SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Filed Pursuant to Section 13 or 15 (d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 11, 1997
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NFO RESEARCH, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-21460 06-1327424
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(State or other jurisdiction (Commission (IRS Employer Identification
of incorporation) File Number) Number)
2 Pickwick Plaza
Greenwich, CT 06830
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Registrant's telephone number, including area code: (203) 629-8888
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Item 2. Acquisition or Disposition of Assets
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On July 11, 1997 the Registrant acquired 100% of the outstanding stock
of The MBL Group Plc ("MBL"), a company incorporated under the laws of
England and Wales, from John and Mary Goodyear. MBL is a leading
international market research firm with 27 offices in 17 countries
throughout Europe, the Middle East, Asia and Southeast Asia. The
acquisition was effected through the issuance of 1,364,242 shares of
NFO common stock.
NFO also announced that it has or will shortly enter into agreements
with the minority shareholders of the various MBL subsidiaries to
repurchase a portion of such shareholders' minority shares during 1997.
The consideration for this initial purchase of the minority interests
is expected to be $14.5 million, of which $11.1 million is payable in
cash and $3.4 million is payable via the issuance of 144,567 newly
issued shares of NFO common stock. To pay the cash portion of the
purchase price, the Registrant used funds both from working capital and
borrowed under the Registrant's existing credit facility with a
syndicate of lenders including Fleet Bank, N.A, The Chase Manhattan
Bank of Connecticut, N.A. and The Bank of New York. The remaining
minority interests will then be repurchased in three years based on the
higher of (a) a multiple of average profits for three years ending
December 31, 1999 or (b) the original valuation. The total price for
100% of the outstanding shares of stock of MBL and its subsidiaries is
estimated to be US$55 million.
The consideration for this acquisition was determined through arm's
length negotiations among the parties to the transaction. The
Registrant had no prior relationship with MBL.
The acquisition of MBL will be accounted for as a pooling of interests
and, accordingly, historical financial data in future reports will be
restated to include MBL. The purchase of the minority interests in
MBL's subsidiaries will be accounted for using purchase accounting.
The above general discussion summarizes briefly certain of the key
terms of the Share Purchase Agreement and the Minority Shareholder
Share Purchase Agreements (the form of which is attached) and the
transactions contemplated thereby. For a complete description, please
refer to the MBL Share Purchase Agreement and the Minority Shareholder
Share Purchase Agreements (the form of which is attached) attached to
this Form 8-K as Exhibits 1 and 2, respectively, and which are
incorporated herein by this reference.
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Item 7. Financial Statements,Pro Forma Financial
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Information and Exhibits
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(a) Financial Statements of Business Acquired:
At this time it is impracticable to provide the required
financial statements of the aforementioned acquired
corporations. Therefore, the required financial statements will
be filed with the Commission no later than 60 days after the
date of the filing of this Report.
(b) Pro Forma Financial Information:
At this time it is impracticable to provide the required
financial information required by Article 11 of Regulation S-X,
therefore, the required financial information will be filed with
the Commission no later than 60 days after the date of the
filing of this Report.
(c) Exhibits
1. Share Purchase Agreement, dated as of July 11, 1997,
between NFO Research, Inc., NFO UK, Inc., John R. Goodyear
and Mary J. Goodyear.
2. Form of Minority Shareholder Share Purchase Agreement for
acquisition of stock of minority shareholders in a
subsidiary of The MBL Group, Inc.
3. News Release, dated July 14, 1997, by the Registrant.
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SIGNATURES
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Pursuant to the requirements 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.
Date: July 25, 1997 NFO RESEARCH, INC.,
By: /s/ Patrick G. Healy
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Name: Patrick G. Healy
Title: EVP-Finance and
Chief Financial Officer
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EXHIBIT INDEX
NFO RESEARCH, INC.
Current Report on Form 8-K
Exhibit No. Description Page No.
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1. Share Purchase Agreement dated as of July 11,
1997, between NFO Research, Inc., NFO UK, Inc.,
John R. Goodyear and Mary J. Goodyear.
2. Form of Minority Shareholder Share Purchase
Agreement for acquisition of stock of minority
shareholders in a subsidiary of The MBL Group Plc.
3. News Release, dated July 14, 1997, by the
Registrant.
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SHARE PURCHASE AGREEMENT
among
NFO RESEARCH, INC.
NFO UK, INC.
and
THE SHAREHOLDERS OF THE MBL GROUP PLC
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July 11, 1997
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================================================================================
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PAGE
TABLE OF CONTENTS
PAGE
ARTICLE 1 SALE AND PURCHASE OF THE SHARES...............................1
1.1 Sale and Purchase of the Shares...............................1
1.2 Payment of Purchase Price.....................................2
1.3 Delivery of the Shares........................................2
1.4 Closing; Closing Date.........................................2
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF NFO-UK AND NFO..............2
2.1 Organization and Good Standing................................2
2.2 Authorization; Binding Agreement..............................2
2.3 Absence of Breach.............................................3
2.4 Governmental Approvals........................................3
2.5 Litigation....................................................3
2.6 Full Disclosure...............................................3
2.7 No Material Adverse Change....................................3
2.8 Accounting Matters............................................4
2.9 Pooling Letter................................................4
2.10 NFO Stock.....................................................4
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE
SELLERS AS TO THE COMPANY.....................................4
3.1 Due Organization and Authority; Subsidiaries..................4
3.2 Subsidiaries..................................................4
3.3 Qualification.................................................5
3.4 Capitalization................................................5
3.5 Options and Other Rights......................................5
3.6 Charter Documents and Corporate Records.......................5
3.7 Authority Relative to this Agreement..........................6
3.8 Consents and Approvals, No Violations.........................6
3.9 Financial Statements..........................................7
3.10 Litigation....................................................7
3.11 No Material Adverse Change....................................7
3.13 Finders and Investment Bankers................................8
3.14 Prohibited Actions............................................8
3.15 Taxes.........................................................8
3.16 Employee Benefit Matters.....................................13
3.17 Employee Relations...........................................16
3.18 Total Revenues or Net Assets.................................16
3.19 Environmental Matters........................................17
3.20 Contracts....................................................17
3.21 Intangible Property..........................................18
3.22 Accounts Receivable; Accounts Payable........................19
3.23 Real Estate..................................................20
3.24 Litigation Involving Sellers.................................20
3.25 Tangible Property............................................20
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PAGE
3.26 Liabilities..................................................21
3.27 Liens........................................................21
3.28 Insurance....................................................21
3.29 Potential Conflicts of Interest.............................21
3.30 Accounting Matters...........................................23
3.31 Pooling Letter...............................................23
ARTICLE 4 .............................................................23
4.1 Conduct of Business of the MBL Group.........................23
4.2 Notification of Certain Matters..............................23
4.3 Reasonable Efforts...........................................24
4.4 Public Announcements.........................................24
4.5 Service Agreements...........................................24
4.6 Registration Rights Agreement................................24
4.7 Non-Competition/Non-Solicitation/No Disparagement............25
4.8 Indemnification of Brokerage.................................27
4.9 NFO Common Stock.............................................27
4.10 Insurance....................................................27
4.11 Accounting Treatment.........................................27
4.12 Stamp and Transfer Taxes.....................................28
ARTICLE 5 CONDITIONS...................................................28
5.1 Conditions Precedent to the Obligation of NFO-UK and NFO to
Close........................................................28
5.2 Conditions to Obligation of the Sellers......................29
ARTICLE 6 TERMINATION AND ABANDONMENT..................................31
6.1 Termination..................................................31
6.2 Procedure and Effect of Termination..........................31
ARTICLE 7 SURVIVAL OF REPRESENTATIONS & WARRANTIES.....................31
7.1 Survival.....................................................31
7.2 Certain Definitions..........................................31
ARTICLE 8................................................................32
8.1 Obligation of the Sellers To Indemnify.......................32
8.2 Obligation of NFO-UK and NFO to Indemnify....................32
8.3 Notice to Indemnifying.......................................33
8.4 Limitations on Indemnification...............................34
8.5 Additional Indemnification...................................35
8.6 Payment of Claims by the Sellers.............................35
ARTICLE 9 MISCELLANEOUS................................................35
9.1 Knowledge of Sellers.........................................35
9.2 Amendment and Modification..................................35
9.3 Waiver of Compliance; Consents...............................36
9.4 Notices......................................................36
9.5 Assignment...................................................37
9.6 Expenses.....................................................38
9.7 Governing Law................................................38
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9.8 Jurisdiction.................................................38
9.9 Counterparts.................................................39
9.10 Interpretation...............................................39
9.11 Entire Agreement.............................................39
9.12 No Third Party Beneficiaries.................................39
EXHIBITS
Exhibit A March 31, 1997 Interim Financial Statements
Exhibit B Form of John R. Goodyear Service Agreement
Exhibit C Form of Mary J. Goodyear Service Agreement
Exhibit D Form of Registration Rights Agreement
Exhibit E Form of Opinion of Winward Fearon
Exhibit F Form of Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
SCHEDULES
Schedule 3.2 MBL Subsidiaries
Schedule 3.4 Capitalization
Schedule 3.5 Options and Other Rights
Schedule 3.8 Consents
Schedule 3.9 Financial Statements
Schedule 3.14 Prohibited Actions
Schedule 3.15 Taxes
Schedule 3.16 Employee Benefit Matters
Schedule 3.17 Employee Relations
Schedule 3.20 Contracts
Schedule 3.21 Intangible Property
Schedule 3.22 Accounts Receivable
Schedule 3.23 Leases
Schedule 3.26 Liabilities
Schedule 3.27 Liens
Schedule 3.28 Insurance
Schedule 3.29 Conflicts of Interest
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SHARE PURCHASE AGREEMENT
SHARE PURCHASE AGREEMENT, dated as of July 11, 1997 (the
"Agreement"), among NFO RESEARCH, INC., a Delaware corporation ("NFO"), NFO-UK,
INC., a Delaware corporation and a wholly-owned subsidiary of NFO ("NFO-UK") and
JOHN R. GOODYEAR and MARY J. GOODYEAR (collectively, the "Sellers").
The Sellers are the legal and beneficial and record owners of
100,000 ordinary shares of (pound)1.00 each (the "Shares" ), of The MBL Group
plc, a company incorporated under the laws of England and Wales (Registration
No. 2077760) (the "Company").
The Shares constitute all of the issued and outstanding share
capital of the Company.
NFO-UK wishes to purchase the Shares from the Sellers, and the
Sellers wish to sell the Shares to NFO-UK, all upon the terms and conditions
hereinafter set forth.
It is intended that the purchase and sale of the Shares shall be
accounted for as a "pooling of interests" transaction for accounting purposes.
Accordingly, the parties agree as follows
ARTICLE 1
SALE AND PURCHASE OF THE SHARES
1.1 SALE AND PURCHASE OF THE SHARES. At the closing provided for in
Section 1.4 (the "Closing"), upon the terms and subject to the conditions of
this Agreement and in reliance upon the representations, warranties and
agreements of the Sellers contained herein, the Sellers shall sell and transfer
to NFO-UK the legal and beneficial title (meaning full and unrestricted title
with the benefit of quiet enjoyment and free from lawful interruption and
disturbance) with full title guarantee and free from all encumbrances (provided
that the implied covenant given pursuant to Section 3(l) of The Law of Property
(Miscellaneous Provisions) Act 1994 shall not be qualified by the words "other
than any charges, encumbrances or rights which that person does not or could not
reasonably be expected to know about") to NFO-UK, and NFO-UK shall purchase from
the Sellers, the Shares.
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1.2 PAYMENT OF PURCHASE PRICE. At the Closing, NFO shall deliver to
the Sellers an aggregate of 1,364,242 shares of common stock, par value $0.01
per share ("NFO Common Stock"), of NFO (the "Purchase Price") in settlement of
the agreed consideration to be received for the Shares of each Seller in an
amount equal to $16,149,205.50 per Seller.
1.3 DELIVERY OF THE SHARES. At the Closing, the Sellers shall
deliver to NFO-UK duly executed share transfers in respect of the Shares in
favour of NFO-UK, together with the relative share certificates and any power of
attorney or other authority under which such transfers have been executed.
1.4 CLOSING; CLOSING DATE. The Closing of the sale and purchase of
the Shares contemplated hereby shall take place at the offices of The MBL Group
plc, 4-5 Bonhill Street, London EC2A 4BX, England at 10:00 a.m., local time, on
July 11, 1997 or at such other time or place or on such other date as the
Purchaser and tile Sellers mutually agree (the date upon which the Closing
occurs being referred to herein as the "Closing Date").
