all the terms and provisions of the
foregoing Award Agreement and acknowledges receipt of (i) a copy of the
prospectus related to the Plan and (ii) a copy of the Information Statement of
the Company dated October 17, 1996.
- - -------------- ---------------------------
Date Participant
<PAGE> 1
Exhibit 10(s)
RESTRICTED STOCK AGREEMENT
UNDER THE
1996 ACNIELSEN CORPORATION
NON-EMPLOYEE DIRECTORS' STOCK INCENTIVE PLAN
This restricted stock agreement (the "Award Agreement") confirms the restricted
stock award (the "Award") made as of _________________, by the Compensation
Committee (the "Committee") of the Board of Directors of ACNielsen Corporation
(the "Company") to
_____________________________ (the "Participant")
of _____ shares of the Company's common stock, par value $0.01 per share (the
"Restricted Stock"). The Restricted Stock is awarded in accordance with and are
subject to all the terms and conditions of the 1996 ACNielsen Corporation
Non-Employee Directors' Stock Incentive Plan (the "Plan"), which Plan is
incorporated herein by reference.
Except as otherwise provided in this Award Agreement and the Plan, the
Participant shall have all the rights of a shareholder of the Company with
respect to the Restricted Stock, including the right to vote the shares and
receive dividends and distributions. However, until the Restricted Stock is
released to the Participant as set forth below, the Participant may not sell,
transfer, pledge, assign or otherwise dispose of the Restricted Stock.
At the Company's election, certificates may be issued in respect of Restricted
Stock, which certificates shall be registered in the name of the Participant and
shall bear the following legend, or any other similar legend as may be required
by the Company:
"The transferability of this certificate and the shares of stock
represented hereby is subject to the terms and conditions (including
forfeiture) of the 1996 ACNielsen Corporation Non-Employee Directors'
Stock Incentive Plan and an agreement entered into between the
registered owner and ACNielsen Corporation. Copies of such plan and the
agreement are on file in the office of the Secretary of ACNielsen
Corporation."
Any stock certificates evidencing the Restricted Stock shall be held in custody
by a bank or other institution, or by the Company itself, until such shares are
forfeited in accordance with the Plan, or until the restrictions thereon shall
have lapsed as set forth below. The Participant hereby agrees as a condition to
the award of the Restricted Stock to deliver to the Company, together with this
Award Agreement, a stock power endorsed in blank relating to the Restricted
Stock covered by this Award, so that, in the event of a forfeiture of the Award,
the Restricted Stock will be transferred to the Company.
<PAGE> 2
In lieu of issuing certificates, the Company may instruct its transfer agent to
establish a book entry account on the transfer agent's records, which account
shall reflect the Participant's ownership of Restricted Stock.
Subject to earlier forfeiture (or release) of the Restricted Stock as provided
in the Plan, all shares of Restricted Stock will be released to the Participant
free of all restrictions and delivered to the Participant on __________________.
IN WITNESS WHEREOF, ACNielsen Corporation has caused this Award Agreement to be
executed in duplicate by its officer thereunto duly authorized.
ACNIELSEN CORPORATION
By:
--------------------------
Michael P. Connors
Vice Chairman
The undersigned hereby accepts and agrees to all the terms and provisions of the
foregoing Award Agreement and acknowledges receipt of (i) a copy of the
prospectus related to the Plan and (ii) a copy of the Information Statement of
the Company dated October 17, 1996.
- - -------------------- -------------------------------
Date Participant
<PAGE> 1
EXHIBIT 11
ACNIELSEN CORPORATION
COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK
ON A FULLY DILUTED BASIS(a)
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA 1996 1995 1994
---- ---- ----
(AVERAGE SHARE DATA IN THOUSANDS)
<S> <C> <C> <C>
Weighted average number of shares 56,712 56,507 56,649
Dilutive effect of shares issuable as of
year-end under stock option plans 243 0 0
Adjustment of shares applicable to stock
options and stock appreciation rights
exercised during the year 27 0 0
---------------------------------------
Weighted average number of shares
on a diluted basis 56,982 56,507 56,649
=======================================
---------------------------------------
Net income $ 15.8 $(230.9) $(65.1)
=======================================
---------------------------------------
Earnings per share of common stock
on a fully diluted basis $ 0.28 $ (4.09) $(1.15)
=======================================
(b) (b)
</TABLE>
(a) All periods prior to November 1, 1996 reflect the adjusted share and option
activity of The Dun and Bradstreet Corporation
(b) No adjustment required as it would result in anti-dilution
<PAGE> 1
Exhibit 13
ACNIELSEN CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(Dollar amounts in thousands)
YEAR-ENDED DECEMBER 31, 1996 COMPARED WITH YEAR-ENDED DECEMBER 31, 1995
ACNielsen Corporation (ACNielsen or the Company) reported net income of $15,844
in 1996, compared with a net loss of $230,884 in 1995. The loss in 1995 included
a non-recurring pre-tax charge of $152,170 ($141,260 after-tax) in the fourth
quarter of 1995 for costs principally associated with asset impairments,
software write-offs and contractual obligations that have no future economic
benefit. (See Note 3 to the ACNielsen Consolidated Financial Statements.)
Results for 1995 also included a pre-tax charge in the third quarter of $31,900
($24,200 after-tax) for postemployment benefits. Excluding the unusual items,
ACNielsen's net income increased to $15,844 from a net loss of $65,424 in 1995,
reflecting solid improvement in the U.S. business as a result of revenue growth,
productivity improvements and other business re-engineering activities initiated
in 1995.
Revenue increased 6.0% in 1996 to $1,358,644 from $1,281,345 in 1995, reflecting
continued strong revenue growth in the Asia Pacific and Canada/Latin America
regions. Growth in the U.S. of 4.4% was driven by new products and new
customers, primarily in retail measurement and consumer panel services. Europe
reported modest revenue growth reflecting the impact of the stronger dollar.
Excluding the unfavorable impact of foreign exchange, Europe's revenue increased
4.1%, as increased scanning capabilities drove favorable results in modeling and
analytical services and causal tracking services. Excluding the effects of
foreign exchange, ACNielsen's 1996 consolidated revenue increased 7.7%.
Operating costs decreased 14.8% to $732,056 in 1996 from $859,132 in 1995.
Operating costs in 1995 included the unusual items noted above. Excluding these
items, operating costs increased 8.4%, reflecting higher costs associated with
geographic expansion in Asia Pacific, higher production and other costs related
to the scanning transition in Europe, partially offset by lower expenses in the
U.S.
Selling and administrative expenses increased 3.8% to $505,259 in 1996 from
$486,992 in 1995. This increase resulted from higher expenses in Asia Pacific to
support expansion, offset in part by expense reductions in the U.S.
ACNielsen reported operating income in 1996 of $28,155 compared with an
operating loss of $184,008 in 1995. The operating loss in 1995 reflected the
impact of unusual items. Excluding the unusual items in 1995, operating income
increased $28,093 primarily reflecting lower costs and higher revenues in the
U.S. In Europe, however, higher production and other costs related to scanning
transition resulted in a $14,373 decline in operating income in 1996 versus
1995, excluding the charges described above. Operating income in Asia Pacific
declined as well excluding the unusual items, reflecting costs associated with
the expansion of the Company's business infrastructure in China and other
emerging markets.
ACNielsen reported non-operating income -- net of $2,339 in 1996 compared with
non-operating expense -- net of $7,040 in 1995, primarily reflecting reduced
interest expense as a result of a lower level of short-term borrowings in Latin
America and lower foreign exchange losses in hyperinflationary countries.
The following discusses results on a geographic basis:
Total Americas revenue increased 6.4% in 1996 to $472,038 from $443,561 in 1995,
and its operating income increased to $17,298 from an operating loss of
$154,004, reflecting the absence of $108,870 of the non-recurring charge and
$18,500 of postemployment benefit expense, and substantial cost reductions in
the U.S. Excluding the unusual items in 1995, operating income increased
$43,932, almost entirely as a result of the U.S. business. Revenue in the U.S.
increased 4.4% to $286,522 in 1996 from $274,552 in 1995, reflecting increases
in retail measurement and consumer panel services, partially offset by lower
sales in merchandising services (services to retailers) as a result of increased
competitive pressures. The operating loss for the U.S. decreased to $4,912 in
1996 from an operating loss of $172,971 in 1995, reflecting the absence of the
unusual items, substantial productivity improvements from workforce reductions
and other re-engineering actions, and lower depreciation and amortization
expense. Excluding the unusual items in 1995, operating loss in the U.S.
decreased to $4,912 from a loss of $49,471 in 1995. In Canada/Latin America,
revenue increased 9.8% to $185,516 from $169,009 and operating income increased
17.1% to $22,210 from $18,967. Excluding the unusual items, operating income
decreased by $627, reflecting costs to install television audience measurement
services in Latin America.
F-1
<PAGE> 2
Europe's revenue increased 2.5% to $597,669 in 1996 from $583,269 in 1995. The
revenue increase reflected expanded sales of modeling and analytical services,
consumer panel services and causal information in the retail tracking business,
partially offset by the unfavorable effect of currency translation. Excluding
the effect of the stronger dollar, revenue growth for the region was 4.1%.
Operating income increased to $21,828 from an operating loss of $5,599 in 1995,
reflecting, in part, the non-recurring charge of $28,400 and provision for
postemployment benefits ($13,400). Excluding these charges, operating income
declined to $21,828 from $36,201, reflecting expenses incurred to improve
customer service, data quality and delivery.
Asia Pacific's revenues increased 17.2% to $254,082 in 1996, from $216,875 in
1995, reflecting broad-based revenue gains in customized research, media
measurement and retail measurement services. Operating income, however, declined
to $4,762 from $11,695 in 1995. Excluding the non-recurring charge of $900,
operating income decreased $7,833, primarily due to higher costs associated with
geographic expansion in China and other new markets, integration costs
associated with acquisitions, particularly in Australia, and significant
competitive pressures and reduced margins in customized research in both
Australia and North Asia.
ACN Japan's operating revenue decreased 7.4% to $34,855 in 1996 from $37,640 in
1995, reflecting the unfavorable effect of currency translation. Excluding the
effect of currency translation, revenue increased 7.4% as new revenues were
added from retail scanning and beverage services. ACN Japan reported a lower
operating loss of $15,733 in 1996, compared with a loss of $36,100 in 1995,
reflecting the absence of the non-recurring charge of $14,000, improved revenue,
lower employee-related costs and the impact of currency translation.
YEAR-ENDED DECEMBER 31, 1995 COMPARED WITH YEAR-ENDED DECEMBER 31, 1994
ACNielsen reported a net loss of $230,884 in 1995, compared with a net loss of
$65,061 in 1994. The loss in 1995 reflects a non-recurring pre-tax charge of
$152,170 ($141,260 after-tax) in the fourth quarter of 1995 for costs
principally associated with asset impairments, software write-offs and
contractual obligations that have no future economic benefit. (See Note 3 to the
ACNielsen Consolidated Financial Statements.) Results for 1995 also included a
pre-tax charge in the third quarter of $31,900 ($24,200 after-tax) for
postemployment benefits. Excluding the non-recurring charge and provision for
postemployment benefits, ACNielsen reported a net loss of $65,424 in 1995,
compared with a net loss of $65,061 in 1994.