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF NFO-UK AND NFO
NFO and NFO-UK, jointly and severally, represent and warrant to the
Sellers as follows:
2.1 ORGANIZATION AND GOOD STANDING. Each of NFO-UK and NFO is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
2.2 AUTHORIZATION; BINDING AGREEMENT. Each of NFO-UK and NFO has
full corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of NFO-UK and NFO,
respectively, and no other corporate proceedings on the part of NFO-UK or NFO
are necessary to authorize the execution and delivery of this Agreement or to
consummate the transactions so contemplated. This Agreement has been duly and
validly authorized, executed and delivered by each of NFO- UK and NFO and
constitutes a legal, valid and binding agreement of each of NFO-UK and NFO,
enforceable against each such entity in accordance with its terms.
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2.3 ABSENCE OF BREACH. The execution and delivery by each of NFO-UK
and NFO of this Agreement, and the performance thereby of its obligations
hereunder, will not (i) conflict with or result in a breach of any of the
provisions of the Certificate of Incorporation or By-laws thereof (ii) require
any consent, approval or notice under or conflict with or result in a violation
in or breach of or constitute (with or without notice or lapse of time or both)
a default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any material
note, bond, mortgage, indenture, license, agreement or other instrument or
obligation to which either of NFO-UK or NFO is a party or by which it or any of
its properties or assets may be bound or (iii) subject to the obtaining of the
governmental and other consents referred to in Section 2.4, contravene any law,
rule or regulation of any state or of the United States or any political
subdivision thereof or therein, or any order, writ, judgment, injunction,
decree, determination or award currently in effect, which, singly or in the
aggregate, would have a material adverse effect thereon.
2.4 GOVERNMENTAL APPROVALS. No consent, approval or authorization of
or declaration or filing with any governmental agency or regulatory authority on
the part of either of NFO-UK or NFO which has not been made is required in
connection with the execution or delivery thereby of this Agreement or the
consummation thereby of the transactions contemplated hereby.
2.5 LITIGATION. There is no action or proceeding or investigation
pending or, to the best knowledge of each of NFO-UK and NFO, respectively,
threatened against or involving either of NFO-UK or NFO, respectively, which, if
determined adversely, would materially and adversely affect the financial
condition, business, assets or results of operations thereof or the ability
thereof to perform its obligations hereunder.
2.6 FULL DISCLOSURE. The Quarterly Report on Form 10-Q (the "Form
10-Q") of NFO for the quarter ended March 31, 1997 (which has been delivered by
NFO-UK and NFO to the Sellers), as of the date thereof, neither contained any
untrue statement of a material fact nor omitted to state a material fact in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
2.7 NO MATERIAL ADVERSE CHANGE. Since the date of the Form 10-Q, (i)
there has been no material adverse change in the business, assets, prospects,
condition (financial or otherwise) or results of operations (the "Condition") of
NFO, (ii) to the knowledge of NFO-UK and NFO, there is no condition or state of
facts or any change that is threatened that if it were to occur could reasonably
be expected to have a material adverse effect on the Condition of NFO, and (iii)
there has not been any damage, destruction or loss materially adversely
affecting the Condition of NFO, whether or not covered by insurance.
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2.8 ACCOUNTING MATTERS. Neither NFO nor, to its best knowledge, any
of its subsidiaries, has taken or agreed to take any action that would prevent
NFO- UK and NFO from accounting for the transaction contemplated by this
Agreement as a " pooling of interests" transaction.
2.9 POOLING LETTER. NFO-UK and NFO have caused NFO's independent
auditors to deliver to NFO-UK and NFO on or prior to the date hereof a draft
letter setting forth the preliminary conclusion of Arthur Andersen LLP that,
assuming the Company is a corporation eligible to be party to a transaction
seeking pooling of interests accounting treatment and that the participation of
the Company in the transactions contemplated by this Agreement will not, in and
of itself, disqualify the transactions contemplated by this Agreement from
qualifying for pooling of interests accounting treatment if consummated in
accordance with this Agreement, and NFO-UK and NFO have delivered a true and
complete copy of such letter to the Sellers.
2.10 NFO STOCK. The issuance of shares of NFO Common Stock to be
issued to the Sellers pursuant to this Agreement has been duly authorised by NFO
and, when issued and delivered in accordance with this Agreement, such shares
will be validly issued, fully paid and nonassessable. Upon the issuance and
delivery of the NFO Common Stock, the Sellers will have good, marketable and
valid title to the NFO Common Stock, free and clear of all liens, security
interests, negative pledges, encumbrances, restrictions or options, save as
expressly set out in this Agreement and Registration Rights Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLERS AS TO THE COMPANY
The Sellers jointly and severally represent and warrant to NFO- UK
and NFO as follows:
3.1 DUE ORGANIZATION AND AUTHORITY; SUBSIDIARIES. Each member of the
MBL Group (as defined below) is duly organized and registered, validly existing
and in good standing under the laws of their respective jurisdictions of
organization and each has all requisite power and lawful authority to own, lease
and operate its properties and to carry on its business as now being and
heretofore conducted.
3.2 SUBSIDIARIES. SCHEDULE 3.2 sets forth the name and jurisdiction
of organization of (i) each entity in which, as of the Closing Date, the Company
directly or indirectly owns or has the power to vote shares or other ownership
interests having voting power to elect at least 50% of the directors of such
entity; and (ii) MERAC WLL Ltd. and its subsidiaries (all such entities each, an
"MBL Subsidiary," collectively, the "MBL
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Subsidiaries" and, together with the Company, the "MBL Group" ). Except as set
forth on Schedule 3.2, all of the issued and outstanding shares or other
ownership interests of each MBL Subsidiary is owned by the Company indicated on
such schedule, free and clear of any lien, pledge, mortgage, deed of trust,
security interest, claim, lease, license, charge, option, right of first
refusal, easement, servitude, transfer restriction, encumbrance or any other
restriction or limitation whatsoever (" Lien" ). Except as set forth on SCHEDULE
3.2, and, with respect to the Company, except for the MBL Subsidiaries, none of
the members of the MBL Group directly or indirectly owns any interest in any
other person.
3.3 QUALIFICATION. Each member of the MBL Group is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing would not individually
or in the aggregate affect materially and adversely the Condition thereof.
3.4 CAPITALIZATION. Schedule 3.4 sets forth the capitalization of
each member of the MBL Group. SCHEDULE 3.4 also specifies the ownership
structure of each member of the MBL Group, including the names of all owners and
their respective percentage ownership. All of the share capital or other
ownership interests of each member of the MBL Group are validly issued, fully
paid, non-assessable and free of preemptive rights.
3.5 OPTIONS AND OTHER RIGHTS. Except as set forth on SCHEDULE 3.5,
there is no outstanding right, subscription, warrant, call, unsatisfied
preemptive right, option or other agreement of any kind to purchase or otherwise
receive from any member of the MBL Group or either Seller any of the
outstanding, authorized but unissued, unauthorized or treasury shares or other
ownership interests of any member of the MBL Group, and there is no outstanding
security of any kind of any member of the MBL Group convertible into any such
shares or other equity interests.
3.6 CHARTER DOCUMENTS AND CORPORATE RECORDS. The Sellers have
heretofore delivered to NFO-UK and NFO true and complete copies, as of the date
hereof, of (i) the Memorandum and Articles of Association of the Company
(certified by the Company Secretary), (ii) the charter (or comparable
instrument) of each MBL Subsidiary and (iii) the by-laws (or comparable
instrument) of each member of the MBL Group. The Statutory Books (or comparable
records) of each member of the MBL Group have been properly kept and have been
heretofore made available to NFO-UK and NFO for its inspection and contain true
and complete records of all meetings and consents in lieu of meeting of the
Board of Directors (or comparable group) (and any committee thereof), and
shareholders (or comparable groups) of each member of the MBL Group since the
time of each such
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companies' organization, and accurately reflect all transactions referred to in
such minutes and consents in lieu of meeting. The share registers (or comparable
ledgers) of each member of the MBL Group have been heretofore made available to
NFO-UK and NFO for its inspection and are true and complete. The Company, and,
to the extent applicable, each other member of the MBL Group, has compiled with
the requirements of the Companies Act 1985 (as amended or re-enacted by the
Companies Act 1989) (the "Companies Act"), the European Communities Act 1972 and
all other statutes, regulations or laws binding on it as to the keeping of
records and filing of documents with the Registrar of Companies or any other
agency or authority.
3.7 AUTHORITY RELATIVE TO THIS AGREEMENt. Each of the Sellers has
full power and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by the Sellers and no other proceedings are
necessary to authorize the execution and delivery of this Agreement or to
consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by each of the Sellers, and constitutes a legal,
valid and binding agreement of the Sellers, enforceable against each of them in
accordance with its terms.
3.8 CONSENTS AND APPROVALS, NO VIOLATIONS. No filing with, and no
permit, authorization, consent or approval of any UK public body is necessary
for the execution, delivery or performance of this Agreement by the Sellers or
the consummation by the Sellers of the transactions contemplated by this
Agreement. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby nor compliance by each
member of the MBL Group or the Sellers with any of the provisions hereof will
(i) conflict with or result in any breach of any provision of the Memorandum and
Articles of Association of the Company or the charters or by-laws (or comparable
instruments) of any MBL Subsidiary, or, in each case, any other governing
instruments, (ii) except as set forth on SCHEDULE 3.8, require any consent,
approval or notice under or conflict with or result in a violation or breach of,
or constitute (with or without notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation to which any member of the
MBL Group or any Seller is a party or by which any of them or any of their
respective properties or assets may be bound or (iii) violate any order, writ,
injunction, determination, award, decree, law, statute, rule or regulation
applicable to any member of the MBL Group or any Seller or any of their
respective properties or assets.
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3.9 FINANCIAL STATEMENTS. The audited consolidated balance sheets of
the MBL Group as of December 31, 1996 and December 31, 1995 and the related
consolidated statements of cash flow, profit and loss and total recognized gains
and losses for the years then ended, including the footnotes thereto, certified
by Soteriou Banerji, registered auditors and chartered accountants ("Soteriou
Banerji" ), which have been delivered to NFO-UK and NFO, comply with all
requirements of the Companies Act and truly and fairly represent the
consolidated results of operations of the MBL Group for such respective periods,
in each case in accordance with United Kingdom generally accepted accounting
principles consistently applied for the periods covered thereby. (The foregoing
audited consolidated financial statements of the MBL Group as of December 31,
1996 and for the year then ended are sometimes herein called the "Audited
Financials.") The unaudited financial statements of each member of the MBL Group
as of March 31, 1997, copies of which are attached hereto as Exhibit A, have
been prepared in a manner consistent with the past practice of the relevant
member of the MBL Group for internal management reporting and, to the knowledge
of the Sellers, no material modifications of the financial statements attached
hereto as Exhibit A are necessary to make the presentation of the data contained
therein comparable to the financial data presented in the equivalent internal
management financial statements of the members of the MBL Group for prior
periods. (The consolidated balance sheet included in the Audited Financials is
referred to herein as the "Balance Sheet" and December 31, 1996 is referred to
herein as the "Balance Sheet Date.")
3.10 LITIGATION. As of the date hereof, there are no claims,
actions, proceedings or, to the best knowledge of the Sellers, investigations
pending or threatened against any member of the MBL Group, or any properties or
rights of any member of the MBL Group, before any court, administrative,
governmental or regulatory authority or body. As of the date hereof, no member
of the MBL Group nor any of their respective properties is subject to any order,
judgment, injunction or decree.
3.11 NO MATERIAL ADVERSE CHANGE. Since the Balance Sheet Date, to
the knowledge of the Sellers, (i) there has been no material adverse change in
the Condition of any member of the MBL Group; (ii) there is no condition or
state of facts or any change that is threatened that if it were to occur could
reasonably be expected to have a material adverse effect on the Condition of any
member of the MBL Group; and (iii) there has not been any damage, destruction or
loss materially adversely affecting the Condition of any member of the MBL
Group, whether or not covered by insurance.
3.12 GOVERNMENTAL AUTHORIZATION AND COMPLIANCE WITH LAWS. The
business of each member of the MBL Group has been operated in compliance with
all laws, ordinances, regulations and orders of all governmental entities,
domestic or foreign, except for violations
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which do not affect and will not affect materially and adversely the Condition
of any member of the MBL Group. Each member of the MBL Group (i) has all
permits, certificates, licenses, approvals and other authorizations
(collectively, "Permits") required in connection with the operation of its
business, (ii) is not in violation of any Permit applicable to the operation of
its business, and (iii) no proceeding is pending or, to the knowledge of the
Sellers, threatened to revoke any Permit, except those the absence or possible
violation of which does not affect and will not affect materially and adversely
the Condition of any member of the MBL Group.
3.13 FINDERS AND INVESTMENT BANKERS. No member of the MBL Group nor
any of their respective officers or directors nor either Seller has employed any
broker, finder, agent or similar intermediary or incurred any liability for any
brokerage fees, commissions or finders' or similar fees in connection with this
Agreement or the transactions contemplated hereby.
3.14 PROHIBITED ACTIONS. Except as set forth on Schedule 3.14, since
the Balance Sheet Date, no member of the MBL Group has taken any of the actions
prohibited by Section 4. 1.
3.15 TAXES.
(a) Each member of the MBL Group has duly and punctually paid
all forms of taxation and statutory, governmental supra-governmental, state,
principal, local governmental or municipal impositions, duties, contributions
and levies whether of the United Kingdom or elsewhere whenever imposed, and all
penalties, charges, costs and interests relating thereto and without limitation
all employment tax and any deductions or withholdings of any sort ("Taxes", and
"Tax" shall be construed accordingly) which it is or has been liable to pay or
account for prior to the Closing Date and has made full provision in its audited
unconsolidated accounts ("the AUFs" ) for the accounting period ended on the
Balance Sheet Date in respect of all Taxes which it will or may become liable to
pay or account for in respect of all accounting and other periods ending on or
before the Balance Sheet Date.
(b) The amount of the provision for deferred taxation (if any)
contained in the AUFs was at the Balance Sheet Date adequate and fully in
accordance with United Kingdom generally accepted accountancy practices (or the
practices in the appropriate jurisdiction) and, in particular, was calculated in
accordance with SSAP 15 (or the equivalent standard in the appropriate
jurisdiction).
(c) Each member of the MBL Group has properly and punctually
deducted and accounted for Taxes which it has been required to deduct or for
which it has been required to account in respect of any payments made or deemed
to have been made by it.
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In particular, each United Kingdom member of the MBL Group has properly operated
the PAYE system and has duly made all deductions and payments required to be
made in respect of National Insurance contributions (including employer's
contributions).
(d) Each member of the MBL Group has duly and punctually made
all returns and given or delivered all notices and accounts and information and
has made all claims, disclaimers and elections which on or before the Closing
Date ought to have been made, given or delivered for the purposes of Taxes or
which have been assumed for the purposes of the AUFS.
(e) There is no material dispute or disagreement outstanding
nor is any contemplated at the date of this Agreement with the Inland Revenue or
H.M. Customs & Excise (or any comparable agency) or any other authority, body or
person whether statutory, governmental, federal, provincial, state, districts,
municipal or otherwise and whether of the United Kingdom or of any other part of
the world (in each case, a "Tax Authority" ) regarding (i) the computation of
any gains, profits or losses of any member of the MBL Group for the purposes of
Taxes; (ii) any liability or potential liability for Taxes (including penalties
or interest) recoverable from any member of the MBL Group; or (iii) the
availability to any member of the MBL Group of any relief from Taxes.
(f) No member of the MBL Group is or will become liable to
pay, reimburse or indemnify any person in respect of Taxes in consequence of
failure by that or any other person to discharge those Taxes (whether within any
specified period or otherwise) where such Taxes relate to a profit, income,
gain, transaction, event, omission or circumstance arising, occurring or deemed
to arise or occur (whether wholly or partly) on or before the Closing Date.
(g) SCHEDULE 3.15 lists all concessions, agreements and other
formal or informal arrangements with any Tax Authority (other than such as are
published by a Tax Authority) from which any member of the MBL Group has or will
benefit, or by which it is bound, and (in either case) which are extant on the
date of this Agreement.
(h) Each member of the MBL Group maintains materially complete
information accounts and records of all transactions and activities in which it
has been involved and of its Tax affairs which will or may be relevant for
calculating annually any Tax liability of such member of the MBL Group (i) for
any accounting or other period ending on or before the Closing Date or in
respect of any event occurring on or before the Closing Date as to which no
final agreement relating to Taxes has yet been reached with the relevant Tax
Authority; (ii) for any such period ending or event occurring after the Closing
Date; and (iii) as required by law.
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(i) No member of the MBL Group has in the six years ending on
the Closing Date been a party to any scheme or arrangement (i) in respect of
which the main purpose or one of the main purposes was the avoidance, reduction
or deferral of a liability for Taxes; (ii) in respect of which any Tax clearance
has been or should have been obtained; or (iii) which was or included a
reorganization or reduction of the share capital of any member of the MBL Group
(other than the redemption in three stages in 1993, 1994 and 1995 of redeemable
shares in BJM Research and Consultancy Ltd).
(j) No member of the MBL Group has been party to any scheme or
arrangement as a result of which on the future disposal of any asset owned on
the Closing Date the allowable loss or chargeable gain otherwise arising or any
liability for Taxes is liable to be adjusted by any Tax Authority.
(k) No member of the MBL Group has in the six years ending on
the date of this Agreement carried out or been engaged in any transaction or
arrangement in respect of which there has been or may be substituted for the
consideration given or received by such member of the MBL Group (including a nil
consideration) a different consideration for Tax purposes and no member of the
MBL Group has any obligation to enter into any such transaction or arrangement
in the future.
(l) The Company has at all times since its incorporation been
resident in the United Kingdom for Tax purposes and has never been regarded as
being resident for such purposes in a territory outside the United Kingdom.
(m) Save in respect of those items incurred in the ordinary
course of the business and which are not normally deductible and the equivalent
of which were not deducted in the period ended on the Balance Sheet Date
(including UK corporate entertainment), no member of the MBL Group has since the
Balance Sheet Date made or incurred or is liable to make or incur any payments
or expenditure which will not be wholly deductible in computing its taxable
profits or which will not be a deductible payment for the purposes of
corporation tax (or its equivalent in the relevant jurisdiction) whether on the
grounds of being a dividend or distribution or for any other reason.
(n) In respect of a hypothetical disposal on the Closing Date
by any member of the MBL Group of an asset which it owns at the Closing Date,
(i) for a consideration equal to the value of that asset taken for the purposes
of the AUFs (if it was owned by any such member on the Balance Sheet Date) the
liability to Taxes thereby incurred would not exceed the amount taken into
account in computing the provision for deferred taxation as stated in the AUFs;
and (ii) for a consideration equal to that for which the asset
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was acquired (if it was acquired after the Balance Sheet Date) no liability to
Taxes would arise.
(o) The Company is and, during the six years ending on the
Balance Sheet Date, has been a close company within the meaning of Section 414
Taxes Act 1988 but is not and has not at any time during the six years ended on
the Balance Sheet Date been a close-investment holding company within the
meaning of Section 13A Taxes Act 1988.
(p) Except as disclosed in Schedule 3.15 no member of the MBL
Group has at any time in the six years ending on the Balance Sheet Date been a
member of a group of companies for Tax purposes other than within the MBL Group
itself.
(q) Final agreement has been reached with the relevant Tax
Authority as to all surrenders of or claims for group relief or advance
corporation tax which affect any United Kingdom member of the MBL Group. No
member of the MBL Group incorporated in the United Kingdom has made or received
any payment in respect of a claim for or surrender of group relief or advance
corporation tax which could in any circumstances be liable to be refunded to a
company which is not a member of the MBL Group as at the Closing Date.
(r) No member of the MBL Group owns any asset which it
acquired within the period of six years ending on the Closing Date from another
company which was at the date of acquisition a member of the same group of
companies.
(s) The value of the consideration for the acquisition of any
asset included in the AUFs or acquired after the Balance Sheet Date is not
deemed for Tax purposes to have been reduced by reason of any claim made to
defer Taxation whether in relation to that or any other asset.
(t) All expenditure which any member of the MBL Group has
incurred or is liable to incur under any subsisting commitment on the provision
of machinery or plant has qualified or will qualify (if not deductible as a
trading expense) for capital allowances (or the equivalent (if any) in the
appropriate jurisdiction).
(u) To the best knowledge of the Sellers, all allowances (or
the equivalent in the appropriate jurisdiction) available to any member of the
MBL Group in respect of capital expenditure incurred prior to the Closing Date
or to be incurred under any subsisting commitment will be available in taxing
the trade of such member of the MBL Group.
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(v) All documents which are in the possession of any member of
the MBL Group or by virtue of which any such member of the MBL Group has any
right or interest and which either attracts stamp duty or stamp duty reserve tax
or requires to be stamped with a particular stamp denoting that no duty is
chargeable or that the document has been produced to the appropriate Tax
Authority have been properly stamped and there is no liability to any fine or
penalty in respect of such duty or stamp nor are there any circumstances which
may result in any such member becoming liable to any such fine or penalty.
(w) Within the two years ending on the Closing Date, the MBL
Group has not made nor will it make any claim for exemption from stamp duty
under Section 42 Finance Act 1930.
(x) Each member of the MBL Group has, if required, duly
registered for Value Added Tax ("VAT") purposes and has complied with all
relevant provisions of the Value Added Tax Act 1994 ("VATA") and regulations
made or notices issued under any legislation relating to VAT.
(y) No member of the MBL Group has applied for or is treated
as a member of a group of companies for VAT purposes except that the Company and
Market Behaviour Limited are registered as a group of companies for VAT
purposes.
(z) SCHEDULE 3.15 contains full particulars (including the
date of the acquisition) of all capital items owned by a United Kingdom member
of the MBL Group to which Part XV of the Value Added Tax Regulations 1995 may be
applied.
(aa) No United Kingdom member of the MBL Group nor any of
their relevant associates (within the meaning of paragraph 3(7) of Schedule 10
to VATA) has made an election in accordance with paragraphs 2 and 3 of Schedule
10 to VATA.
(bb) As at the date of this Agreement, the United Kingdom
members of the MBL Group (other than the Company have no surplus advance
corporation tax (within the meaning of Section 239 (3) Taxes Act 1988) after the
set-off (or intended set-off) of a company's surplus ACT against liability to
corporation tax (within the meaning of Section 240 Taxes Act 1988). The above
position will not be affected by any pre-sale dividends. The Company has surplus
advance corporation tax of (pound)58,000 which may not be capable of being set
off against its future liability to corporation tax dependent on the future
level of income to be received by the Company from its subsidiaries.
(cc) There has not been in the past three years a major change
in the nature or conduct of the trade or business of each United Kingdom member
of the MBL Group such as might prevent the carry forward or back of advance
corporation tax, trading
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losses or excess management expenses by reason of the application of Taxes Act
1988, Section 245 (Calculation etc of ACT on change of ownership of company),
Section 245A ((Restriction on application of Section 240 in certain
circumstances), Section 768 (Change in ownership of company: disallowance of
trading losses), Section 768A (Change in ownerships disallowance of carry back
of trading losses) or Section 768B (Change in ownership of investment company:
deductions generally).
(dd) No United Kingdom member of the MBL Group will be
restricted by Taxes Act 1988, Section 245B (Restriction on set-off where asset
transferred after change in ownership of company) as to the amount of relief
available to it in respect of surplus advance corporation tax.
(ee) Apart from Marketing Blueprint Limited, there is and has
been for the past three years a valid group-income election (within the meaning
of Section 247 Taxes Act 1988) between each United Kingdom member of the MBL
Group.
(ff) Except as set forth on Schedule 3.1 5, during the past
three years, each dividend declared and paid and each interest payment made
between the United Kingdom members of the MBL Group (apart from Marketing
Blueprint Limited) was made under or pursuant to such an election.
(gg) No United Kingdom member of the MBL Group has made any
distribution within the meaning of Section 418 Taxes Act 1988 in the past six
years.
(hh) During the past six years, no United Kingdom member of
the MBL Group has made any loan or advance in the circumstances set out in
Sections 419 and 420 Taxes Act 1988 and has not written off or released or
agreed to release or write-off the whole or any part of such loan or advance
during the same period.
(ii) No United Kingdom member of the MBL Group has received
notice of any direction pursuant to Section 747 Taxes Act 1988 and no
circumstances exist which would enable the Inland Revenue to make any such
direction so as to apportion any profits of a controlled foreign company in
accordance with Section 752 Taxes Act 1988.
(jj) Other than for the United Kingdom members of the MBL
Group, none of the other members of the MBL Group is or has been during the past
six years managed and controlled in the United Kingdom.
3.16 EMPLOYEE BENEFIT MATTERS.
(a) Since the Balance Sheet Date:
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(i) except as set forth on SCHEDULE 3.16 and as
reflected in the Service Agreements of the Sellers and of the minority
shareholders of the MBL Subsidiaries, there have been no changes in the
remuneration of any officer or employee of any member of the MBL Group whose
remuneration as at the Balance Sheet Date was in excess of (pound)50,000 per
annum.