The following discusses the fourth quarter 1995 non-recurring charge:
In the fourth quarter of 1995, ACNielsen recorded within operating costs a
charge of $152,170. This charge primarily reflected an impairment loss in
connection with the adoption of the provisions of SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
($74,370), a provision for postemployment benefits ($14,300) under D&B's
severance plan, an accrual for contractual obligations that have no future
economic benefits ($55,800) and other asset revaluations ($7,700). No payments
relating to the accrued contractual obligations were made in 1995.
SFAS No. 121 requires that long-lived assets and certain intangibles be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. In connection with this
review, ACNielsen recorded an impairment loss of $74,370 reflecting the
revaluation of certain fixed assets, administrative and production systems and
other intangibles that will be replaced or will no longer be used by ACNielsen.
The provision for postemployment benefits of $14,300, represents the cost of
workforce reductions. The accrual for contractual obligations that have no
future economic benefits of $55,800 relates to the acquisition of certain
information and services that are no longer used by ACNielsen, and the other
asset revaluations of $7,700 are necessitated based on an evaluation of the new
business initiatives.
The non-recurring charge of $152,170 evolved from D&B's annual budget and
strategic planning process in the fall of 1995, which indicated, based on
preliminary results, that D&B's consolidated long-term profitability objectives
would not be achieved. Accordingly, a more comprehensive review was undertaken
to review D&B's underlying cost structure, products and services and assets used
in the business. Based upon such analysis, management having the authority to
approve such business decisions committed in December 1995 to a plan to
discontinue certain product lines and dispose of certain other assets, resulting
in the charge. These decisions were not reversed or modified as a result of
D&B's reorganization plan, which was reviewed and, subject to certain
conditions, approved by the Board of Directors of D&B on January 9, 1996.
F-2
<PAGE> 3
Revenue increased 17.3% in 1995 to $1,281,345 from $1,092,107 in 1994. Strong
revenue increases ($111,310) were achieved in the Asia Pacific region
principally due to the full year impact of acquiring in 1994 Survey Research
Group (SRG), AGB Australia, AGB New Zealand and Reark. Growth in the U.S. and
Europe aggregated 7.2% and 6.3%, respectively. Positive growth in these regions
was achieved despite strong competition, restructuring and issues related to new
product integrations. Excluding the effects of the acquisitions and foreign
exchange, ACNielsen's revenue increased about 6.0%.
Operating costs increased 47.6% to $859,132 in 1995 from $582,225 in 1994.
Operating costs in 1995 included the non-recurring charge of $152,170 and a
$31,900 provision in the third quarter for postemployment benefits. Excluding
these items and 1994 restructuring expense, operating costs increased 17.8%,
reflecting higher production and other costs related to the scanning transition
issues in Europe, the full year impact of the acquisitions of SRG, AGB
Australia, AGB New Zealand and Reark in 1994, and increased costs in Latin
America resulting from continued geographic expansion. In 1995, the Company
embarked on an aggressive program to begin converting the collection of store
data from a manual process ("audit") to an electronic process ("scanning").
Issues that arose during the conversion related to timeliness and quality of
data and customers being unfamiliar with the expanded data generated by the
scanning process. As a result, the Company ran parallel processes for longer
than anticipated and increased its provision for doubtful accounts in Europe.
The issues were addressed by reengineering efforts that included stepping up
quality control measures, introducing customer service centers and improving
communications with customers and retailers.
Selling and administrative expenses increased 20.7% to $486,992 in 1995 from
$403,469 in 1994. This increase resulted from higher expenses in Asia Pacific,
primarily due to the full year impact of 1994 acquisitions and expense growth in
Europe for increased service levels to support the transition from audit to
scanning, partially offset by a reduction in expenses in the U.S. reflecting the
realignment of the functional organization to improve ACNielsen's position and
focus in the U.S. marketplace.
ACNielsen incurred an operating loss in 1995 of $184,008 compared with an
operating loss of $1,169 in 1994. The operating loss in 1995 primarily reflected
the aforementioned charge and provision for postemployment benefits. Excluding
the aforementioned charge and the provision for postemployment benefits in 1995
and restructuring expense in 1994, operating income was $62 in 1995, compared
with $7,753 in 1994. Lower costs drove a $37,798 reduction in the operating loss
in the U.S., excluding the aforementioned charges in 1995, and restructuring
expense in 1994. In Europe, however, higher production and other costs related
to the scanning transition issues resulted in a $39,218 decline in operating
income in 1995 versus 1994, excluding the charges described above. Operating
income in Asia Pacific increased $1,423, excluding the charges, reflecting the
full year impact of 1994 acquisitions.
Non-operating expense -- net decreased to $7,040 in 1995 from $13,419 in 1994,
primarily reflecting lower foreign exchange losses in hyperinflationary
countries.
The following discusses results on a geographic basis:
Total Americas revenue increased 9.5% in 1995 to $443,561 from $405,235 in 1994,
and its operating loss increased to $154,004 from $63,343 reflecting the impact
of $108,870 of non-recurring charges and $18,500 of postemployment benefit
expense, partially offset by cost reductions in the U.S. resulting from field
force and operational improvements. Excluding the aforementioned non-recurring
charge and provision for postemployment benefits in 1995, and 1994 restructuring
expense, the operating loss declined $33,313, driven primarily by field force
and operational improvements in the U.S. Revenue in the U.S. increased 7.2% to
$274,552 in 1995 from $256,111 in 1994, reflecting increased customer demand for
value-added services in the consumer information, decision support and
analytical product categories. The U.S. operating loss increased to $172,971 in
1995 from $90,665 in 1994 reflecting the aforementioned non-recurring charge and
provision for postemployment benefits. Excluding these charges and restructuring
expense in 1994, operating loss in the U.S. decreased to $49,471 from $87,269
primarily reflecting significant process improvements during the year.
F-3
<PAGE> 4
Europe's revenue increased 6.3% to $583,269 in 1995 from $548,647 in 1994. The
region had an operating loss of $5,599, reflecting, in part, the fourth quarter
charge of $28,400 and provision for postemployment benefits ($13,400). Excluding
these charges and restructuring expense in 1994, operating income declined to
$36,201 from $75,419 reflecting increased expenses in the region to improve
customer service, data quality and delivery and ACNielsen's expansion into
Eastern Europe.
Asia Pacific's revenues increased 105% to $216,875 in 1995 from $105,565 in 1994
reflecting the acquisition of SRG in July 1994. Operating income increased to
$11,695 from $11,172. Excluding the fourth quarter charge of $900 described
above, operating income increased $1,423 reflecting the full year impact of
acquisitions as well as continued investment in China and other new markets.
ACN Japan's operating revenue increased 15.2% to $37,640 from $32,660, however
its operating loss increased to $36,100 from $18,891, reflecting the
non-recurring fourth quarter charge of $14,000. Excluding the aforementioned
charge, operating loss increased by $3,209 reflecting the highly competitive
marketplace and significant costs related to data collection.
INCOME TAXES -- ACNielsen's income tax provision decreased to $14,650 in 1996
from $39,836 in 1995. In 1995 and 1994, the Company did not recognize benefits
on U.S. losses since the Company did not believe it was more likely than not
that such benefits could be recognized on a separate-company basis. In 1996,
U.S. losses through the Distribution Date were realized by D&B and, accordingly,
the related tax benefit was reflected by the Company through divisional equity.
(See Note 9 to the ACNielsen Consolidated Financial Statements.) ACNielsen has
initiated a number of global tax-planning strategies to minimize its effective
tax rate.
RESTRUCTURING -- At December 31, 1996 and 1995, restructuring accruals related
to actions from 1993 and 1994 totaled $0 and $4,325, respectively. Other
restructuring accruals totaled $3,627 at December 31, 1995. (See Note 4 to the
ACNielsen Consolidated Financial Statements.) The remaining balance of the
restructuring accrual of $4,325 at December 31, 1995 was utilized in 1996.
NON-U.S. OPERATING AND MONETARY ASSETS -- ACNielsen operates globally. Nearly
80% of ACNielsen's revenues were generated from non-U.S. operations during 1996
and 1995. During 1996, European and Asian operations contributed 44% and 19% of
Company revenues, respectively. ACNielsen's operations in Japan generated
approximately $35,000 of revenues during 1996. Primarily as a result of these
non-U.S. operations, changes in the value of local currencies relative to the
U.S. dollar may increase the volatility of the U.S. dollar operating results. In
1996, foreign currency translation decreased U.S. dollar revenue growth by
approximately 1.7%. During 1995, foreign currency translation increased reported
revenue by approximately 4%. The effect of such foreign currency fluctuations on
1996 operating income and 1995 operating loss was not significant.
ACNielsen plans to enter into foreign exchange forward contracts and other
instruments to mitigate the effects of currency fluctuations on certain of
ACNielsen's non-U.S. net investments and to hedge against foreign exchange
movements between the dates that foreign currency transactions are recorded and
the dates they are settled. In addition, ACNielsen is also evaluating the merits
of implementing a program to mitigate the effects of foreign exchange
fluctuations on operating results.
Non-U.S. monetary assets are maintained in currencies other than the U.S.
dollar, principally in Canada, Spain, Germany, Italy, Austria and Belgium.
Changes in the value of these currencies relative to the U.S. dollar are charged
or credited to shareholders' equity. The effect of exchange rate changes during
1996 decreased the U.S. dollar amount of cash and cash equivalents by $6,387.
LIQUIDITY AND CAPITAL RESOURCES -- At December 31, 1996, cash, cash equivalents
and non-current marketable securities totaled $205,378, an increase of $108,042
from December 31, 1995. Short-term debt totaled $36,761, an increase of $7,063
from December 31, 1995. The increase in cash at December 31, 1996 reflects the
receipt from D&B of approximately $30,000 at the Distribution Date, to settle
certain pre-Distribution obligations, including non-U.S. income and withholding
taxes of approximately $15,000, which will be paid in 1997. In addition, cash
payments in 1997 related to postemployment benefit payments and other actions
implemented in connection with the 1995 non-recurring charge are expected to be
in the range of $35,000 to $40,000.
F-4
<PAGE> 5
Net cash provided by (used in) operating activities aggregated $119,220, $21,465
and ($42,777) in 1996, 1995 and 1994, respectively. The increase of $97,755 in
net cash provided by operating activities in 1996 compared with 1995 reflected
improved collections of accounts receivable, partially offset by higher non-U.S.
taxes paid -- net of refunds ($34,242) and the payments related to the 1995
non-recurring charge ($30,711). The increase in non-U.S. tax payments in 1996 is
attributed to ACNielsen paying certain non-U.S. taxes -- net on behalf of D&B
prior to the Distribution. Additionally, cash provided by other working capital
items in 1996 included the transfer from D&B of pre-Distribution accruals for
taxes and other items related to the reorganization of D&B. The increase of
$64,242 in net cash provided by operating activities in 1995, compared with
1994, primarily reflected lower restructuring payments ($8,886), lower
postemployment benefit payments ($17,500) and a decrease in other working
capital items ($68,158).
Net cash used in investing activities totaled $69,145 for 1996 compared with
$108,359 and $205,050 in 1995 and 1994, respectively. The decrease in cash usage
in 1996 of $39,214 reflected lower capital expenditures, lower deferrals of
project costs (included in other investing) and lower payments for business
acquisitions, offset in part by an increase in purchased computer software. The
decrease in cash usage in 1995 of $96,691 primarily reflected lower payments for
acquisitions and equity investments (included in Other Investments) of $126,975.
Capital expenditures totaled $65,503, $86,862, and $51,053 in 1996, 1995 and
1994, respectively. The high level of capital expenditures during 1995 was
attributable primarily to higher expenditures in Asia related to SRG's
operations (acquired during 1994) and the acquisition of a building in Brazil.