(ii) other than normal annual increases, there have
been no changes in the rate of remuneration of any other officer or employee of
any member of the MBL Group; and
(iii) there has been no change in the terms and
conditions of employment (other than remuneration) of any officer or employee of
any member of the MBL Group other than promotions in the ordinary course.
(b) Each member of the MBL Group has complied with, and
fulfilled all the requirements of, its Memorandum and Articles of Association
(or comparable instruments) and of any statutes, regulations and general law in
relation to its employees.
(c) Except as set forth on Schedule 3.16, no member of the MBL
Group operates, nor has any such member proposed or agreed to operate, for any
of its current or former officers or employees any incentive scheme, or
arrangement, option scheme or bonus or profit sharing scheme whether or not
share based, nor are any of the officers or employees of any member of the MBL
Group participating in or entitled (now or at any time) to participate in or
otherwise receive benefit from any such incentive scheme or arrangement, option
scheme or bonus or profit sharing scheme operated by any member of the MBL
Group.
(d) Except as set forth on Schedule 3.16 and as reflected in
the Service Agreements of the Sellers and the minority shareholders of the MBL
Subsidiaries, all subsisting contracts of service to which any member of the MBL
Group is a party are terminable on not more than three months' notice without
compensation (other than compensation in accordance with the Employment Rights
Act of 1996).
(e) Except for Endellion Sharp, none of the officers or
employees of any member of the MBL Group whose remuneration at the Balance Sheet
Date is in excess of (pound)50,000 per annum has given notice of his intention
to leave his office or employment or will be entitled to terminate his
employment as a result of the execution of and performance of the terms of this
Agreement.
(f) Details of those former officers or employees of any
member of the MBL Group whose remuneration was in excess of (pound)50,000 per
annum whose employment
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has been terminated by such member of the MBL Group within the twelve months
prior to this Agreement have been included in SCHEDULE 3.16 and in respect of
such persons:
(i) there has been no payment and there is no liability
to pay any sums to such persons in respect of the termination of their
employment; and
(ii) no notice of the intention of any of such persons
to assert any statutory or other claim for reinstatement of, or compensation for
loss of their employment has been received.
(g) Except as disclosed on SCHEDULE 3.16, there are no
existing contracts for the provision by any person of any consultancy or other
similar services.
(h) Except to the extent (if any) to which provision or
allowance has been made in the Balance Sheet:
(i) no member of the MBL Group has any current liability
in respect of any contract of service or for services for redundancy payments
(including protective awards) or for compensation for wrongful dismissal or
unfair dismissal or for failure to comply with any order for the reinstatement
or re-engagement of any employees; and
(ii) no gratuitous payment has been made or promised by
any member of the MBL Group in connection with the actual or proposed
termination or suspension of employment or variation of any contract of
employment of any current or former director or employee.
(i) Full and accurate details of all superannuation, pension,
life assurance, death benefit, sickness or accident benefit schemes or
arrangements in respect of which any member of the MBL Group has or may have any
liability to contribute or an obligation to any of its current or former
officers or employees or their dependents, are contained in Schedule 3.16 and,
save for the schemes or arrangements disclosed in Schedule 3.16 with respect to
current or former officers or employees of any member of the MBL Group (or their
dependents), no member of the MBL Group has such liabilities or obligations
whether gratuitous, moral or legally binding.
(j) As regards each of the retirement benefits schemes (as
defined in Section 611 of the Income and Corporation Taxes Act 1988) of the
members of the MBL Group:
(i) full and accurate details of the scheme have been
disclosed;
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(ii) all contributions due to be paid in respect of the
scheme by the members of the MBL Group or any of their officers or Employees
have been duly paid and the rates at which such contributions are being paid are
in accordance with the advice contained in the latest actuarial report on the
scheme;
(iii) the scheme is an exempt approved scheme within the
meaning of Section 592 of the Income and Corporation Taxes Act 1988 and there is
no reason why such approval may be withdrawn;
(iv) the scheme is not a contracted-out scheme within
the meaning of the Social Security Pensions Act 1975;
(v) all insurance premiums due to be paid in respect of
the scheme by any of the members of the MBL Group or the trustees of the scheme
have been duly paid;
(vi) there are no powers under the scheme to provide
additional benefits;
(vii) no legal proceedings in connection with the scheme
are pending, threatened or expected and, to the knowledge of the Sellers, there
is no fact or circumstance likely to give rise to any such proceedings; and
(viii)the scheme meets the requirements of Article 119
of the Treaty of Rome in relation to all benefits provided for male and female
members, pensioners and deferred pensioners for service both before and after
May 17, 1990.
3.17 EMPLOYEE RELATIONS. Schedule 3.17 lists, as of the date hereof,
the approximate number, in the aggregate, of full-time personnel and of contract
workers of each member of the MBL Group. Except as disclosed in Schedule 3.17,
no employee is represented by a union, and no union organizing efforts have been
conducted within the last five years, or are now being conducted or are
threatened. Except as disclosed in Schedule 3.17, no member of the MBL Group has
at any time during the last five years had or is there now threatened, a strike,
picket, work stoppage, work slowdown or other labor dispute that had or may have
a material adverse effect on the Condition of any member of the MBL Group.
3.18 TOTAL REVENUES OR NET ASSETS. The Company, together with the
MBL Subsidiaries, does not have total annual revenues in the United States equal
to or in excess of $25 million or net assets located in the United States equal
to or in excess of $15 million.
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3.19 ENVIRONMENTAL MATTERS. No member of the MBL Group, nor any of
their respective agents, current or former employees or representatives, have:
(a) received notice of any violation, claim, or allegation
from any governmental body or any other person of any material violation of any
environmental law relating to the properties or business of any member of the
MBL Group;
(b) transported, used, generated, handled, stored, released,
emitted, leached, discharged, dumped, or disposed of any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste, special
waste, industrial substance or waste, petroleum or petroleum-derived substance
or waste, radioactive substance or waste, or any constituent of any such
substance or waste, or any other substance regulated under or defined by any
environmental law ("Hazardous Substances") in material violation of any
applicable environmental laws; no Hazardous Substances are currently or have
been located at, in or on the properties of any member of the MBL Group in a
manner which violates any applicable environmental law or which requires
response, cleanup, or corrective action of any kind under any applicable
environmental law;
(c) There is no act, event or condition which will result in
material liability pursuant to any environmental laws on the part of any member
of the MBL Group or any successor thereto.
3.20 CONTRACTS. SCHEDULE 3.20 sets forth a list of all of the
following contracts and other agreements to which the members of the MBL Group
are party or by or to which such members or their respective assets or
properties are bound or subject: (i) contracts, severance agreements and other
agreements with any current or former holder in the five years preceding the
Closing Date of at least 5% of the ordinary shares or equivalent interests of
any member of the MBL Group, officer, director, current or former employee,
consultant, agent or other representative; (ii) contracts and other agreements
with any labor union or association representing any current or former employee;
(iii) contracts, agreements or other arrangements relating to any member of the
MBL Group between any member of the MBL Group, on the one hand, and either
Seller or any of his or her affiliates (other than the members of the MBL Group)
on the other hand; (iv) joint venture agreements; (v) contracts and other
agreements under which any member of the MBL Group agrees to indemnify any
party; (vi) contracts and other agreements relating to the borrowing of money;
(vii) contracts and other agreements relating to the licensing of any trademark,
service mark, trade name or copyright; or (viii) any other material contract or
other agreement whether or not made in the ordinary course of business. There
have been delivered or made available to NFO true and complete copies of all
such contracts and other agreements set forth on SCHEDULE 3.20. All of such
contracts and other agreements are in full force and effect and no member of the
MBL
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Group is in default under any of them, nor to the knowledge of the Sellers, is
any other party to any such contract or other agreement in default thereunder,
nor does any condition exist that with notice or lapse of time or both would
constitute a default thereunder. Except as set forth on SCHEDULE 3.20, no
approval or consent of any person is needed in order that any contracts and
other agreements to which any member of the MBL Group is a party or by or to
which any member of the MBL Group or their respective assets or properties are
bound or subject continue in full force and effect following the consummation of
the transactions contemplated by this Agreement. Neither Seller nor any member
of the MBL Group is a party to or bound by any contract or agreement which,
singly or in the aggregate, has or may have a material adverse effect on the
Condition of any member of the MBL Group. Except as set forth on SCHEDULE 3.20,
to the best knowledge of the Sellers, the transactions contemplated hereby will
not have a material adverse effect on the relationship between any members of
the MBL Group and any of their respective suppliers or customers or will
otherwise materially and adversely affect the right or interests of any members
of the MBL Group under any contract or agreement set forth on SCHEDULE 3.20. Set
forth on SCHEDULE 3.20 are the ten largest customers of each member of the MBL
Group in the accounting period ending on the Balance Sheet Date. The
relationships between the members of the MBL Group and their respective
suppliers and customers are good commercial working relationships.
3.21 INTANGIBLE PROPERTY.
(a) SCHEDULE 3.21 sets forth a complete and accurate list of
all intellectual property, including, without limitation (i) computer software,
computer programs, source code data and documentation; (ii) user manuals,
administrator or director guides, flow charts and programmers' notes relating to
computer software and programs developed by or on behalf of any member of the
MBL Group; (iii) patents and patent applications (including divisions,
continuations, continuations in part, substitutions or reissues thereof, whether
or not patents are issued on such applications and whether or not such
applications are modified, withdrawn or resubmitted), inventions (whether or not
patentable and whether or not reduced to practice), invention disclosures and
improvements thereto, designs and plans; (iv) trademarks, service marks, trade
dress, trade names, brand names, logos, corporate names and registrations and
applications for registration thereof; (v) copyright registrations and
applications for registration thereof; (vi) mask works and registrations and
applications for registration thereof; (vii) trade secrets, processes,
procedures, manufacturing and marketing formulae and know how; and (viii) any
other similar intellectual property rights that are not generally available to
third parties (whether under license or otherwise) and which are treated as
confidential or proprietary by any member of the MBL Group (collectively, the
"Intellectual Property") owned, used, or licensed to or by any member of the MBL
Group.
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(b) No Intellectual Property is necessary to or utilized in
the conduct of the business of any member of the MBL Group as it is currently
conducted which is not owned by or licensed to the relevant member of the MBL
Group.
(c) To the best knowledge of the Sellers, none of the
materials used by any member of the MBL Group is the subject of any claim for
infringement of any trademark, trade name, trade secret, copyright, or other
proprietary right of anyone and no basis for any such claim which has a
reasonable likelihood of being determined adversely to any member of the MBL
Group exists. Other than with respect to such provisions in the standard terms
and conditions of trading of the relevant licensors, no member of the MBL Group
has agreed to indemnify any person against any charge of interference,
infringement, misappropriation or other conflict with respect to any
Intellectual Property.
(d) No member of the MBL Group is making use of any
confidential information or trade secret of any person that is material to the
conduct of the business of such member of the MBL Group as it is currently
conducted, except with permission or as a result of the acquisition by such
member of the MBL Group of the business of such person.
(e) Except as noted on SCHEDULE 3.21, the Intellectual
Property is (i) owned by the Company or an MBL Subsidiary free and clear of all
Liens, encumbrances, or other impediments to title being vested absolutely in
the Company or such subsidiary, or (ii) licensed to the Company or an MBL
Subsidiary under an agreement that will not be breached upon the Sellers
entering into and performing this Agreement.
(f) None of the Intellectual Property, the value of which is
contingent upon maintenance of confidentiality thereof, has been disclosed to
any person other than current or former employees or representatives and agents
of the members of the MBL Group, except as required by applicable law.
3.22 ACCOUNTS RECEIVABLE; ACCOUNTS PAYABLE.
(a) All accounts receivable reflected on the Balance Sheet,
and all accounts receivable arising subsequent to the Balance Sheet Date, have
arisen in the ordinary course of business, and, to the best knowledge of the
Sellers, represent valid obligations and are enforceable, subject to applicable
laws affecting creditors' rights generally. All items which are required by
United Kingdom generally accepted accounting principles to be reflected as
accounts receivable on the Balance Sheet and on the books of the MBL Group are
so reflected and any reserve accounts relating thereto have been established in
accordance therewith applied in a manner consistent with past practices of the
MBL Group. The amounts set forth
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on the Balance Sheet as reserves for bad debts are sufficient. Except as set
forth on SCHEDULE 3.22, the accounts receivable reflected on the Balance Sheet
and all accounts receivable arising subsequent to the Balance Sheet Date are
fully collectible in the ordinary course of business, except to the extent of
the reserve for bad debts set forth on the Balance Sheet and, with respect to
accounts receivable arising after the Balance Sheet Date, to the extent of any
reserve account relating thereto that has been established in accordance with
United Kingdom generally accepted accounting principles applied in a manner
consistent with past practices of the MBL Group.