Net cash provided by financing activities totaled $51,749, $87,777 and $195,521
in 1996, 1995, and 1994, respectively. The transfers from D&B in 1996 included
cash received in connection with the Distribution. A high level of funding from
D&B was required in 1994 to fund acquisitions, primarily SRG.
As a subsidiary of D&B, funding for ACNielsen's U.S. and most non-U.S.
operations was provided by internally generated funds and financing obtained
through D&B. ACNielsen is now providing for its normal capital and operating
expenditure needs through internally generated funds and existing cash reserves.
In addition, ACNielsen intends to continue to maintain its relationships with a
world-wide network of banks and has secured lines of credit sufficient to meet
ACNielsen's short-term cash requirements. (See Note 10 to the Consolidated
Financial Statements.) Management believes that the combination of cash flows
from operations and bank credit lines, as well as existing cash and cash
equivalents, are sufficient to support the Company's long-term cash
requirements.
DIVIDENDS -- The payment and level of cash dividends by ACNielsen is subject to
the discretion of the Board of Directors of ACNielsen and to the restrictions
imposed by the Indemnity and Joint Defense Agreement. In addition, the bank
credit agreement prohibits the company from paying cash dividends. ACNielsen
currently intends to retain future earnings for the development of its business
and does not anticipate paying cash dividends in the near future. Future
dividend decisions will be based on, and affected by, a number of factors,
including the operating results and financial requirements of ACNielsen, as well
as restrictions under agreements. There can be no assurance that any dividends
will be declared or paid.
COMMON STOCK INFORMATION -- The Company's common stock (symbol ART) is listed on
the New York Stock Exchange. During the two months ended December 31, 1996,
23,986,600 shares were traded. The number of shareholders of record at January
31, 1997 was 11,372. The high and low price per share during the period the
Company's stock traded "regular way" during 1996 were $18 5/8 and $14 1/2,
respectively.
F-5
<PAGE> 6
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of ACNielsen Corporation:
We have audited the accompanying Consolidated Balance Sheet of ACNielsen
Corporation and its subsidiaries (a Delaware corporation) (the "Company") as of
December 31, 1996, and the related Consolidated Statements of Operations, Cash
Flows and Shareholders' Equity for the year then ended. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of the Company, as of December 31, 1995, and
for the two years ended December 31, 1995, were audited by other auditors whose
report dated September 16, 1996, expressed an unqualified opinion on those
statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 1996, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Stamford, Connecticut
February 19, 1997
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
Management is responsible for the preparation, integrity and objectivity of the
consolidated financial statements and other financial information presented in
this report. The accompanying consolidated financial statements were prepared in
accordance with generally accepted accounting principles, applying certain
estimates and judgments as required.
ACNielsen's internal controls are designed to provide reasonable assurance as to
the integrity and reliability of the financial statements and to adequately
safeguard, verify and maintain accountability of assets. Such controls are based
on established written policies and procedures, are implemented by trained
skilled personnel with an appropriate segregation of duties and are monitored
through a comprehensive internal audit program. These policies and procedures
prescribe that the Company and all its employees are to maintain the highest
ethical standards and that its business practices throughout the world are to be
conducted in a manner which is above reproach.
Arthur Andersen LLP, independent auditors, are retained to audit ACNielsen's
financial statements. Their accompanying report is based on an audit conducted
in accordance with generally accepted auditing standards, which includes the
consideration of the Company's internal controls to establish a basis for
reliance thereon in determining the nature, timing and extent of audit tests to
be applied.
The Board of Directors exercises its responsibility for these financial
statements through its Audit and Finance Committee, which consists entirely of
independent non-management Board members. The Audit and Finance Committee meets
periodically with the independent auditors and the internal auditors, both
privately and with management present, to review accounting, auditing, internal
controls and financial reporting matters.
/s/ Nicholas L. Trivisonno
Nicholas L. Trivisonno
Chairman and Chief Executive Officer
/s/ Robert J. Chrenc
Robert J. Chrenc
Executive Vice President and Chief Financial Officer
F-6
<PAGE> 7
ACNIELSEN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) 1996 1995 1994
- - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING REVENUE $ 1,358,644 $ 1,281,345 $ 1,092,107
Costs and Expenses:
Operating Costs 732,056 859,132 582,225
Selling and Administrative Expenses 505,259 486,992 403,469
Depreciation & Amortization 93,174 119,229 98,660
Restructuring Expense -- -- 8,922
-------------------------------------------
Total Costs & Expenses 1,330,489 1,465,353 1,093,276
-------------------------------------------
Operating Income (Loss) 28,155 (184,008) (1,169)
-------------------------------------------
Interest Income 8,357 10,025 9,681
Interest Expense (5,209) (14,735) (13,111)
Other Expense -- Net (809) (2,330) (9,989)
-------------------------------------------
Non-Operating Income (Expense) -- Net 2,339 (7,040) (13,419)
-------------------------------------------
Income (Loss) Before Provision for Income Taxes 30,494 (191,048) (14,588)
Provision for Income Taxes 14,650 39,836 50,473
-------------------------------------------
Net Income (Loss) $ 15,844 $ (230,884) $ (65,061)
- - ---------------------------------------------------------------------------------------------------------------
Actual and Pro Forma Net Income (Loss) Per Share of Common Stock $ .28 $ (4.09) $ (1.15)
- - ---------------------------------------------------------------------------------------------------------------
Actual and Pro Forma
Average Number of Shares Outstanding 56,712 56,507 56,649
- - ---------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-7
<PAGE> 8
ACNIELSEN CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
(DOLLAR AMOUNTS IN THOUSANDS) 1996 1995
- - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents $ 185,005 $ 89,568
Accounts Receivable -- Net 270,603 272,976
Other Current Assets 30,822 43,808
---------------------------
Total Current Assets 486,430 406,352
---------------------------
Marketable Securities and Other Investments 26,352 14,579
---------------------------
Property, Plant and Equipment -- Net 186,053 189,485
---------------------------
Other Assets -- Net
Prepaid Pension 46,743 34,294
Computer Software 37,858 27,427
Intangibles and Other Assets 48,610 62,196
Goodwill 204,022 208,454
---------------------------
Total Other Assets -- Net 337,233 332,371
---------------------------
Total Assets $ 1,036,068 $ 942,787
- - ---------------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 84,680 $ 89,063
Short-term Debt 36,761 29,698
Accrued and Other Current Liabilities 260,606 239,976
Accrued Income Taxes 64,268 33,804
---------------------------
Total Current Liabilities 446,315 392,541
---------------------------
Postretirement and Postemployment Benefits 78,924 88,690
Deferred Income Taxes 32,523 27,588
Other Liabilities 24,360 56,437
---------------------------
Total Liabilities 582,122 565,256
---------------------------
Commitments and Contingencies
---------------------------
Divisional Equity -- 406,098
Shareholders' Equity
Preferred Stock -- par value $.01 per share, authorized -- 5,000,000 shares; outstanding -- none -- --
Common Stock -- par value $.01 per share, authorized -- 150,000,000 shares;
issued -- 57,124,419 in 1996 571 --
Series Common Stock -- par value $.01 per share, authorized -- 5,000,000 shares; issued -- none -- --
Additional Paid-in Capital 461,193 --
Retained earnings 7,723 --
Treasury stock, at cost, 266,666 shares in 1996 (3,966) --
Cumulative Translation Adjustment (17,658) (26,282)
Unrealized Gains (Losses) on Investments, Net 6,083 (2,285)
---------------------------
Total Shareholders' Equity 453,946 377,531
---------------------------
Total Liabilities and Shareholders' Equity $ 1,036,068 $ 942,787
- - ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-8
<PAGE> 9
ACNIELSEN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
(DOLLAR AMOUNTS IN THOUSANDS) 1996 1995 1994
- - -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) $ 15,844 $(230,884) $ (65,061)
Reconciliation of Net Income (Loss) to Net Cash
Provided by (Used in) Operating Activities:
Depreciation and Amortization 93,174 119,229 98,660
Deferred Income Taxes 11,598 (15,603) 32,347
Restructuring Provision -- -- 8,922
Restructuring Payments (45) (10,065) (18,951)
Non-Recurring Charge -- 152,170 --
Payments Related to 1995 Non-Recurring Charge (30,711) -- --
Postemployment Benefit Expense 3,077 36,168 2,565
Postemployment Benefit Payments (21,275) (50,290) (67,790)
Net Increase in Accounts Receivable (802) (32,461) (21,693)
Net Decrease (Increase) in Other Working Capital Items 58,682 54,489 (13,669)
Other (10,322) (1,288) 1,893
-------------------------------------
Net Cash Provided by (Used in) Operating Activities 119,220 21,465 (42,777)
-------------------------------------
Cash Flows from Investing Activities:
Proceeds from Marketable Securities 35 260 5,397
Payments for Marketable Securities (187) -- (436)
Business Acquisitions (946) (11,466) (112,009)
Capital Expenditures (65,503) (86,862) (51,053)
Additions to Computer Software (24,450) (20,535) (21,726)
Investments in Efficient Market Services and Manugistics -- -- (21,932)
(Increase) Decrease in Other Investments 2,530 2,199 (2,239)
Other 19,376 8,045 (1,052)
-------------------------------------
Net Cash Used in Investing Activities (69,145) (108,359) (205,050)
-------------------------------------
Cash Flows from Financing Activities:
Net Transfers from The Dun & Bradstreet Corporation 46,210 101,140 155,260
Increase (Decrease) in Short-Term Borrowings 9,758 (11,731) 38,630
Treasury Stock Purchases (3,966) -- --
Common Stock Issuances under Stock Plans 1,335 -- --
Other (1,588) (1,632) 1,631
-------------------------------------
Net Cash Provided by Financing Activities 51,749 87,777 195,521
-------------------------------------
Effect of Exchange Rate Changes on Cash and Cash Equivalents (6,387) 3,649 12,193
-------------------------------------
Increase (Decrease) in Cash and Cash Equivalents 95,437 4,532 (40,113)
Cash and Cash Equivalents, Beginning of Year 89,568 85,036 125,149
-------------------------------------
Cash and Cash Equivalents, End of Year $ 185,005 $ 89,568 $ 85,036
- - -----------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 5,272 $ 14,713 $ 12,586
Cash paid during the year for income taxes $ 57,736 $ 19,882 $ 35,654
- - -----------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-9
<PAGE> 10
ACNIELSEN CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
TREASURY STOCK,
COMMON STOCK ADDITIONAL AT COST
(DOLLAR AMOUNTS IN THOUSANDS) DIVISIONAL -------------------- PAID-IN RETAINED -------------------
THREE YEARS ENDED DECEMBER 31, 1996 EQUITY SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994 $ 445,643
Net Loss (65,061)
Unrealized Losses
on Investments
Net Transfers from The Dun
& Bradstreet Corporation 155,260
Cumulative Translation Adjustment
-----------------------------------------------------------------------------------
Balance, December 31, 1994 535,842
Net Loss (230,884)
Unrealized Losses
on Investments
Net Transfers from The Dun
& Bradstreet Corporation 101,140
Cumulative Translation Adjustment
-----------------------------------------------------------------------------------
Balance, December 31, 1995 406,098
Net Income for period
ended October 31, 1996 8,121
Unrealized Gains
on Investments
Net Transfers from The Dun
& Bradstreet Corporation 46,210
Cumulative Translation Adjustment
Stock Distribution to Holders of
Dun & Bradstreet Stock (460,429) 57,019,180 $570 $459,859
Balance, November 1, 1996 -- 57,019,180 570 459,859
Net Income for period
ended December 31, 1996 $7,723
Treasury Stock Purchased 266,666 $(3,966)
Unrealized Losses
on Investments
Activity under Stock Plans 105,239 1 1,334
Cumulative Translation
Adjustment
-----------------------------------------------------------------------------------
Balance, December 31, 1996 $ -- 57,124,419 $571 $461,193 $7,723 266,666 $(3,966)
- - --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Cumulative Unrealized
(Dollar amounts in thousands) Translation Gains (Losses) Total
Three Years Ended December 31, 1996 Adjustment on Investments Equity
- - ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, January 1, 1994 $(59,850) $ 385,793
Net Loss (65,061)
Unrealized Losses
on Investments $(964) (964)
Net Transfers from The Dun
& Bradstreet Corporation 155,260
Cumulative Translation Adjustment 23,407 23,407
-------------------------------------------
Balance, December 31, 1994 (36,443) (964) 498,435
Net Loss (230,884)
Unrealized Losses
on Investments (1,321) (1,321)
Net Transfers from The Dun
& Bradstreet Corporation 101,140
Cumulative Translation Adjustment 10,161 10,161
-------------------------------------------
Balance, December 31, 1995 (26,282) (2,285) 377,531
Net Income for period
ended October 31, 1996 8,121
Unrealized Gains
on Investments 9,324 9,324
Net Transfers from The Dun
& Bradstreet Corporation 46,210
Cumulative Translation Adjustment 4,526 4,526
Stock Distribution to Holders of
Dun & Bradstreet Stock
Balance, November 1, 1996 (21,756) 7,039 445,712
Net Income for period
ended December 31, 1996 7,723
Treasury Stock Purchased (3,966)
Unrealized Losses
on Investments (956) (956)
Activity under Stock Plans 1,335
Cumulative Translation
Adjustment 4,098 4,098
-------------------------------------------
Balance, December 31, 1996 $(17,658) $ 6,083 $ 453,946
- - ----------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-10
<PAGE> 11
ACNIELSEN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share data)
NOTE 1. BASIS OF PRESENTATION
Effective on November 1, 1996 (the Distribution Date), ACNielsen Corporation
(the Company) became an independent, publicly-owned company as a result of the
distribution by The Dun & Bradstreet Corporation (D&B) of the Company's $.01 par
value Common Stock, at a distribution ratio of one share for three shares (the
Distribution). Prior to the Distribution, the Company was formed as a wholly
owned subsidiary of D&B for the purpose of effecting the Distribution. Included
in this transaction was the transfer of the former D&B businesses and operations
that now comprise the Company, and substantially all of the assets and
liabilities of such businesses. For purposes of these financial statements, all
references to the Company include the assets and liabilities related to the
businesses that were transferred to the Company prior to the Distribution.