(b) All accounts payable (including, without limitation, Taxes
payable) reflected on the Balance Sheet, and all accounts payable (including,
without limitation, Taxes payable) of any member of the MBL Group arising
subsequent to the Balance Sheet Date, have been and are being paid in the
ordinary course of business of the members of the MBL Group, consistent with
past practices.
3.23 REAL ESTATE. No member of the MBL Group owns any real property
or any buildings or other structures located on real property. Schedule 3.22
sets forth: (i) all leases, subleases or other agreements under which any member
of the MBL Group is a lessee of any real property; (ii) all options held by any
member of the MBL Group or contractual obligations on its part to purchase or
acquire any interest in real property; and (iii) all options granted by any
member of the MBL Group or contractual obligations on its part to sell or
dispose of any interest in real property. The members of the MBL Group are the
lessees under the leases or holders of the options, as the case may be, of each
of the items set forth on SCHEDULE 3.23 (except as set forth in the response to
item (iii)). Such leases, subleases and other agreements are in full force and
no member of the MBL Group has received any notice of default thereunder. The
leasehold interests of the MBL Group are subject to no Lien or other encumbrance
and enjoy a right of quiet possession as against any Lien or other encumbrance
on the property. Each of the options, if any, as set forth on Schedule 3.23 is
in full force and effect subject to no Lien or other encumbrance.
3.24 LITIGATION INVOLVING SELLERS. Neither Seller is a party to or
has been threatened with any litigation or judicial, administrative or
arbitration proceeding which is likely to delay materially or prevent the
consummation of the transactions contemplated hereby or have a material adverse
effect upon the ability of such Seller to perform his or her obligations
hereunder.
3.25 TANGIBLE PROPERTY. The facilities, machinery, equipment,
furniture, leasehold improvements, fixtures, vehicles, structures, any related
capitalized items and other tangible property material to the business of each
member of the MBL Group (the "Tangible Property") are in good operating
condition and repair, subject to continued repair and
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replacement in accordance with past practice. During the past three years there
has not been any significant interruption of the operations of any member of the
MBL Group due to inadequate maintenance of the Tangible Property.
3.26 LIABILITIES. Except as disclosed in the Balance Sheet or as set
forth on SCHEDULE 3.26, no member of the MBL Group has any material direct or
indirect indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, fixed or unfixed, choate or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise,
whether or not of a kind required by United Kingdom generally accepted
accounting principles to be set forth in a financial statement, other than (i)
liabilities fully and adequately reflected or reserved against in the Balance
Sheet and (ii) liabilities incurred in the ordinary course of business
consistent with the past practices of the MBL Group.
3.27 LIENS. Except as set forth on SCHEDULE 3.27, each member of the
MBL Group owns outright and has good and marketable title to all of its assets
and properties, including, without limitation, all of the assets and properties
reflected on the Balance Sheet, in each case, free and clear of any Lien, except
for (i) immaterial assets and properties; (ii) assets and properties disposed of
in the ordinary course of business since the Balance Sheet Date; (iii) Liens
securing Taxes, assessments, governmental charges or levies, or the claims of
the material men, carriers, landlords and like persons, which are not yet due
and payable; (iv) minor Liens of a character which do not substantially impair
the assets or properties of any member of the MBL Group or materially detract
from their respective businesses; or (v) in the case of assets held on lease or
hire purchase, the terms and conditions thereof.
3.28 INSURANCE. SCHEDULE 3.28 sets forth all policies or binders of
fire, liability, workmen's compensation, vehicular or other insurance held by or
on behalf of each member of the MBL Group (specifying the insurer, the policy
number or covering note number with respect to binders, and describing each
pending claim thereunder of more than US$10,000). Such policies and binders are
in full force and effect. No member of the MBL Group is in default with respect
to any provision contained in any such policy or binder and has not failed to
give any notice or present any claim under any such policy or binder in due and
timely fashion. Except for claims set forth on Schedule 3.28, there are no
outstanding unpaid claims under any such policy or binder. No member of the MBL
Group has received a notice of cancellation or non-renewal of any such policy or
binder. Neither Seller has any knowledge of any inaccuracy in any application
for such policies or binders, any failure to pay premiums when due or any
similar state of facts which might form the basis for termination of any such
insurance.
3.29 POTENTIAL CONFLICTS OF INTEREST. Except as set forth on
SCHEDULE 3.29, (i) the Sellers do not own, directly or indirectly, in the
aggregate, any interest in (excepting not
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more than 5% stock holdings for investment purposes in securities of publicly
held and traded companies) and neither Seller is an officer, director, employee
or consultant of any person which is a competitor, lessor, lessee, customer or
supplier of any member of the MBL Group; (ii) no officer or director of any
member of the MBL Group owns, directly or indirectly, in whole or in part, any
copyright, trademark, trade name, service mark, franchise, patent, invention,
permit, license or secret or confidential information which the Company or any
MBL Subsidiary is using or the use of which is necessary for the business of the
Company or any MBL Subsidiary; or (iii) no officer or director of any member of
the MBL Group has any cause of action or other claim whatsoever against, or owes
any amount to, any member of the MBL Group, except for claims in the ordinary
course of business, such as for accrued vacation pay, accrued benefits under
incentive, option, bonus or profit sharing scheme and similar matters and
agreements existing on the date hereof.
3.30 ACCOUNTING MATTERS. To the knowledge of the Sellers, none of
the Sellers, the Company or any MBL Subsidiary has taken or agreed to take any
action that, as advised by NFO, would prevent NFO-UK and NFO from accounting for
the transaction contemplated by this Agreement as a "pooling of interests"
transaction.
3.31 POOLING LETTER. The Company has caused the Company's
independent auditors to deliver to Arthur Andersen LLP on or prior to the date
hereof a draft letter in the form previously agreed to between Soteriou Banerji
and Arthur Andersen LLP.
ARTICLE 4
COVENANTS
4.1 CONDUCT OF BUSINESS OF THE MBL GROUP. Except as contemplated by
this Agreement, during the period from the date of this Agreement to the
Closing, the Sellers jointly and severally agree that they shall cause each
member of the MBL Group to (a) conduct its operations according to its ordinary
course of business and consistent with past practice and (b) use its best
efforts to preserve intact its business organization, to keep available the
services of its officers and employees and to maintain satisfactory
relationships with licensors, licensees, suppliers, customers and others having
business relationships with it. Without limiting the generality of the
foregoing, prior to the Closing, the Sellers jointly and severally agree that
they will not permit any member of the MBL Group, without the prior written
consent of NFO, to:
(a) amend or propose to amend its Memorandum and Articles of
Association (or comparable governing instruments);
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(b) authorize for issuance, issue, sell, pledge, deliver or
agree or commit to issue, sell, pledge or deliver (whether through the issuance
or granting of any options, warrants, commitments, subscriptions, rights to
purchase, awards or otherwise) any ordinary shares (or comparable ownership
interests) or any securities convertible into or exchangeable for ordinary
shares (or comparable ownership interests) of any member of the MBL Group;
(c) split, combine or reclassify any ordinary shares (or
comparable ownership interests) or declare, pay or set aside any dividend or
other distribution (whether in cash, equity or property or any combination
thereof) in respect of its share capital, or redeem, purchase or otherwise
acquire or offer to acquire any shares (or comparable ownership interests) of
share capital;
(d) (i) increase in any manner the compensation of any
directors or officers; (ii) increase in any manner the compensation of any
employees that are not directors or officers other than in the ordinary course
of business consistent with the past practices; (iii) make, or agree to make,
any loans or advances to any officers, directors or employees (other than normal
travel advances paid to such persons in a manner consistent with the past
practices); (iv) pay or agree to pay any pension, retirement allowance or other
employee benefit not required by any existing plan, agreement or arrangement to
any such director, officer or employee, whether past or present; (v) commit
itself to any additional pension, profit-sharing, bonus, incentive, deferred
compensation, share purchase, option or appreciation right, group insurance,
severance pay, retirement or other employee benefit plan, agreement or
arrangement, or to any service or consulting agreement with or for the benefit
of any person, or to amend any of such plans or any of such agreements in
existence on the date hereof; or (vi) make any payment or award under any
executive compensation plan, if any; or
(e) agree, commit or arrange to do any of the foregoing.
4.2 NOTIFICATION OF CERTAIN MATTERS. The Sellers jointly and
severally agree that they shall give prompt notice to each of NFO-UK and NFO of:
(i) any notice of, or other communication relating to, a default or event which,
with notice or lapse of time or both, would become a default, received by any
member of the MBL Group subsequent to the date of this Agreement and prior to
the Closing, under any agreement, indenture or instrument material to the
Condition to which any such member of the MBL Group is a party or is subject;
(ii) any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement; (iii) any notice or other
communication from any regulatory authority in connection with the transactions
contemplated by this Agreement; (iv) any material adverse change in the
Condition of any member of the MBL Group, or the occurrence of an event that
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becomes known to either Seller which, so far as reasonably can be foreseen at
the time of its occurrence, would result in any such change; and (v) any claims,
actions, proceedings or investigations commenced or to the best knowledge of
either Seller, threatened, involving or affecting any member of the MBL Group or
any of their respective property or assets, or any employee, consultant,
director or officer, in his or her capacity as such, of any member of the MBL
Group which, if pending on the date hereof, would have been required to have
been disclosed in writing pursuant to Section 3.10 or which relates to the
consummation of the transactions contemplated by this Agreement.
4.3 REASONABLE EFFORTS. Upon the terms and subject to the conditions
hereof, each of the parties hereto agrees to use reasonable efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, including using
reasonable efforts (i) to obtain all necessary consents, amendments to or
waivers under the terms of any borrowing or other contractual arrangements of
any member of the MBL Group required by the transactions contemplated by this
Agreement; (ii) to promptly effect all necessary or appropriate registrations
and filings; (iii) to defend and to cooperate with each other in defending any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby; and (iv) to fulfill or cause the fulfillment of the conditions to
Closing,
4.4 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect,
the parties agree that they shall not, and shall cause their respective
affiliates not to, issue or cause the publication of any press release or any
other announcement with respect to this Agreement without the consent of the
other party; provided, however, that NFO may make any announcement required by
applicable law or regulation with, if reasonably practicable, prior written
notice to the Sellers.
4.5 SERVICE AGREEMENTS. John R. Goodyear and Mary J. Goodyear shall
enter into service agreements with the Company in the forms attached hereto as
Exhibits B and C, respectively (together, the "Service Agreements"), prior to or
on the Closing Date.
4.6 REGISTRATION RIGHTS AGREEMENT. The Sellers and NFO shall enter
into a registration rights agreement in the form attached hereto as Exhibit D
(the "Registration Rights Agreement"), on the date hereof.
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4.7 NON-COMPETITION/NON-SOLICITATION/NO DISPARAGEMENT.
(a) NON-COMPETE/NON-SOLICITATION/NO DISPARAGEMENT. Following
the Closing, while each Seller is an employee of the Company and for a period of
five years following the date (the "Noncompete Trigger Date") on which each
Seller ceases, for any reason, to be an employee of the Company (provided that
for purposes of this Section 4.7(a), each Seller will be considered to be an
employee of the Company until the last date on which such Seller receives any
payment (severance or otherwise) required to be made to such Seller by NFO-UK,
NFO or the Company), each such Seller shall not, directly or indirectly, in any
geographical area or in any foreign country in which NFO or any of its
subsidiaries and the members of the MBL Group engage or plan to engage in
business on the Noncompete Trigger Date in any form or manner:
(i) own, manage, control, participate in, consult with,
render services for, or in any manner engage In any business competing with the
businesses of NFO or any of its subsidiaries or any member of the MBL Group as
such businesses exist or are in process on the Noncompete Trigger Date;
provided, however, that each such Seller may be a passive owner of not more than
5% of the outstanding stock of any class of a corporation which is publicly
traded, so long as such Seller has no active participation in the business of
such corporation;
(ii) (a) induce or attempt to induce any employee of NFO
or any of its subsidiaries or any member of the MBL Group to leave the employ
thereof; (b) hire any person who was an employee of NFO or any of its
subsidiaries or any member of the MBL Group, while such Seller was an employee
of the Company or (c) induce or attempt to induce any customer, supplier,
licensee or other business relation of NFO or any of its subsidiaries or any
member of the MBL Group to cease doing business with NFO or any of its
subsidiaries or any member of the MBL Group or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and NFO or any of its subsidiaries and any member of the MBL Group; or
(iii) make any unfavorable, disparaging or negative
comments, remarks or statements or do anything which might prejudice the
goodwill of NFO or any of its subsidiaries or any member of the MBL Group or
their respective businesses, and in particular (but without limitation) do
anything which might prejudice the relationship NFO or any of its subsidiaries
or of any member of the MBL Group with any person who is a customer or supplier
of NFO or any of its subsidiaries or any member of the MBL Group.