The Balance Sheet, as of December 31, 1996, is presented on a consolidated
basis. The Statement of Operations for the year ended December 31, 1996 includes
the combined results of operations of the ACNielsen businesses under D&B for the
ten months prior to the Distribution Date and the consolidated results of
operations of the Company for the two month period ended December 31, 1996. The
financial statements for periods prior to the Distribution Date are presented on
a combined basis and have been prepared using D&B's historical basis of
accounting for the assets and liabilities and historical results of operations
related to the Company's businesses, except for accounting for income taxes (see
Note 2 to the Financial Statements).
The financial statements generally reflect the financial position, results of
operations, and cash flows of the Company as if it were a separate entity for
all periods presented. The financial statements include allocations of certain
D&B Corporate assets (including prepaid pension assets) and liabilities
(including pension and postretirement benefits), and expenses (including cash
management, legal, accounting, tax, employee benefits, insurance services, data
services and other D&B Corporate overhead) relating to the Company's businesses
that were transferred to the Company from D&B. Management believes these
allocations are reasonable. However, the financial information included herein
may not necessarily reflect the financial position, results of operations, and
cash flows of the Company in the future or what they would have been had the
Company been a separate entity during the periods prior to the Distribution.
For purposes of governing certain of the ongoing relationships between the
Company, D&B and Cognizant Corporation (Cognizant, another corporation spun off
by D&B) after the Distribution and to provide for orderly transition, the
Company, D&B and Cognizant entered into various agreements including a
Distribution Agreement, Employee Benefits Agreement, Tax Allocation Agreement,
Indemnity and Joint Defense Agreement, TAM Master Agreement, Shared Transaction
Services Agreements, Intellectual Property Agreement, Transition Services
Agreement and Data Services Agreement.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation. Investments in companies over which the Company has
significant influence but not a controlling interest are carried at equity. The
effects of all significant intercompany transactions have been eliminated. The
financial statements of subsidiaries outside the United States and Canada
reflect a fiscal year ending November 30 to facilitate timely reporting of the
Company's financial results.
Cash Equivalents and Marketable Securities. Investments that are highly liquid
and mature within 90 days of purchase date are considered cash equivalents. At
December 31, 1996 and 1995, all marketable securities are classified as
"available for sale," and therefore are reported at fair value, with net
unrealized gains and losses reported in equity in accordance with the provisions
of Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Debt and Equity Securities."
Property, Plant and Equipment. Buildings and machinery and equipment are
depreciated over their estimated useful lives using principally the
straight-line method. Leasehold improvements are amortized on a straight-line
basis over the shorter of the term of the lease or the estimated useful life of
the improvement.
Computer Software. Certain internal costs incurred in the development of
computer software are capitalized in accordance with SFAS No. 86, "Accounting
for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed." As
such, costs incurred to establish technological feasibility of a computer
software product are expensed in the periods in which they are incurred.
Capitalization ceases and amortization starts when the product is available for
general release to customers. Computer software costs are being amortized on a
product by product basis, over three to five years. Annual amortization is the
greater of the amount computed using
F-11
<PAGE> 12
(a) the ratio that gross revenues for a product bears to the total of current
and anticipated future gross revenue for that product or (b) the straight-line
method over the remaining estimated economic life of the product. In addition,
computer software includes amounts purchased for internal use.
Other Intangibles. Other intangibles include customer lists and database
development. Other intangibles are amortized, using principally the
straight-line method, over five to twenty years.
Goodwill. Goodwill represents the excess purchase price over the fair value of
identifiable net assets of businesses acquired and is amortized on a
straight-line basis over five to forty years. The Company reviews the
recoverability of goodwill, not identified with impaired long-lived assets,
based on estimated undiscounted future cash flows from operating activities
compared with the carrying value of goodwill and recognizes any impairment on
the basis of such comparison. The recognition and measurement of goodwill
impairment is assessed at the business unit level.
Impairment of Long-Lived Assets. The Company adopted the provisions of SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" in 1995. This statement requires that long-lived
assets and certain identifiable intangibles held and used by an entity be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. In general, this
statement requires recognition of an impairment loss when the sum of
undiscounted expected future cash flows is less than the carrying amount of such
assets. The measurement for such impairment loss is then based on the fair value
of the asset. See Note 3 to the Consolidated Financial Statements.
Revenue Recognition. Retail Measurement Service products generally have contract
terms of one to three years. The base contract revenue from the first commitment
period is recognized ratably over the initial contract term. Revenue from
remaining years of multi-year contracts, extensions and renewals are recognized
ratably over their extension periods. After the initial commitment, the contract
generally continues indefinitely, unless canceled by the client with a minimum
of three months' prior written notice.
Revenue for special modeling and analytical services is recognized as services
are performed.
Consumer Panel products generally have contract terms of one year with revenue
recognized over the term of the contract on a straight-line basis.
International Media Services are generally provided over longer periods with
revenue recognized on a straight-line basis over the contract term. The
contracts are cancelable by the client only with specified notice and payments.
Foreign Currency Translation. For all operations outside the United States where
the Company has designated the local currency as the functional currency, assets
and liabilities are translated using end-of-period exchange rates; revenue and
expenses are translated using average rates of exchange. For these countries,
currency translation adjustments are accumulated in a separate component of
equity, whereas realized transaction gains and losses are recognized in other
income (expense) -- net. For operations in countries that are considered to be
highly inflationary, where the U.S. dollar is designated as the functional
currency, monetary assets and liabilities are translated using end-of-period
exchange rates, nonmonetary accounts are translated using historical exchange
rates, and all translation and transaction adjustments are recognized in other
income (expense) -- net.
The Company has significant operations in non-U.S. countries. Therefore, changes
in the value of foreign currencies affect the Company's financial statements
when translated into U.S. dollars.
Income Taxes. In accordance with the Tax Sharing Agreement, the Company is
liable for Federal, State and non-U.S. income tax liabilities beginning after
the Distribution Date. In addition, the Company is liable for certain non-U.S.
tax liabilities arising prior to the Distribution. Prior to the Distribution,
the Company was included in the Federal and certain state and non-U.S. income
tax returns of D&B.
F-12
<PAGE> 13
Stock-Based Compensation. In 1996, the Company adopted SFAS No. 123, "Accounting
for Stock-Based Compensation," which requires that companies with stock-based
compensation plans either recognize compensation expense based on the fair value
of options granted, or continue to apply Accounting Principles Board (APB)
Opinion No. 25 and disclose pro forma net income and earnings per share, as if
the fair value based accounting method in SFAS No. 123 had been applied. The
Company has chosen to continue to account for stock-based compensation as
prescribed by APB Opinion No. 25. Accordingly, pro forma amounts are disclosed
in Note 8 to the Financial Statements.
Divisional Equity. Divisional equity includes historical investments and
advances from D&B, including net transfers to/from D&B, third party liabilities
paid on behalf of the Company by D&B and amounts due to/from D&B for services
and other charges, as well as current period income/loss, unrealized gains
(losses) on investments, and foreign currency translation adjustments.
Estimates. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses and the disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.
Earnings (Loss) Per Share. Earnings per share for the year ended December 31,
1996 are computed using a combination of the average number of D&B shares
outstanding for the ten months ended October 31, 1996, adjusted for the
one-for-three distribution ratio, and the average number of ACNielsen shares
outstanding for the two months ended December 31, 1996. The computation of pro
forma loss per share for the years ended December 31, 1995 and 1994 is based on
the average number of shares of D&B common stock outstanding during the year,
adjusted for the one for three distribution ratio. The inclusion of shares
issuable under stock options would not result in material dilution.
Reclassifications. Certain prior-year amounts have been reclassified to conform
with the current-year presentation.
NOTE 3. NON-RECURRING CHARGE
In the fourth quarter of 1995, the Company recorded within operating costs a
charge of $152,170. This charge primarily reflected an impairment loss in
connection with the adoption of the provisions of SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
($74,370), a provision for postemployment benefits ($14,300) under D&B's
severance plan, an accrual for contractual obligations that have no future
economic benefits ($55,800) and other asset revaluations ($7,700). In 1996,
payments relating to the accrued contractual obligations totaled $24,974. No
payments relating to the accrued contractual obligations were made in 1995.
SFAS No. 121 requires that long-lived assets and certain intangibles be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. In connection with this
review, the Company recorded an impairment loss of $74,370 reflecting the
revaluation of certain fixed assets, administrative and production systems and
other intangibles that will be replaced or will no longer be used by the
Company.
The provision for postemployment benefits of $14,300 represents the cost of
workforce reductions. The accrual for contractual obligations that have no
future economic benefits of $55,800 relates to the acquisition of certain
information and services that are no longer used by the Company, and the other
asset revaluations of $7,700 are necessitated based on an evaluation of the new
business initiatives.
This non-recurring charge evolved from D&B's annual budget and strategic
planning process, which included a review of D&B's underlying cost structure,
products and services and assets used in the business. Based upon such analysis,
management having the authority to approve such business decisions committed in
December 1995 to a plan to discontinue certain product lines and dispose of
certain other assets, resulting in the charge. These decisions were not reversed
or modified as a result of D&B's reorganization plan, which was reviewed and,
subject to certain conditions, approved by the Board of Directors of D&B on
January 9, 1996.
F-13
<PAGE> 14
NOTE 4. RESTRUCTURING
In 1994, the Company recorded a pre-tax charge of $8,922 to restructure certain
operations and businesses, and to reduce costs and increase operating
efficiencies.
In 1993, the Company recorded $60,301 to restructure certain operations and
businesses. These actions were part of a D&B-wide plan designed to achieve
long-term productivity improvements and reduce costs. The costs associated with
this plan, and all other restructuring actions, included only specific, direct
and incremental costs that could be estimated with reasonable accuracy and were
clearly identifiable with the related plans.
Cash paid for restructuring in 1995 ($10,065) included $5,702 for actions to
reduce real estate costs and $4,363 for other actions. At December 31, 1995,
accruals for restructuring totaled $4,325. There was no restructuring accrual
remaining at December 31, 1996.
NOTE 5. ACQUISITIONS
In 1996, 1995 and 1994, the Company acquired various companies in separate
transactions that were accounted for as purchases.
The aggregate purchase price of such acquisitions totaled $1,907 in 1996,
$11,466 in 1995 and $112,009 in 1994. In 1994, the largest acquisition was
Survey Research Group, a premier market research firm in Southeast Asia. The
purchase price was $85,351.
The results of operations of all purchases are included in the Consolidated
Statements of Operations from dates of acquisition. Had the acquisitions made in
1996, 1995 and 1994 been consummated on January 1 of the year preceding the year
of acquisition, the results of these acquired operations would not have had a
significant impact on the Company's consolidated results of operations for any
of the years presented.
NOTE 6. PENSION AND OTHER BENEFIT PLANS
The Company has a defined benefit pension plan covering substantially all
employees in the United States. The benefits to be paid to employees under this
plan are based on notional account balances which are increased annually by
pay-related and interest credits. Pension costs are determined actuarially and
funded to the extent allowable under the Internal Revenue Code. Supplemental
plans in the United States are maintained to provide retirement benefits to
eligible employees in excess of levels allowed by the Internal Revenue Code.
The Company's non-U.S. subsidiaries provide retirement benefits for employees
consistent with local practices, primarily using defined benefit or termination
indemnity plans.
At the Distribution Date, the Company assumed responsibility for pension
benefits for active employees of the Company and established separate retirement
plans for its employees; the responsibility for all others, principally
retirees, remained with D&B. An allocation of assets and liabilities for such
active employee benefits has been included in the consolidated financial
statements.
U.S. Pension Plans. Prior to the Distribution Date, the Company's U.S. employees
participated in D&B's defined benefit pension plan covering substantially all
employees in the United States. The benefits to be paid to employees under these
plans were based on years of credited service and average final compensation.
The Company accounted for the plan as a multi-employer plan. Accordingly, the
Company has recorded pension costs (income) as allocated by D&B totaling $1,301
for the ten months ended October 31, 1996, and $882 and $(645) for the years
1995 and 1994, respectively. During 1994, the Company recognized a pension
curtailment gain of $2,303 resulting from a workforce reduction.
The components of net U.S. pension costs for the period subsequent to the
Distribution Date are summarized as follows:
<TABLE>
<CAPTION>
TWO MONTHS ENDED
DECEMBER 31, 1996
- - --------------------------------------------------------------------------------
<S> <C>
Service Cost $ 314
Interest Cost on Projected Benefit Obligation 513
Actual Return on Plan Assets (726)
Net Amortization and Deferral (141)
-----
Net Periodic Pension (Income) $ (40)
================================================================================
</TABLE>
F-14
<PAGE> 15
The status of U.S. defined benefit pension plans at December 31, 1996 is as
follows:
<TABLE>
<CAPTION>
FUNDED UNFUNDED
- - -------------------------------------------------------------------------------
<S> <C> <C>
Fair Value of Plan Assets $ 50,266
-------------------------
Actuarial Present Value of
Benefit Obligations:
Vested Benefits 24,854
Non-Vested Benefits 5,359 $ 1,255
-------------------------
Accumulated Benefit Obligations 30,213 1,255
Effect of Projected Future
Salary Increases 2,932 2,623
-------------------------
Projected Benefit Obligations 33,145 3,878
-------------------------
Plan Assets in Excess of (Less than)
Projected Benefit Obligations 17,121 (3,878)
Unrecognized Net (Gain) Loss (2,619) 24
Unrecognized Prior Service (Credit) (436) (64)
Unrecognized Net Transition
(Asset) Obligation (1,706) 1,051
-------------------------
Prepaid (Accrued) Pension Cost $ 12,360 $ (2,867)
- - -------------------------------------------------------------------------------
</TABLE>
The key actuarial assumptions used in determining the amounts shown in the table
above were an expected long-term rate of return on plan assets of 9.0%, a
discount rate of 7.5% and a 4.16% rate of increase in future compensation.
Non-U.S. Benefit Plans. The Company's non-U.S. subsidiaries provide retirement
benefits for employees consistent with local practices, primarily using defined
benefit or termination indemnity plans. The projected benefit obligations for
these funded and unfunded plans at December 31, 1996 and 1995 were $204,026 and
$196,073, respectively. Prepaid pension costs for the funded plans totaled
$34,383 and $31,393 as of December 31, 1996 and 1995, respectively. Accrued
pension costs for the unfunded plans totaled $23,769 and $25,012 as of December
31, 1996 and 1995, respectively. Pension costs for these plans were $12,721,
$9,194 and $12,427 for the years 1996, 1995 and 1994, respectively.
The weighted average expected long-term rate of return on pension plan assets
was 9.32%, 9.85% and 9.87% for 1996, 1995 and 1994, respectively. At December
31, 1996 and 1995, the projected benefit obligations were determined using
weighted average discount rates of 7.92% and 8.15%, respectively, and weighted
average rates of increase in future compensation levels of 4.58% and 4.94%,
respectively. Plan assets are invested in diversified portfolios that consist
primarily of equity and debt securities.
Defined Contribution Plans. Prior to the Distribution Date, certain employees of
the Company in the United States were also eligible to participate in a
D&B-sponsored defined contribution plan. The Company made a matching
contribution of up to 100% of the employee's contribution subject to specified
limits. The Company's expense related to this plan was $3,523 for the ten months
ended October 31, 1996 and $4,695 and $4,105 for the years 1995 and 1994,
respectively.
Effective upon the Distribution, the Company eliminated the matching
contribution to the defined contribution plan and established an Employee Stock
Ownership Plan (ESOP) for the benefit of its United States employees. The
Company may contribute cash or Company common stock to each employee's account
equal to 3.5% of compensation (subject to IRS limitations). For the two months
ended December 31, 1996, the Company recognized compensation expense of $639 in
connection with the ESOP.
NOTE 7. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
In addition to providing pension benefits, the Company provides various
health-care and life-insurance benefits for retired employees. Employees of the
Company in the United States become eligible for these benefits if they reach
normal retirement age while working for the Company and have completed at least
ten years of service after age 45. The postretirement medical benefit is
contributory. Certain of the Company's subsidiaries outside the United States
have postretirement benefit plans, although most participants are covered by
government-sponsored or -administered plans. The cost of Company-sponsored
postretirement benefit plans outside the U.S. is not significant.
Prior to the Distribution Date, the Company accounted for the postretirement
benefit plan as a multi-employer plan. Accordingly, the Company has recorded
postretirement benefit costs as allocated by D&B totaling $1,432 for the ten
months ended October 31, 1996 and $1,356, and $2,365 for 1995, and 1994,
respectively.
F-15
<PAGE> 16
At the Distribution, the Company assumed responsibility for postretirement
benefits for active employees of the Company; the responsibility for all others
remained with D&B. During 1994, the Company also recognized a curtailment gain
of $4,082 resulting from a change in eligibility requirements for the
postretirement medical plan. The components of net periodic postretirement
benefit cost other than pensions for the period subsequent to the Distribution
Date are summarized as follows:
<TABLE>
<CAPTION>
TWO MONTHS ENDED
DECEMBER 31, 1996
- - -------------------------------------------------------------------------------
<S> <C>
Service Cost $ 80
Interest Cost on Accumulated Benefit Obligation 60
Net Amortization and Deferral (20)
-----
Net Postretirement Benefit Cost $ 120
- - --------------------------------------------------------------------------------
</TABLE>
The status of postretirement benefit pension plans at December 31, 1996 is as
follows:
<TABLE>
<S> <C>
- - -------------------------------------------------------------------------------
Active Associates -- Eligible $(1,720)
Active Associates -- Not Yet Eligible (2,790)
-------
Accumulated Postretirement
Benefit Obligations (4,510)
Unrecognized Net Loss 100
Unrecognized Prior
Service (Credit) (260)
-------
Accrued Postretirement
Benefit Obligations $(4,670)
- - -------------------------------------------------------------------------------
</TABLE>
Obligations are unfunded and the actuarial present values of accumulated plan
benefit obligations are recognized in the consolidated balance sheet. The
accumulated postretirement benefit obligation at December 31, 1996 was
determined using a discount rate of 7.5%. The assumed rate of future increases
in per capita cost of covered health-care benefits is 8.0% in 1996, decreasing
gradually to 5.0% by the year 2021 and remaining constant thereafter. Increasing
the assumed health-care cost trend rate by one percentage point in each year
would increase the accumulated postretirement benefit obligation by $550 and
would increase annual aggregate service and interest cost by $120.
Postemployment Benefits. In certain instances, the Company provides
postemployment benefits to former or inactive employees following employment but
before retirement, principally severance. The Company reported postemployment
benefit expense (as allocated by D&B through November 1, 1996) of $3,077,
$36,168 and $2,565, for 1996, 1995 and 1994, respectively. The expense in 1995
included an incremental charge of $31,900 for severance in the third quarter,
but excluded $14,300 recorded in the fourth quarter as part of the non-recurring
charge. (See Note 3 to the Financial Statements).
NOTE 8. EMPLOYEE STOCK AND RELATED PLANS
In October 1996, the Company adopted three stock incentive plans which reserve
shares of common stock for issuance to key employees and non-employee directors.
Pursuant to one such plan, immediately following the Distribution, outstanding
awards under the D&B stock option plans held by Company employees were replaced
by substitute awards. The substitute awards have the same ratio of the exercise
price per option to the market value per share, the same aggregate difference
between market value and exercise price and substantially the same other terms
and conditions as the options they replaced. A total of 18,300,000 shares have
been reserved for issuance under these plans.
The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock Based Compensation." Accordingly, no compensation expense
has been recognized for the Company's three stock incentive plans. Had
compensation expense for the Company's plans been determined based on the fair
value at the grant date for option grants after January 1, 1995, including the
conversion of D&B stock options granted prior to 1995, consistent with the
provisions of SFAS No. 123, the Company's net income and net income per share
would have been reduced to the pro forma amounts indicated below for 1996. The
effect on 1995 is not material.