(b) RIGHTS AND REMEDIES UPON BREACH. If either Seller
breaches, or threatens to commit a breach of, any of the provisions of Section
4.7(a) (the "Restrictive
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Covenants"), NFO-UK and NFO shall have the following rights and remedies, each
of which rights and remedies shall be independent of the other and severally
enforceable, and all of which rights and remedies shall be in addition to, and
not in lieu of, any other rights and remedies available to NFO-UK and NFO under
law or in equity:
(i) SPECIFIC PERFORMANCE. The right and remedy to have
the Restrictive Covenants specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to NFO-UK and NFO and that money
damages will not provide adequate remedy to NFO-UK and NFO; and
(ii) ACCOUNTING. The right and remedy to require a
Seller to account for and pay over to NFO-UK or NFO all compensation, profits,
monies, accruals, increments or other benefits derived or received by such
Seller as the result of any transactions constituting a breach of any of the
Restrictive Covenants, and such Seller shall account for and pay over such
benefits to NFO-UK or NFO.
(c) SEVERABILITY OF COVENANTS. If any court determines that
any of the Restrictive Covenants, or any part thereof, is invalid or
unenforceable, the remainder of the Restrictive Covenants shall not thereby be
affected and shall be given full effect, without regard to the invalid portions.
(d) BLUE-PENCILLING. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration of such provision or the area covered thereby, such court shall have
the power to reduce the duration or area of such provision and, in its reduced
form, such provision shall then be enforceable and shall be enforced.
(e) ENFORCEABILITY IN JURISDICTIONS. NFO-UK, NFO and each
Seller intends to and hereby confers jurisdiction to enforce the Restrictive
Covenants upon the courts of any Jurisdiction within the geographical scope of
such covenants. If the courts of any one or more of such jurisdictions hold the
Restrictive Covenants wholly unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of NFO-UK, NFO and the Sellers that such
determination not bar or in any way affect the right of NFO-UK and NFO to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of such covenants, as to breaches of such covenants in such
other respective jurisdictions, such covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and independent
covenants.
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4.8 INDEMNIFICATION OF BROKERAGE.
(a) NFO-UK and NFO jointly and severally agree to indemnify
and save the Sellers harmless from any claim or demand for commission or other
compensation by any broker, finder, agent or similar intermediary claiming to
have been employed by or on behalf of NFO-UK, NFO or its affiliates in respect
of the transactions contemplated by this Agreement, and to bear the cost of
legal expenses incurred in defending any such claim.
(b) The Sellers jointly and severally agree to indemnify and
save the MBL Group, NFO-UK and NFO harmless from any claim or demand for
commission or other compensation by any broker, finder, agent or similar
intermediary claiming to have been employed by or on behalf of the Company, any
MBL Subsidiary or either Seller or any of their respective affiliates in respect
of the transactions contemplated by this Agreement, and to bear the cost of
legal expenses incurred in defending any such claim.
4.9 NFO COMMON STOCK. Each Seller agrees that, without NFO's prior
written consent, he or she will not offer, sell, contract to sell or otherwise
dispose of any shares of NFO Common Stock acquired hereunder except in
compliance with the Securities Act of 1933, as amended. Each Seller further
agrees that the certificate or certificates issued to him or her to evidence the
shares of NFO Common Stock delivered pursuant to Section 1.2 hereof shall bear a
legend stating as follows:
The shares evidenced by this certificate have not been registered under
the Securities Act of 1933 as amended (the " 1933 Act" ) or any state
securities laws and may not be sold or transferred except in transactions
exempt from registration under the 1933 Act or any applicable state
securities laws or pursuant to an effective registration statement under
the 1933 Act. The shares represented by this certificate are subject to
certain transfer restrictions pursuant to that certain Share Purchase
Agreement, dated as of July 11, 1997, by and among the issuer of these
shares and certain other parties thereto.
4.10 INSURANCE. From the date hereof through the Closing Date, each
member of the MBL Group shall maintain in force (including necessary renewals
thereof) the insurance policies listed on any Schedule hereto, except to the
extent that they may be replaced with equivalent policies appropriate to insure
the assets, properties and business of such member of the MBL Group to the same
extent as currently insured at the same or lower rates or rates approved by
NFO-UK or NFO.
4.11 ACCOUNTING TREATMENT. Each member of the MBL Group, the
Sellers, NFO-UK and NFO shall not take any action and shall not fail to take any
action, which action or failure to act would prevent, or would be reasonably
likely to prevent, the transaction contemplated by this Agreement from
qualifying for "pooling of interests" accounting treatment.
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4.12 STAMP AND TRANSFER TAXES. NFO-UK and NFO shall pay all
transfer and/or stamp Taxes resulting from the transactions contemplated by this
Agreement.
ARTICLE 5
CONDITIONS
5.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF NFO-UK AND NFO TO
CLOSE. The obligation of NFO-UK and NFO to enter into and complete the Closing
shall be subject to the fulfillment on or prior to the Closing Date of the
following conditions, any one or more of which may be waived by NFO-UK and NFO:
(a) All requisite approvals of the shareholders of the Company
pursuant to the Companies Act and the Company's Memorandum and Articles of
Association and under any shareholders agreement (including the waiver of
preemption rights), resolutions and any shareholders agreements shall have been
obtained for this Agreement, and the transactions contemplated hereby;
(b) The Sellers shall have entered into the Service
Agreements;
(c) The Sellers each shall have performed and complied with
all covenants and agreements required by this Agreement to be performed or
complied with by each of them on or prior to the Closing Date pursuant to the
terms hereof;
(d) The representations and warranties of the Sellers in this
Agreement shall be true and correct on and as of the Closing Date as if made on
and as of such date;
(e) Each Seller shall have delivered to NFO-UK and NFO a
certificate in form and substance reasonably satisfactory to NFO-UK and NFO,
dated the Closing Date, certifying as to the matters set forth in Sections 5.1
(c) and (d);
(f) NFO- UK and NFO shall have received the opinion of Winward
Fearon, counsel to the Sellers, dated the date of the Closing, addressed to
NFO-UK and NFO, substantially in the form attached hereto as Exhibit E, and with
customary assumptions, exceptions and qualifications;
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(g) No order, statute, rule, regulation, executive order,
stay, decree, judgment or injunction shall have been enacted, entered,
promulgated or enforced by any court or governmental authority which prohibits
or prevents the consummation of the transactions contemplated by this Agreement;
(h) The Sellers shall have caused the Company to have
delivered to NFO-UK and NFO a certificate, in form and substance reasonably
satisfactory to NFO-UK and NFO, signed by an executive officer thereof, dated
the Closing Date, certifying that full and complete copies of the following are
attached thereto: copies of the Company's Memorandum and Articles of Association
as in effect on the date hereof;
(i) Any and all permits and approvals from any governmental or
regulatory body required for the lawful consummation of the Closing shall have
been obtained;
(j) All consents, permits and approvals from parties
(including, without limitation, Stochastic Consulting Limited) to any contracts
or other agreements with any member of the MBL Group which may be required in
connection with the performance by such member of its obligations under this
Agreement other than Exchange Control Consents in India, Sri Lanka and
Bangladesh or the continuance of such contracts or other agreements after the
Closing shall have been obtained;
(k) The Sellers shall have paid to the MBL Group any amounts
owed by such person to the MBL Group;
(l) No action, suit or proceeding shall have been instituted
before any court or governmental body or instituted or threatened by any
governmental agency or body to restrain or prevent the carrying out of the
transactions contemplated hereby, or which has or may have, in the reasonable
opinion of each of NFO-UK and NFO, a materially adverse effect on the Condition
of any member of the MBL Group; and
(m) NFO-UK and NFO shall have received a copy of the letter of
Soteriou Banerji referred to in Section 3.31 hereof.
5.2 CONDITIONS TO OBLIGATION OF THE SELLERS. The obligation of the
Sellers to enter into and complete the Closing shall be subject to the
fulfillment on or prior to the Closing Date of the following conditions, any one
or more of which may be waived by the Sellers:
(a) Each of NFO-UK and NFO shall have performed and compiled
with all covenants and agreements required by this Agreement to be performed or
complied with by it on or prior to the Closing Date pursuant to the terms
hereof;
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(b) The representations and warranties of each of NFO-UK and
NFO contained in this Agreement shall be true and correct on and as of the
Closing Date as if made on and as of such date;
(c) NFO-UK and NFO shall have delivered to each Seller a
certificate in form and substance reasonably satisfactory to them, dated the
Closing Date, certifying as to the matters set forth in Sections 5.2(a) and (b);
(d) The Sellers shall have received the opinion of Paul,
Weiss, Rifkind, Wharton & Garrison, counsel to NFO-UK and NFO, dated the date of
the Closing, addressed to the Sellers substantially in the form attached hereto
as Exhibit F;
(e) No order, statute, rule, regulation, executive order,
stay, decree, judgment or injunction shall have been enacted, entered,
promulgated or enforced by any court or governmental authority which prohibits
or prevents the consummation of the transactions contemplated by this Agreement;
(f) NFO-UK and NFO shall have delivered to the Sellers a
certificate, in form and substance reasonably satisfactory to the Sellers,
signed by an executive officer thereof, dated the Closing Date, certifying that
full and complete copies of the following are attached thereto: minutes of the
Board of Directors thereof (or unanimous written consents in lieu thereof)
authorizing and approving this Agreement and the transactions contemplated
hereby, copies of the Certificate of Incorporation and By-laws thereof as in
effect on the date hereof, and such other documents or instruments as the
Sellers may reasonably request in writing not less than two days prior to the
Closing Date to carry out the intent and purpose of this Agreement;
(g) NFO shall have executed and delivered the Registration
Rights Agreement;
(h) The Company shall have entered into the Service
Agreements; and
(i) the Sellers shall have received a copy of the letter of
Arthur Andersen LLP referred to in Section 2.9 hereof.
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ARTICLE 6
TERMINATION AND ABANDONMENT
6.1 TERMINATION. This Agreement may be terminated by mutual action
of NFO-UK and NFO on the one hand and the Sellers on the other.
6.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of the
termination of this Agreement pursuant to Section 6.1, it shall become null and
void and have no further force or effect, except that any such termination of
this Agreement shall be without prejudice to the rights of any party on account
of the non-satisfaction of the conditions set forth in Article 5 resulting from
the intentional or willful breach or violation of the representations,
warranties, covenants or agreements of another party under this Agreement.
Notwithstanding anything in this Agreement to the contrary, Section 4.5 and
Article 8 shall survive any termination of this Agreement.
ARTICLE 7
SURVIVAL OF REPRESENTATIONS & WARRANTIES
7.1 SURVIVAL. Notwithstanding any right of the parties hereto fully
to investigate the affairs of the MBL Group, NFO-UK and NFO and notwithstanding
any knowledge of facts determined or determinable by any party hereto pursuant
to such investigation or right of investigation, each party hereto shall have
the right to rely fully upon the representations and warranties of the other
parties contained in this Agreement as qualified by the schedules attached
hereto. The representations and warranties and covenants and agreements of the
parties hereto shall survive the execution and delivery hereof and the Closing
hereunder. Subject to Section 8.5 hereof, the representations and warranties
shall thereafter terminate and expire with respect to any General Claims (as
defined below) or Tax Claims (as defined below), upon the earlier to occur of
(A) one year from the Closing Date; or (B) the date on which Arthur Andersen LLP
(or its successor) delivers to NFO-UK and NFO its final audit opinion on the
consolidated financial statements of NFO for the fiscal year ending December 31,
1997.
7.2 CERTAIN DEFINITIONS. For the purposes of this Article 7:
(a) The term "General Claim" shall mean any claim (other than
a Tax Claim) arising out of or otherwise in respect of any breach of any
representation or
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warranty of NFO-UK, NFO or the Sellers contained in this Agreement or any
certificate required to be delivered by NFO-UK, NFO or the Sellers in connection
herewith.