<TABLE>
<CAPTION>
1996
- - -----------------------------------------------------------------------------
<S> <C>
Net Income -- as reported $15,844
Net Income -- pro forma $13,200
-------
Net Income per share -- as reported $ .28
Net Income per share -- pro forma $ .23
- - --------------------------------------------------------------------------------
</TABLE>
Note: The 1996 pro forma amounts include an incremental pre-tax charge of
$3,048, as a result of the replacement stock option plan being a modification of
the plan in accordance with SFAS No. 123.
F-16
<PAGE> 17
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions (including assumptions related to D&B options to determine
compensation expense for the period prior to the Distribution):
<TABLE>
<CAPTION>
OLD ACNIELSEN &
D&B REPLACEMENT
OPTIONS OPTIONS
- - -------------------------------------------------------------------------------
<S> <C> <C>
Expected dividend yield 4.7% 0%
Expected stock price volatility 15% 30%
Risk-free interest rate 6.15% 6.11%
Expected life of options 5.0 years 5.0 years
- - --------------------------------------------------------------------------------
</TABLE>
The weighted average fair value of options granted during 1996 is $6.16 per
share.
Under the stock incentive plans adopted in 1996, 7,593,945 shares of common
stock were available for future grants as of December 31, 1996. These plans
provide that shares granted come from the Company's authorized but unissued
common stock or treasury stock. The price of options granted pursuant to these
plans will not be less than the fair market value of the shares on the date of
grant, with the exception of the substitute awards, the price of which was
determined as described above. Stock options granted during 1996 ("effective
date options") have a term of ten years and vest over four or six years. In
addition, effective date options may vest earlier if the Company's stock price
reaches certain targets. One-half of the unvested options will vest if the
Company's stock price reaches 150% of the exercise price for five consecutive
trading days and the remaining unvested options become vested if the stock price
reaches 200% of the exercise price for five consecutive trading days.
The plans also provide for the granting of limited stock appreciation rights
(LSARs) in tandem with stock options to certain key employees. At December 31,
1996, 2,613,641 LSARs were outstanding, which are exercisable upon the
occurrence of a specified event.
Changes in stock options for the period subsequent to the Distribution Date are
summarized as follows:
<TABLE>
<CAPTION>
AVERAGE OPTION
SHARES PRICE PER SHARE
- - --------------------------------------------------------------------------------
<S> <C> <C>
Conversion of D&B options at
November 1, 1996 4,054,731 $15.66
Granted during period 4,706,055 15.75
Exercised (69,190) 14.53
Surrendered or Expired (148,336) 16.15
--------- ------
Options outstanding at
December 31, 1996 8,543,260 $15.71
- - --------------------------------------------------------------------------------
</TABLE>
At December 31, 1996, exercise prices for all outstanding options range from a
minimum of approximately $11.10 per share to a maximum of approximately $17.05
per share. The average remaining maximum term of options outstanding is
approximately 8.81 years.
Success Share Program. On December 9, 1996, the Company granted, to each of its
full-time and regular part-time employees, stock appreciation rights at a strike
price of $15 3/4, entitling the employee to the appreciation on the equivalent
of 25 shares of the Company's common stock, subject to certain terms, conditions
and limitations. The rights vest on December 9, 1997 and expire on December 9,
1999. There were no charges to income in 1996 with respect to this program.
NOTE 9. INCOME TAXES
Income (loss) before provision for income taxes consisted of:
<TABLE>
<CAPTION>
1996 1995 1994
- - -------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. $ (35,714) $(244,236) $(129,484)
Non-U.S 66,208 53,188 114,896
-----------------------------------------------
$ 30,494 $(191,048) $ (14,588)
- - -------------------------------------------------------------------------------
</TABLE>
In 1995 and 1994, the Company had not recognized benefits on the U.S. losses
reflected above since the Company did not believe it was more likely than not
that such benefits could be recognized on a separate-company basis. In 1996,
U.S. losses through the Distribution Date were realized by D&B and, accordingly,
the related tax benefit was reflected by the Company through divisional equity.
F-17
<PAGE> 18
The provision (benefit) for income taxes consisted of:
<TABLE>
<CAPTION>
1996 1995 1994
- - -------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Federal and state:
Current $ (9,776) $ 32,237 $ (6,186)
Deferred (996) (30,237) 6,860
----------------------------------------
Total (10,772) 2,000 674
Non-U.S.:
Current 10,631 22,846 24,127
Deferred 14,791 14,990 25,672
----------------------------------------
Total 25,422 37,836 49,799
----------------------------------------
Total $ 14,650 $ 39,836 $ 50,473
- - -------------------------------------------------------------------------------
</TABLE>
The following table summarizes the significant differences between the U.S.
Federal statutory taxes and the Company's provision for income taxes for
consolidated financial statement purposes.
<TABLE>
<CAPTION>
1996 1995 1994
- - -------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax expense (benefit) at
statutory rate $ 10,673 $(66,867) $ (5,106)
State and local income
taxes, net of
Federal effect (1,161) (8,962) (3,488)
U.S. losses for which
no tax benefits
were provided -- 94,445 48,807
Non-U.S. taxes 2,249 19,220 9,586
Other 2,889 2,000 674
----------------------------------------
Total taxes $ 14,650 $ 39,836 $ 50,473
- - -------------------------------------------------------------------------------
</TABLE>
The Company's deferred tax assets (liabilities) are comprised of the following
at December 31:
<TABLE>
<CAPTION>
1996 1995
- - -------------------------------------------------------------------------------
<S> <C> <C>
Deferred Tax Assets:
Operating Losses $ 52,784 $ 55,043
Non-Recurring Charges 13,398 22,928
Postemployment Benefits 14,325 8,766
Postretirement Benefits 8,107 8,197
Bad Debts 892 1,469
Restructuring Costs -- 747
Other -- 922
---------------------------
89,506 98,072
Valuation Allowance (79,866) (80,522)
---------------------------
9,640 17,550
---------------------------
Deferred Tax Liabilities:
Intangibles (7,560) (10,239)
Deferred Revenue (6,375) (7,364)
Depreciation (4,048) (3,847)
Investments (4,056) (922)
Other (12,447) (2,331)
---------------------------
(34,486) (24,703)
NET DEFERRED TAX LIABILITY $(24,846) $ (7,153)
- - -------------------------------------------------------------------------------
</TABLE>
No provision was made for U.S. taxes payable on undistributed earnings amounting
to approximately $167,000 as such amounts are permanently reinvested.
NOTE 10. BANK CREDIT LINE
In December 1996, the Company entered into a credit agreement with a global bank
syndicate comprising twelve banks. This $125,000 credit facility is unsecured
and has a three-year term. The facility provides for multicurrency and bridge
loans. The base interest rates can be fixed or various floating rates, depending
on the type of loan undertaken and currencies involved. Interest spreads and
fees vary based on the Company's fixed charge coverage ratio for the preceding
four quarters. The terms of the credit agreement contain, among other
provisions, limitations on total debt/leverage levels, minimum earnings before
interest, taxes, depreciation and amortization and minimum fixed charge
coverages. The agreement also prohibits the Company from paying cash
F-18
<PAGE> 19
dividends and permits share repurchases only in connection with employee benefit
programs. At December 31, 1996, approximately $22,700 was drawn against this
facility. The nominal value of the borrowings approximates fair value. There are
no compensating balance requirements or material commitment fees associated with
the credit line.
The weighted average interest rates on short-term debt at December 31, 1996 and
1995, respectively, were 7.65% and 14.48%.
NOTE 11. CAPITAL STOCK
The Company has authority to issue 160,000,000 shares of which 150,000,000
represent shares of ACNielsen Common Stock, 5,000,000 represent shares of
Preferred Stock and 5,000,000 represent shares of Series Common Stock. The Board
of Directors is authorized to issue one or more series of Preferred Stock and
Common Stock, and to establish the number of shares in that series, voting
rights (if any), consideration for such shares, and other rights or restrictions
of the shares in that series. At December 31, 1996, no Preferred Stock or Series
Common Stock had been issued.
In October 1996, the Company adopted a Shareholders' Rights Plan. Under the
plan, each share of the Company's Common Stock has a right which trades with the
stock until the right becomes exercisable. Each right entitles the shareholders
to buy 1/1,000 of a share of Series A Junior Participating Preferred Stock of
the Company at a purchase price of $108 per 1/1,000 of a share, subject to
adjustment. The rights will not be exercisable until a person or group
(Acquiring Person) acquires beneficial ownership of, or commences a tender offer
for, 15% or more of the Company's outstanding Common Stock.
In the event of such a 15% acquisition or if subsequently the Company is
acquired in a merger or other business combination, as described in the
Shareholders' Rights Plan, each right will entitle its holder (other than the
Acquiring Person) to receive upon exercise, stock with a value of two times the
exercise price in the form of the Company's Common Stock or, where appropriate,
the Acquiring Person's common stock. The Company may redeem the rights, which
expire in October 2006, for $.01 per right, under certain circumstances.
NOTE 12. OTHER TRANSACTIONS WITH AFFILIATES
Prior to the Distribution Date, the Company participated in D&B's centralized
cash management system to finance its operations. Cash deposits from most of the
Company's businesses were transferred to D&B on a daily basis and D&B funded the
Company's disbursement bank accounts as required. No interest has been charged
on these transactions. Cash and cash equivalents in the Consolidated Balance
Sheet at December 31, 1995 represent balances of certain foreign entities.
D&B historically has provided certain centralized services (see Note 1 to the
Consolidated Financial Statements) to the Company. Prior to the Distribution
Date, expenses related to these services were allocated to the Company based on
utilization of specific services or, where not estimable, based on assets
employed by the Company in proportion to D&B's total assets. Management believes
these allocation methods are reasonable. These allocations were $82,600 in the
ten months ended October 31, 1996, and $85,700 (including data service charges
beginning in 1995) and $45,017 in 1995 and 1994, respectively, and are included
in operating costs and selling and administrative expenses in the Consolidated
Statements of Operations. Amounts due to D&B for these expenses were included in
divisional equity.
The Company provided certain services to D&B and affiliates at negotiated
prices. Operating revenue from such services totaled $895 in the ten months
ended October 31, 1996 and $1,531 and $2,970 in 1995 and 1994, respectively.
Net transfers to/from D&B, included in Divisional Equity, included advances and
loans from affiliates, net cash transfers to/from D&B, third party liabilities
paid on behalf of the Company by D&B, amounts due to/from D&B for services and
other charges, and income taxes paid on behalf of the Company by D&B. No
interest has been charged on these transactions. The weighted average balance
due to D&B was $324,578 for the ten months ended October 31, 1996 and $713,099
and $518,738 for 1995, and 1994, respectively.