(b) The term "Tax Claim" shall mean any claim arising out of
or otherwise in respect of any breach of any representation or warranty of
NFO-UK, NFO or the Sellers contained in this Agreement or any certificate
required to be delivered by NFO-UK, NFO or the Sellers in connection herewith
relating to Taxes, including, without limitation, any and all Losses (as defined
below) resulting (i) on or before or in respect of any period of time ending on
or before the Closing Date or (ii) in respect of any act or transaction which
occurs on or before the Closing Date; but not, with respect to any
representation or Warranty of the Sellers relating to Taxes; (A) to the extent
such Taxes have previously been taken into account in the calculation of the
Balance Sheet and the AUFs; (B) to the extent any indemnified party hereunder
does any voluntary act or transaction outside the ordinary course of business
after the Closing Date which causes a Tax liability to arise; (C) to the extent
a Tax liability arises from a change in accounting or Tax policy or practice
adopted by any member of the MBL Group on or after the Closing Date; or (D) to
the extent a Tax liability arises or is increased as a result of any increase in
rates of Tax or any change in the law or published practice of a Tax Authority
after the Closing Date.
ARTICLE 8
8.1 OBLIGATION OF THE SELLERS TO INDEMNIFY. Subject to the
limitations contained in Section 8.4, the Sellers shall be jointly and severally
liable to, and shall indemnify, defend and hold harmless NFO and its
subsidiaries (including NFO-UK) (and any of their directors, officers, partners,
employees, agents and affiliates) (each, an "NFO Indemnified Party") from and
against all claims, losses, liabilities, damages, deficiencies, costs or
expenses (including interest, penalties and reasonable fees of attorneys and
disbursements (collectively "Losses" which, for the purposes hereof, shall also
include the reasonable fees of attorneys and disbursements incurred by an NFO
Indemnified Party in bringing a claim under this Agreement, prosecuting its
rights of indemnity in respect of such claim and collecting any amounts awarded
upon such claim)) suffered, sustained or incurred or required to be paid by any
such person due to, based upon, arising out of or otherwise in respect of any
inaccuracy in or any breach of any representation, warranty, covenant or
agreement of the Sellers contained in this Agreement or any certificate required
to be delivered by the Sellers in connection herewith.
8.2 OBLIGATION OF NFO-UK AND NFO TO INDEMNIFY. Subject to the
limitations contained in Section 8.4, each of NFO- UK and NFO shall be liable
to, and shall
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indemnify, defend and hold harmless each Seller (each, a "Seller Indemnified
Party" ) from and against all Losses (which, for the purposes hereof shall also
include the reasonable fees of attorneys and disbursements incurred by a Seller
Indemnified Party in bringing a claim under this Agreement, prosecuting its
rights of indemnity in respect of such claim and collecting any amounts awarded
upon such claim) suffered, sustained or incurred or required to be paid by and
such person due to, based upon, arising out of or otherwise in respect of any
inaccuracy in or breach of any representation, warranty, covenant or agreement
of NFO-UK and NFO contained in this Agreement or any certificate required to be
delivered by NFO-UK and NFO in connection herewith.
8.3 NOTICE TO INDEMNIFYING.
(a) If either an NFO Indemnified Party, on the one hand, or a
Seller Indemnified Party, on the other hand, as the case may be (the
"lndemnitee"), receives written notice of any third party claim or potential
claim or the commencement of any action or proceeding which could give rise to
an obligation on the part of either Seller, on the one hand, or NFO-UK or NFO,
on the other hand, as the case may be, to provide indemnification (the
"Indemnifying Party") pursuant to Section 8.1 or 8.2, the lndemnitee shall
promptly give the Indemnifying Party notice thereof (the "Indemnification
Notice"); provided, that the failure to give the Indemnification Notice promptly
shall not impair the lndemnitee's right to indemnification in respect of such
claim, action or proceeding unless, and only to the extent that the lack of
prompt notice adversely affects the ability of the Indemnifying Party to defend
against or diminish the Losses arising out of such claim, action or proceeding.
Delivery of the Indemnification Notice shall be a condition precedent to any
liability of the Indemnifying Party under the provisions for indemnification
contained in this Agreement. The Indemnification Notice shall contain factual
information (to the extent known to the Indemnitee) describing the asserted
claim in reasonable detail and shall include copies of any notice or other
document received from any third party in respect of any such asserted claim.
The Indemnifying Party shall have the right to assume the defense of a third
party claim or suit described in this Section 8.3 at its own cost and expense
and with counsel of its own choosing, provided, however, that the Indemnifying
Party acknowledges in writing (at the time it elects to assume the defense of
such claim or suit, which shall be not later than 30 days after the date of the
Indemnification Notice) its obligation under this Section 8.3 to indemnify the
Indemnitee with respect to such claim or suit, such counsel is reasonably
satisfactory to the Indemnitee; the Indemnitee is kept fully informed of all
developments and is furnished copies of all papers; the Indemnitee is given the
opportunity, at its option, to participate at its own cost and expense and with
counsel of its own choosing (which shall be reasonably satisfactory to the
Indemnifying Party) in the defense of such claim or suit; and the Indemnifying
Party diligently prosecutes the defense of such claim or suit. In the event that
all of the foregoing conditions
33
<PAGE>
are not satisfied, the lndemnitee shall have the right, without impairing any of
its rights to indemnification as provided herein, to assume and control the
defense of such claim or suit and to settle such claim or suit. No settlement of
any such third party claim or suit shall be made by, the Indemnifying Party
without the prior written consent of the Indemnitee (which shall not be
unreasonably withheld). No settlement of any such third party claim or suit
shall be made by the lndemnitee if the Indemnifying Party shall have assumed the
defense thereof and shall be in compliance with its obligations with respect
thereto as set forth above in this Section 8.3. If the Indemnifying Party
chooses to defend any claim, the Indemnitee shall make available to the
Indemnifying Party, any books, records or other documents within its control
that are necessary or appropriate for such defense. Notwithstanding the
foregoing, the Indemnitee shall have the right to employ separate counsel at the
Indemnifying Party's expense and to control its own defense of such asserted
liability if in the reasonable opinion of counsel to such Indemnitee (i) there
are or may be legal defenses available to such Indemnitee or to other
Indemnitees that are different from or additional to those available to the
Indemnifying Party; or (ii) a conflict or potential conflict exists between the
Indemnifying Party and such Indemnitee that would make such separate
representation advisable.
(b) If any NFO Indemnified Party or any Seller Indemnified
Party, as the case may be, has a claim (or potential claim) in respect of any
Loss based upon, arising out of or otherwise in respect of a breach of any
representation, warranty, covenant or agreement contained herein or in any
certificate required to be delivered in connection herewith which does not
relate to a claim, suit or proceeding by a third party, then such NFO
Indemnified Party or Seller Indemnified Party, as the case may be, shall send to
the Sellers, on the one hand, or NFO-UK or NFO on the other hand, as the case
may be, a written notice describing the facts or circumstances with respect to
the subject matter of such claim (or potential claim). Any such notice must be
received b-y the Sellers, NFO-UK or NFO, as the case may be, on or prior to the
date on which the representation or warranty on which such claim (or potential
claim) or action or proceeding is based ceases to survive as set forth in
Article 7, irrespective of whether the subject matter of such claim (or
potential claim), action or proceeding shall have occurred before or will occur
after such date.
8.4 LIMITATIONS ON INDEMNIFICATION. Anything in either Section 8.1
or 8.2 to the contrary notwithstanding, no indemnification payment shall be made
pursuant to either Section 8.1 or Section 8.2 (i) for any claim for Losses which
do not exceed U.S.$25,000 (the "Threshold Amount") or (ii) except to the extent
that the amounts for claims for Losses in excess of the Threshold Amount that
would otherwise be payable under either Section 8.1 or Section 8.2 would, taken
together, aggregate at least U.S.$250,000 (the "Minimum Amount"). After the
Minimum Amount has been met in respect of claims for Losses in excess of the
Threshold Amount, all amounts payable under either Section 8.1 or Section 8.2 in
34
<PAGE>
respect of claims for Losses in excess of the Threshold Amount (including the
Minimum Amount) shall be payable by the Sellers, NFO-UK or NFO, as the case may
be, until the amounts paid by the Sellers, NFO-UK or NFO, as the case may be,
shall equal the Purchase Price (the "Maximum Amount").
8.5 ADDITIONAL INDEMNIFICATION. Notwithstanding anything to the
contrary contained herein, and in addition to any other remedies of NFO and
NFO-UK hereunder, the Sellers shall jointly and severally be liable to, and
shall indemnify, defend and hold harmless, for a period of 60 months from the
Closing Date, each NFO Indemnified Party from and against all losses suffered,
sustained or incurred or required to be paid by any such person due to, based
upon, arising out of or otherwise in respect of (x) any inaccuracy in the
representations and warranties contained in Sections 3.2 and 3.4 hereof
regarding the ownership structure of MBL Research and Consultancy Group (P) Ltd.
or Trends-MBL Inc. and (y) any Tax Liability in excess of (pound)25,000 arising
out of or relating to the failure to receive credit from the appropriate
governmental authority for payment of taxes on behalf of or by Market Behaviour
(Thailand) Ltd., a company incorporated under the laws of Thailand, as a result
of its failure to relocate its registered office.
8.6 PAYMENT OF CLAIMS BY THE SELLERS. To the extent still owned by
the Sellers, all claims for indemnification hereunder by an NFO Indemnified
Party shall be satisfied by payment by the Sellers of shares of NFO Common
Stock, which for purposes of this Article 8, shall be valued at $23.675 per
share (subject to appropriate adjustment in the event of any subdivision,
combination or other capital adjustment or the payment of a stock dividend in
NFO Common Stock).
ARTICLE 9
MISCELLANEOUS
9.1 KNOWLEDGE OF SELLERS. For purposes of this Agreement, "knowledge
of the Sellers," or words to that effect, means knowledge of all facts, matters
and circumstances which would or ought to have been known to each Seller had
such Seller made full and diligent inquiries of all persons or relevant sources
who or which might have knowledge of the relevant matters. Knowledge of one
Seller shall be implied to the other.
9.2 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may, be amended, modified or supplemented only by a written agreement
signed by the parties hereto.
35
<PAGE>
9.3 WAIVER OF COMPLIANCE; CONSENTS. Any failure of NFO-UK or NFO, on
the one hand, or the Sellers, on the other hand, to comply with any obligation,
covenant, agreement or condition herein may be waived by NFO-UK, NFO or the
Sellers, respectively, only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a Waiver
of or estoppel with respect to any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 9.3.
9.4 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given When delivered in person,
by telecopier (with a confirmed receipt thereof) or registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
by like notice).
(a) if to NFO-UK or NFO, to:
NFO Research, Inc.
2 Pickwick Plaza
Suite 400
Greenwich, Connecticut 06830
Telecopy No.: (203)629-8885
Attention: Chief Financial Officer
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1295 Avenue of the Americas
New York, New York 10019-6064
Telecopy No.: (212) 757-3990
Attention: James A. Dubin, Esq.
36
<PAGE>
(b) if to the Company, to:
The MBL Group plc
4-5 Bonhill Street
London EC2A 4BX
ENGLAND
Telecopy No.: 011-44-171-891-1234
Attention: John R. Goodyear
with a copy to:
Winward Fearon
35 Bow Street
London WC2E 7AU
ENGLAND
Telecopy No: 011-44-171-420-2803
Attention: Adrian Luto, Esq.
(c) if to any Seller, to him or her:
c/o The MBL Group plc
4-5 Bonhill Street
London EC2A 4BX
ENGLAND
Telecopy No.: 011-44-171-891-1234
with a copy to:
Winward Fearon
35 Bow Street
London WC2E 7AU
ENGLAND
Telecopy No: 011-44-171-420-2803
Attention: Adrian Luto, Esq.
9.5 ASSIGNMENT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties, nor
is this Agreement intended to confer upon any other person except the
37
<PAGE>
parties hereto any rights or remedies hereunder; provided, however, that the
rights of NFO-UK or NFO may be transferred in whole or in part to any affiliate
thereof.
9.6 EXPENSES.
(a) All of the fees and expenses of the Sellers in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the Company and all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby by NFO-UK and NFO shall be
paid by NFO-UK and NFO.