F-19
<PAGE> 20
The activity in the net transfers (to) from D&B account, included in Divisional
Equity is summarized as follows:
<TABLE>
<CAPTION>
TEN MONTHS YEARS ENDED
ENDED OCT. 31, DECEMBER 31,
1996 1995 1994
- - -------------------------------------------------------------------------------
<S> <C> <C> <C>
D&B services
and other charges $ 88,059 $ 88,505 $ 36,881
Loans and advances -- Net (379,189) 132,734 206,835
U.S. income taxes (12,507) 32,237 (6,186)
Cash transfers -- Net 349,847 (152,336) (82,270)
-----------------------------------------
Net transfers from D&B $ 46,210 $ 101,140 $ 155,260
- - -------------------------------------------------------------------------------
</TABLE>
NOTE 13. LEASES AND OTHER COMMITMENTS
Certain of the Company's operations are conducted from leased facilities, which
are under operating leases. Rental expense under real estate operating leases
for the years 1996, 1995, and 1994 was $38,427, $40,109, and $31,781,
respectively. The totals include $98 for the ten months ended October 31, 1996
and $115 and $124 in 1995, and 1994, respectively, for facilities usage charged
by D&B or an affiliate. The approximate minimum annual rental expense for real
estate operating leases that have remaining noncancelable lease terms in excess
of one year, net of sublease rentals, at December 31, 1996, was: 1997-$34,710;
1998-$32,052; 1999-$27,842; 2000-$21,840; 2001-$15,536; and an aggregate of
$15,506 thereafter.
The Company also leases or participates with D&B in leases of certain computer
and other equipment under operating leases. These leases are frequently
renegotiated or otherwise changed as advancements in computer technology produce
opportunities to lower costs and improve performance. Rental expense under
computer and other equipment leases was $26,570, $25,076, and $17,796 for 1996,
1995 and 1994, respectively. At December 31, 1996, the approximate minimum
annual rental expense for computer and other equipment under operating leases
that have remaining noncancelable lease terms in excess of one year was:
1997-$22,772; 1998-$10,966; 1999-$4,779; 2000-$2,232; 2001-$2,052; and an
aggregate of $8,020 thereafter.
The Company has agreements with a third party for certain data processing
services, extending beyond one year. At December 31, 1996, the minimum annual
services covered by this agreement total approximately: 1997-$6,500;
1998-$3,600; 1999-$800; 2000-$800; 2001-$800; and thereafter $1,400.
Prior to the Distribution, the Company entered into certain lease or sublease
agreements with D&B, Cognizant, an affiliate or third parties for certain leased
facilities, computer and other equipment, which principally are a continuation
of existing lease commitments at market rates. The commitments are included in
the amounts disclosed above.
NOTE 14. LITIGATION
On November 28, 1996, the Company delivered an Undertaking to Directorate
General IV of the Commission of the European Union (the "Commission"). In
accepting the Undertaking, the Commission agreed to terminate its investigation
of the Company without any adverse decision or fine. Pursuant to the
Undertaking, the Company agreed not to engage in certain sales practices and
contracts with multinational customers. In the opinion of management, compliance
with the Undertaking will not affect the Company's results of operations, cash
flows or financial position.
On July 29, 1996, Information Resources, Inc. ("IRI") filed a complaint in the
United States District Court for the Southern District of New York, naming as
defendants D&B, A.C. Nielsen Company (which is a subsidiary of the Company) and
I.M.S. International, Inc., a subsidiary of Cognizant Corporation ("IMS") (the
"IRI Action").
The complaint alleges various violations of the United States antitrust laws,
including alleged violations of Sections 1 and 2 of the Sherman Act. The
complaint also alleges a claim of tortious interference with a contract and a
claim of tortious interference with a prospective business relationship. These
claims relate to the acquisition by defendants of Survey Research Group Limited
("SRG"). IRI alleges that SRG violated an alleged agreement with IRI when it
agreed to be acquired by the defendants and that the defendants induced SRG to
breach that agreement.
F-20
<PAGE> 21
IRI's complaint alleges damages in excess of $350 million, which amount IRI has
asked to be trebled under the antitrust laws. IRI also seeks punitive damages in
an unspecified amount.
In connection with the IRI Action, D&B, Cognizant Corporation (the parent
company of IMS) and the Company have entered into an Indemnity and Joint Defense
Agreement (the "Indemnity and Joint Defense Agreement") pursuant to which they
have agreed (i) to certain arrangements allocating potential liabilities ("IRI
Liabilities") that may arise out of or in connection with the IRI Action and
(ii) to conduct a joint defense of such action. In particular, the Indemnity and
Joint Defense Agreement provides that the Company will assume exclusive
liability for IRI Liabilities up to a maximum amount to be calculated at the
time such liabilities, if any, become payable (the "ACN Maximum Amount"), and
that Cognizant and D&B will share liability equally for any amounts in excess of
the ACN Maximum Amount. The ACN Maximum Amount will be determined by an
investment banking firm as the maximum amount which the Company is able to pay
after giving effect to (i) any plan submitted by such investment bank which is
designed to maximize the claims paying ability of the Company without impairing
the investment banking firm's ability to deliver a viability opinion (but which
will not require any action requiring stockholder approval), and (ii) payment of
related fees and expenses. For these purposes, financial viability means the
ability of the Company, after giving effect to such plan, the payment of related
fees and expenses and the payment of the ACN Maximum Amount, to pay its debts as
they become due and to finance the current and anticipated operating and capital
requirements of its business, as reconstituted by such plan, for two years from
the date any such plan is expected to be implemented.
The Indemnity and Joint Defense Agreement also imposes certain restrictions on
the payment of cash dividends and the ability of the Company to purchase its
stock.
Management of ACNielsen is unable to predict at this time the final outcome of
the IRI Action or whether its resolution could materially affect the Company's
results of operations, cash flows or financial position.
The Company and its subsidiaries are also involved in other legal proceedings
and litigation arising in the ordinary course of business. In the opinion of
management, the outcome of such current legal proceedings, claims and
litigation, if decided adversely, could have a material effect on quarterly or
annual operating results or cash flows when resolved in a future period.
However, in the opinion of management, these matters will not materially affect
the Company's consolidated financial position.
NOTE 15. SUPPLEMENTAL FINANCIAL DATA
Accounts Receivable -- Net:
<TABLE>
<CAPTION>
1996 1995
- - -------------------------------------------------------------------------------
<S> <C> <C>
Trade $ 227,171 $ 229,492
Less: allowance for
doubtful accounts (10,847) (17,289)
Unbilled receivables 25,651 30,579
Other 28,628 30,194
-----------------------------
$ 270,603 $ 272,976
===============================================================================
</TABLE>
Other Current Assets:
<TABLE>
<CAPTION>
1996 1995
- - --------------------------------------------------------------------------------
<S> <C> <C>
Deferred taxes $ 6,402 $20,435
Prepaid expenses 24,420 23,373
---------------------------
$30,822 $43,808
================================================================================
</TABLE>
Property, Plant and Equipment -- Net, carried at cost, less accumulated
depreciation and amortization:
<TABLE>
<CAPTION>
1996 1995
- - -------------------------------------------------------------------------------
<S> <C> <C>
Land $ 4,593 $ 4,752
Buildings 50,073 53,927
Machinery and Equipment 374,523 371,659
Leasehold Improvements 35,321 39,881
---------------------------
Less: accumulated depreciation (278,457) (280,734)
---------------------------
$ 186,053 $ 189,485
===============================================================================
</TABLE>
F-21
<PAGE> 22
Intangibles and Other Assets, Computer Software and Goodwill:
<TABLE>
<CAPTION>
INTANGIBLES
AND COMPUTER
OTHER ASSETS SOFTWARE GOODWILL
- - -------------------------------------------------------------------------------
<S> <C> <C> <C>
January 1, 1995 $ 120,047 $ 55,320 $ 193,464
Additions at cost 14,057 20,535 3,444
Amortization (11,840) (36,643) (9,609)
Other deductions and
reclassifications (60,068) (11,785) 21,155
-------------------------------------------
December 31, 1995 62,196 27,427 208,454
Additions at cost 2,495 24,450 1,907
Amortization (10,996) (14,666) (9,999)
Other deductions and
reclassifications (8,289) 647 3,660
Deferred income taxes 3,204 -- --
-------------------------------------------
December 31, 1996 $ 48,610 $ 37,858 $ 204,022
===============================================================================
</TABLE>
Accumulated amortization of intangibles and other assets, computer software and
goodwill was $140,542 and $176,413 at December 31, 1996 and 1995, respectively.
Accounts Payable:
<TABLE>
<CAPTION>
1996 1995
- - --------------------------------------------------------------------------------
<S> <C> <C>
Trade $47,242 $43,692
Customer advances 1,805 1,145
Taxes other than income taxes 34,149 33,688
Other 1,484 10,538
------------------------
$84,680 $89,063
================================================================================
</TABLE>
Accrued and Other Current Liabilities:
<TABLE>
<CAPTION>
1996 1995
- - --------------------------------------------------------------------------------
<S> <C> <C>
Salaries, wages, bonuses and
other compensation $ 47,183 $ 39,633
Restructuring costs -- 4,325
Postemployment benefits 26,346 39,232
Other 187,077 156,786
--------------------------
$260,606 $239,976
================================================================================
</TABLE>
NOTE 16. OPERATIONS BY GEOGRAPHIC AREA
The Company, operating globally, delivers market research, information and
analysis to the consumer products and service industries.
Financial information by geographic area is summarized as follows. Inter-area
sales were not significant.
<TABLE>
<CAPTION>
OPERATING IDENTIFIABLE
OPERATING REVENUE INCOME (LOSS) ASSETS
- - --------------------------------------------------------------------------------
<S> <C> <C> <C>
1996
UNITED STATES $ 286,522 $ (4,912) $ 269,397
CANADA/LATIN AMERICA 185,516 22,210 136,656
----------------------------------------------
TOTAL AMERICAS 472,038 17,298 406,053
----------------------------------------------
EUROPE 597,669 21,828 399,890
ASIA PACIFIC 254,082 4,762 221,581
ACN JAPAN 34,855 (15,733) 8,544
----------------------------------------------
TOTAL $1,358,644 $ 28,155 $1,036,068
================================================================================
1995
United States $ 274,552 $ (172,971) $ 192,429
Canada/Latin America 169,009 18,967 112,373
----------------------------------------------
Total Americas 443,561 (154,004) 304,802
----------------------------------------------
Europe 583,269 (5,599) 430,586
Asia Pacific 216,875 11,695 198,310
ACN Japan 37,640 (36,100) 9,089
----------------------------------------------
Total $1,281,345 $ (184,008)(1) $ 942,787
================================================================================
1994
United States $ 256,111 $ (90,665) $ 249,071
Canada/Latin America 149,124 27,322 94,329
----------------------------------------------
Total Americas 405,235 (63,343) 343,400
----------------------------------------------
Europe 548,647 69,893 413,536
Asia Pacific 105,565 11,172 178,447
ACN Japan 32,660 (18,891) 23,031
----------------------------------------------
Total $1,092,107 $ (1,169)(2) $ 958,414
================================================================================
</TABLE>
(1) 1995 Operating Loss includes a non-recurring charge of $152,170 ($107,000 in
the U.S., $1,870 in Canada/Latin America, $28,400 in Europe, $900 in Asia
Pacific and $14,000 in Japan) in the fourth quarter and includes a 1995 third
quarter incremental provision for postemployment benefits of $31,900 ($16,500 in
the U.S., $2,000 in Canada/Latin America, and $13,400 Europe). (See Notes 3 and
7 to the Consolidated Financial Statements).
(2) 1994 Operating Income includes restructuring expense of $8,922 ($3,396 in
the U.S. and $5,526 in Europe). (See Note 4 to the Consolidated Financial
Statements).
F-22
<PAGE> 23
NOTE 17. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 YEAR
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996
OPERATING REVENUE $307,292 $336,948 $346,743 $ 367,661 $1,358,644
OPERATING (LOSS) INCOME $(18,750) $ 11,029 $ 15,196 $ 20,680 $ 28,155
NET INCOME (LOSS) $(19,190) $ 1,706 $ 21,882 $ 11,446 $ 15,844
ACTUAL AND PRO FORMA EARNINGS (LOSS) PER SHARE $ (0.34) $ 0.03 $ 0.39 $ 0.20 $ 0.28
ACTUAL AND PRO FORMA AVERAGE NUMBER OF SHARES OUTSTANDING 56,556 56,686 56,713 56,766 56,712
- - -----------------------------------------------------------------------------------------------------------------------------------
1995
Operating Revenue $285,341 $325,828 $321,235 $ 348,941 $1,281,345
Operating (Loss) Income(1) $(19,903) $ 8,874 $(24,425) $(148,554) $ (184,008)
Net Loss(1) $(26,654) $(10,139) $(33,143) $(160,948) $ (230,884)
Pro Forma Loss Per Share(1) $ (0.47) $ (0.18) $ (0.59) $ (2.85) $ (4.09)
Pro Forma Average Number of Shares Outstanding 56,574 56,546 56,526 56,507 56,507
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes a non-recurring charge of $152,170 pre-tax ($141,260 after-tax) or
$2.50 per share in the fourth quarter and a provision for postemployment
benefits of $31,900 pre-tax ($24,200 after-tax) or $0.43 per share in the third
quarter. (See Notes 3 and 7 to the Consolidated Financial Statements).
F-23
<PAGE> 24
ACNIELSEN CORPORATION
SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA) 1996 1995(1) 1994(2) 1993(2) 1992
- - ------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating Revenue $ 1,359 $ 1,281 $ 1,092 $ 1,045 $ 1,117
Income (Loss) before cumulative effect
of changes in accounting principles $ 16 $ (231) $ (65) $ (55) $ 47
Actual and Pro Forma Net Income (Loss)
Per Share of Common Stock(3) $ .28 $ (4.09) $ (1.15) $ (.94) $ .79
BALANCE SHEET DATA:
Total Assets $ 1,036 $ 943 $ 958 $ 828 $ 904
Long-term Debt $ 3 $ 6 $ 9 $ 4 $ 10
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Income (Loss) before cumulative effect of changes in accounting principles
in 1995 includes a non-recurring pre-tax charge in the fourth quarter of $152
million ($141 million after-tax or $2.50 per share) for costs principally
associated with asset impairments, software write-offs and contractual
obligations that have no future economic benefit, and an incremental
postemployment benefit expense of $32 million pre-tax ($24 million after-tax or
$.43 per share).
(2) Income (Loss) before cumulative effect of changes in accounting principles
includes restructuring expense of $9 million and $60 million pre-tax, in 1994
and 1993, respectively.
(3) The computation of pro forma Income (Loss) per share for the periods prior
to November 1, 1996 (the Distribution) is based on the average number of shares
of D&B Common Stock outstanding during the respective periods, adjusted for the
one for three Distribution ratio.
F-24
<PAGE> 1
EXHIBIT 21
ACNIELSEN CORPORATION
LIST OF ACTIVE SUBSIDIARIES-1/31/97
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------------
STATE OR OTHER % OWNERSHIP
NAME JURISDICTION OF 100% EXCEPT
INCORPORATION AS NOTED
- - -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
A. C. NIELSEN COMPANY DELAWARE
A. C. Nielsen (Argentina) S.A. DELAWARE
Control Publicitario S.A. Argentina
IPSA S.A. Argentina 80.25
IPSA Nielsen Argentina S.A. Argentina 80.0
A. C. Nielsen Ges.mbH Austria
CMIS Coordinierte Management Informations Systeme Ges.mbH Austria
ANR Piackutato Kft. Hungary
A. C. Nielsen Company (Belgium) S.A. Belgium
A. C. Nielsen Corporation & Co. SNC Belgium
A. C. Nielsen do Brasil Ltda. Brazil
Companhia Brasileira de Pesquisa e Analise Brazil 54.0
ACNielsen Canada Holding Ltd. Canada
ACNielsen Company of Canada Limited Canada
Nielsen Korea Limited Korea
A. C. Nielsen Chile Limitada Chile
A. C. Nielsen Chile S.A. Chile 51.0
A. C. Nielsen de Colombia S.A. Colombia 94.0
Nielsen del Ecuador S.A. Ecuador
ANR Amer Nielsen Research Limited Cyprus 51.0
AIM Nielsen A/S Denmark
AIM Farmstat ApS Denmark 66.67
Teollisuuden Tielopalvelu Industrial Intelligence Ltd. Oy Finland
A. C. Nielsen Finland Oy Finland
Finnpanel Oy Finland 50.0
A. C. Nielsen S.A. France
ERIM S.A. France
Panel de Gestion S.A.R.L. France
Amer-Nielsen Research Hellas S.A. Greece 80.0
A. C. Nielsen (Dublin) Limited Ireland
A. C. Nielsen of Ireland Limited Ireland
</TABLE>
<PAGE> 2
-2-
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------
STATE OR OTHER % OWNERSHIP
NAME JURISDICTION OF 100% EXCEPT
INCORPORATION AS NOTED
- - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
A. C. NIELSEN COMPANY (Continued)
A. C. Nielsen Italia S.p.A. Italy
C.R.A. S.r.l. Italy
Telepanel S.A. Italy
SITA, Societa per gli Indici Tessile e Abbigliamento-S.r.l. Italy 75.0
Management Tools S.r.l. Italy 60.0
Nielsen Japan K.K. Japan
A. C. Nielsen (N.Z.) Limited New Zealand
AGB McNair Group Ltd. New Zealand
Media Research Services Ltd. New Zealand 75.0
Market Research (NZ) Ltd. New Zealand
ACNielsen Holdings Spain B.V. The Netherlands
N&P Holdings Spain S.A. Spain
A. C. Nielsen Company S.A. Spain
Infoadex S.A. Spain 50.0
Panel Internacional S.A. Spain
A. C. Nielsen (Nederland) B.V. The Netherlands
ACNielsen Polen B.V. The Netherlands
ANR Amer Nielsen Research Sp. z.o.o. Poland
Nielsen Marketing Research spol, s.r.o. Czech Republic
Nederland Centrum voor Marketing Analyses B.V. The Netherlands 70.0
South African L.P. (No official name) South Africa 50.0
ZET-Nielsen Business Information A.S. Turkey 85.0
Nielsen Norge as Norway 98.9
A/S Norsk Reklame-Statistikk Norway 83.7
A. C. Nielsen de Panama S.A. Panama
A. C. Nielsen Peru S.A. Peru
Nedro-Nielsen Estudios de Mercado, Lda. Portugal
A. C. Nielsen P.R. Inc. Puerto Rico
A. C. Nielsen Singapore Pte. Ltd. Singapore
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
-3-
- - ------------------------------------------------------------------------------------------------------------------------------------
State or other % Ownership
Name Jurisdiction of 100% Except
Incorporation as Noted
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
A.C. NIELSEN COMPANY (Continued)
A.C. Nielsen Company AB Sweden
A.C. Nielsen Management Services S.A. Switzerland
A.C. Nielsen S.A. Switzerland
Media Focus Switzerland 50.0
ACN/PIB Partners Connecticut 50.01
Nielsen Holdings, Inc. Delaware
Nielsen Leasing Corporation Delaware
Panel International S.A. Delaware
A.C. NIELSEN COMPANY LIMITED England
A.C. NIELSEN (HOLDINGS) PTY. LIMITED Australia
A.C. Nielsen Australia Pty. Limited Australia
AGB McNair Holdings Pty. Limited Australia
AGB Research Holdings Pty. Limited Australia
Tart Research Pty. Limited Australia
AGB McNair Pty. Limited Australia
McNair Anderson Associates Pty. Limited Australia
Marketing Insights Pty. Ltd. Australia
Nandette Pty. Limited Australia
Australian Independent Media Data Pty. Limited Australia 50.0
CZT/ACN TRADEMARKS, L.L.C. Delaware 50.0
IMS FINANCIAL ACN HOLDING GmbH Germany
ACN Marketing Research Holding GmbH Germany
A.C. Nielsen GmbH Germany
A.C. Nielsen Werbeforschung S&P GmbH Germany
"P&S" Handelsberatung GmbH Germany
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
-4-
- - ------------------------------------------------------------------------------------------------------------------------------------
State or other % Ownership
Name Jurisdiction of 100% Except
Incorporation as Noted
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SRG HOLDINGS LIMITED Hong Kong
SRG Management Services Limited Hong Kong
Research Consulting Services Ltd. Hong Kong
SRG China Ltd. Hong Kong
Shanghai SRG Ltd. China 80.0
SRG International (HK) Ltd. Hong Kong
SRG Research Services (HK) Ltd. Hong Kong
Survey Research Hong Kong Ltd. Hong Kong
Survey Research Asia Pacific Ltd. Hong Kong
Survey Research Taiwan Ltd. Taiwan
Survey Research Group Ltd. Hong Kong
SRG Guangzhou Ltd. China 92.0
Survey Research Group Pte. Ltd. Singapore
SRG Research Canada Ltd. Canada
D.J. Calhoun Marketing & Development Ltd. Canada 86.0
Recherches en Marketing (Quebec) Inc. Canada
P.T. SRI Nielsen Indonesia Indonesia
SRG Japan K.K. Japan
Hankook Research Company Korea 50.0
Survey Research Malaysia Sdn Bhd Malaysia
Target Marketing Promotions Sdn Bhd Malaysia
Consumer Pulse Inc. Philippines
Dealer Pulse Inc. Philippines
Media Pulse Inc. Philippines
Philippine Monitoring Services Inc. Philippines
Research Philippines Unisearch INC. Philippines
Survey Research Singapore Pte. Ltd. Singapore
Deemar Company Ltd. Thailand
SRG INTERNATIONAL LTD. New York
</TABLE>
January 31, 1997
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in the registration statements of ACNielsen
Corporation on Forms S-8 (File Nos. 333-14085 and 333-14753) of our report dated
February 19, 1997 incorporated by reference in ACNielsen Corporation's Form 10-K
for the year ended December 31, 1996 and to all references to our Firm included
in this Form 10-K.
ARTHUR ANDERSEN LLP
Stamford, Connecticut
March 21, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of ACNielsen Corporation on Form S-8 (File Nos. 333-14085 and
333-14753) of our reports dated September 16, 1996, on our audits of the
combined financial statements and financial statement schedule of ACNielsen
Corporation, as defined in the notes to the financial statements, as of December
31, 1995 and for each of the two years in the period ended December 31, 1995.
COOPERS & LYBRAND L.L.P.
Stamford, Connecticut
March 21, 1997
<TABLE> <S> <C>
<ARTICLE> 5 Exhibit 27
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 185,005
<SECURITIES> 0
<RECEIVABLES> 270,603
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 486,430
<PP&E> 464,510
<DEPRECIATION> 278,457
<TOTAL-ASSETS> 1,036,068
<CURRENT-LIABILITIES> 446,315
<BONDS> 0
0
0
<COMMON> 571
<OTHER-SE> 453,375
<TOTAL-LIABILITY-AND-EQUITY> 1,036,068
<SALES> 0
<TOTAL-REVENUES> 1,358,644
<CGS> 0
<TOTAL-COSTS> 1,330,489
<OTHER-EXPENSES> 809
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (3,148)
<INCOME-PRETAX> 30,494
<INCOME-TAX> 14,650
<INCOME-CONTINUING> 15,844
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,844
<EPS-PRIMARY> 0.28
<EPS-DILUTED> 0.28
</TABLE>