(b) If the Sellers, on the one hand, or NFO-UK or NFO, on the
other hand (in any such case, the "Refusing Party"), intentionally or willfully
(i) refuse to consummate the transactions contemplated by this Agreement on the
Closing Date; (ii) cause a material breach of any covenant contained herein
which directly results in the consummation of the transactions contemplated by
this Agreement not going forward on the Closing Date, subject to applicable cure
periods; or (iii) fails to satisfy any of the conditions to closing contained
herein, then, so long as the parties that are not the Refusing Parties are
ready, willing and able to consummate the transactions contemplated by this
Agreement and have satisfied in all material respects the conditions set forth
in Article 5 applicable to them, the Refusing Parties shall promptly pay an
amount equal to U.S. $2,000,000 to the parties that are not the Refusing
Parties.
9.7 GOVERNING LAW. This Agreement shall be governed by the laws of
the State of New York applicable to agreements made and to be performed entirely
within such State.
9.8 JURISDICTION. Any action, suit or proceeding arising out of or
relating to this Agreement or any transaction contemplated hereby may be
instituted in any Federal court of the Southern District of New York or any
state court located in New York County, State of New York, and each party agrees
not to assert, by way of motion, as a defense or otherwise, in any such action,
suit or proceeding, any claim that it is not subject personally to the
jurisdiction of such court, that the action, suit or proceeding is brought in an
inconvenient forum, that the venue of the action, suit or proceeding is improper
or that this Agreement or the subject matter hereof may not be enforced in or by
such court. Each party further irrevocably submits to the jurisdiction of such
court in any such claim. Any and all service of process and any other notice in
any such action, suit or proceeding shall be effective against any party if
given personally or by registered or certified mail, return receipt requested,
or by any other means of mail that requires a signed receipt, postage prepaid,
mailed to such party as herein provided, or by personal service on the Agent
with a copy of such process mailed to such party by first class mail or
registered or certified mail, return receipt requested, postage
38
<PAGE>
prepaid. Nothing herein contained shall be deemed to affect the right of any
party to serve process in any manner permitted by law or to commence legal
proceedings or otherwise proceed against any other party in any other
jurisdiction.
9.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.10 INTERPRETATION. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement; (i) the term
"person" shall mean and include an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof; (ii) the term "affiliate," with respect to any
person, shall mean and include any person controlling, controlled by or under
common control with such person; and (iii) the term "subsidiary" of any
specified person shall mean any corporation 50% or more of the outstanding
voting power of which, or any partnership, joint venture or other entity 50% or
more of the total equity interest of which, is directly or indirectly owned by
such specified person. For purposes of this Agreement, all references to
"subsidiaries" of a person shall be deemed to mean "subsidiary" if such person
has only one subsidiary.
9.11 ENTIRE AGREEMENT. This Agreement, including the documents or
instruments referred to herein, embodies the entire agreement and understanding
of the parties hereto in respect of the subject matter contained herein. There
are no restrictions, promises, representations, warranties, covenants or
undertakings, other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings whether oral or
written between the parties with respect to the subject matter hereof.
9.12 NO THIRD PARTY BENEFICIARIES. This Agreement is not intended
to, and does not, create any rights or benefits of any party other than the
parties hereto.
39
<PAGE>
IN WITNESS WHEREOF, NFO-UK, NFO and the Sellers have caused this
Agreement to be signed as of the 11th day of July, 1997.
NFO RESEARCH INC.
By: /s/ William E. Lipner
-----------------------------
Name: William E. Lipner
Title: Chairman, Chief Executive Officer
& President
NFO UK, INC
By: /s/ Patrick G. Healy
-----------------------------
Name: Patrick G. Healy
Title: Executive Vice President-Finance
and Chief Financial Officer
/s/ John R. Goodyear
---------------------------------
John R. Goodyear
/s/ Mary J. Goodyear
---------------------------------
Mary J. Goodyear
40
<PAGE>
Schedule 3.2
THE MBL GROUP
<TABLE>
<CAPTION>
COMPANY JURISDICTION OF ORGANISATION
<S> <C>
The MBL Group plc England, United Kingdom
BJM Research and Consultancy Limited England, United Kingdom
Market Behaviour Limited England, United Kingdom
Marketing Blueprint Limited England, United Kingdom
MBL Asia-Pacific Limited Hong Kong
Market Behaviour (Hong Kong) Limited Hong Kong
International Research Associates (Hong Kong) Limited Hong Kong
INRA (HK) Limited Hong Kong
Market Behaviour (International) Limited Hong Kong
Market Behaviour (China) Limited Hong Kong
Market Behaviour (Thailand) Limited Hong Kong
Market Behaviour (Vietnam) Limited Hong Kong
Consensus MB Limited Hong Kong
Market Behaviour (Malaysia) Sdn Bhd Malaysia
Market Behaviour (Singapore) Pte Limited Singapore
Trends-MBL, Inc. Philippines
P.T. Continental Sentratama Surveys Indonesia
Market Behaviour (Thailand) Limited Thailand
MBL Research and Consultancy (P) Limited India
Market Behaviour Lanka (PVT) Limited Sri Lanka
Market Behaviour Bangladesh Limited Bangladesh
MERAC WLL Ltd Bahrain (42% holding only by The MBL
Group plc only)
MERAC - Egypt Ltd Egypt (80% through MERAC WLL Ltd)
MERAC Arabia Company Ltd Saudi Arabia (49% holding only through
MERAC WLL Ltd)
</TABLE>
<PAGE>
Schedule 3.4
THE MBL GROUP
CAPITALISATION
<TABLE>
<S> <C>
1)Name of Company: THE MBL GROUP PLC
Authorised Capital: (pound)l00,000 divided into 100,000 shares of(pound)l.00 each
Issued Capital: 100,000 shares
Total paid up: (pound)100,000
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
John R Goodyear 50,000
Mary J Goodyear 50,000
2)Name of Company: BJM RESEARCH AND CONSULTANCY LIMITED
Authorised Capital: (pound)100,000 divided into 100,000 shares of(pound)l.00 each
Issued Capital: 100,000 shares
Total paid up: (pound)l00,000
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
The MBL Group plc 70,000
D. J. Johnson 10,000
N. A. G. Spackman 5,000
C. E. Baker 5,000
I. S. Brace 5,000
R. B. Winslow 2,000
J. W. Archer 2,000
A. Futerman 1,000
3)Name of Company: MARKET BEHAVIOUR LIMITED
Authorised Capital: (pound)100 divided into 100 shares of(pound)l.00 each
Paid-up Capital: 100 shares
Total paid up: (pound)100
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
The MBL Group plc 81
J. R. Goodyear* 1
F. M. Yelland 12
N. M. Long 6
(*on trust for The MBL Group plc)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
4)Name of Company: MARKETING BLUEPRINT LIMITED
Authorised Capital: (pound)l0,000 divided into 10,000 shares of(pound)l.00 each
Paid-up Capital: 9,000 shares
Total paid up: (pound)9,000
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
The MBL Group plc 7,000
A. J. Turton 2,000
5)Name of Company: MBL ASIA-PACIFIC LIMITED
Authorised Capital: HK$786,500 divided into 786,500 shares of HK$1.00
each
Paid-up Capital: 786,500 shares of HK$1.00 each
Total paid up: HK$786,500
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
The MBL Group Plc 560,382
Christopher Noel Robinson 186,793
Mark Van Roo 23,595
Clive Little 15,730
6)Name of Company: INRA (HONG KONG) LIMITED (Dormant Company)
Authorised Capital: HK$1,000.00 divided into 100 shares of HK$l0.00
each
Paid-up Capital: 2 shares of HK$10.00 each
Total paid up: HK$20.00
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
International Research Associates (Hong Kong) Limited 1
J. R. Goodyear* 1
(* on trust for International Research Associates (Hong Kong) Ltd)
7)Name of Company: MARKET BEHAVIOUR (HK) LIMITED
Authorised Capital: HK$1,000,000.00 divided into 1,000,000 shares of
HK$1.00 each
Paid-up Capital: 1,000,000 shares of HK$1.00 each
Total paid up: HK$1,000,000
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
MBL Asia-Pacific Limited 700,000
Christopher Noel Robinson 200,000
Jenny So Kwok Ying 100,000
8)Name of Company: MARKET BEHAVIOUR (CHINA) LIMITED
Authorised Capital: HK$10,000.00 divided into 1,000 shares of
HK$10.00 each
Paid-up Capital: 1,000 shares of HK$10.00 each
Total paid up: HK$10,000.00
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
MBL Asia-Pacific Limited 999
John Robert Goodyear 1
(on trust for MBL Asia-Pacific Ltd.)
9)Name of Company: INTERNATIONAL RESEARCH ASSOCIATES (HONG KONG) LIMITED
Authorised Capital: HK$500,000.00 divided into 5,000 shares of
HK$100.00 each.
Paid-up Capital: 2,500 shares of HK$l00.00 each
2,500 shares issued at HK$234.00 each
Total paid up: HK$835,000.00
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
Christopher Noel Robinson 375
(on trust for MBL Asia-Pacific Ltd)
MBL Asia-Pacific Ltd 3,625
Kenrick, Leung Chun Yick 1,000
10)Name of Company: MARKET BEHAVIOUR (INTERNATIONAL) LIMITED
Authorised Capital: HK$1,000.00 divided into 1,000 shares of HK$1.00 each
Paid-up Capital: 1,000 shares of HK$1.00
Total paid up: HK$1,000.00
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
MBL Asia-Pacific Limited 760
Mark Van Roo 200
Jacky Wong 40
</TABLE>
<PAGE>
<TABLE>
<S> <C>
11)Name of Company: MARKET BEHAVIOUR (THAILAND) LIMITED
Authorised Capital: HK$10,000.00 divided into 1,000 shares of
HK$10.00 each.
Paid-up Capital: 1,000 shares of HK$l0.00 each
Total paid up: HK$10,000.00
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
MBL Asia-Pacific Limited 800
Christopher Sidney Maxwell 200
12)Name of Company: MARKET BEHAVIOUR (VIETNAM) LIMITED
Authorised Capital: HK$10,000.00 divided into 1,000 shares of
HK$10.00 each.
Paid-up Capital: 1,000 shares of HK$10.00 each.
Total paid up: HK$10,000.00
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
MBL Asia-Pacific Limited 999
Christopher Noel Robinson 1
(on trust for MBL Asia-Pacific Ltd.)
13)Name of Company: CONSENSUS-MB LIMITED
Authorised Capital: HK$10,000.00 divided into 10,000 shares of
HK$1.00 each.
Paid-up Capital: 100 shares of HK$1.00 each
Total paid up: HK$100.00
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
MBL Asia-Pacific Limited 69
Clive Liffle 20
Sjafril Djalal 10
Christopher Noel Robinson 1
(on trust for MBL Asia-Pacific Ltd.)
14)Name of Company: MARKET BEHAVIOUR (SINGAPORE) PTE LIMITED
Authorised Capital: S$l00,000.00 divided into 100,000 shares of S$1.00 each
Paid-up Capital: 100,000 shares.
Total paid up: S$100,000
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
MBL Asia-Pacific Limited 70,000
Dr. Thomas Tan Tsu Wee 10,000
Tan Jee Lui 10,000
Leong Lai Sim 10,000
15)Name of Company: MARKET BEHAVIOUR (MALAYSIA) SDN BHD
Authorised Capital: 100,000 shares of MR1.00 each
Issued Capital: 45,000 shares.
Total paid up: MR45,000.00
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
MBL Asia-Pacific Limited 34,998
J. R. Goodyear* one
C. N. Robinson* one
L. Yap 5,000
1. David 5,000
(*held on trust for MBL Asia-Pacific Limited)
16)Name of Company: TRENDS-MBL, INC.
Authorised Capital: 1,500,000 Pesos divided into 15,000 shares of 100 Pesos each
Issued Capital: 10,000 shares
Total paid up: 1,000,000 Pesos
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
MBL Asia-Pacific Limited 3,998
J. R. Goodyear* one
C. N. Robinson* one
M. Abad* 4,400
A. Caro* 800
L. Villanueva* 800
(*on trust for MBL Asia Pacific Limited. 100% subsidiary but 10% of profits are in turn held on
trust for the benefit of the employees of Trends-MBL, Inc.)
17)Name of Company: P.T. CONTINENTAL SENTRATAMA SURVEYS
Authorised Capital: 100,000,000 Rupiah divided into 1,000 shares of 100,000
Rupiah each
Issued Capital: 1,000 shares
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Total paid up: 100,000,000 Rupiah
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
Sjafril Djalal* 1,000
(*All held on trust for MBL Asia-Pacific Limited)
18)Name of Company: MARKET BEHAVIOUR (THAILAND) LIMITED
Authorised Capital: 30,000 shares of 100 Baht each
Issued Capital: 30,000 shares
Total paid up: 30,000 Baht
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
MBL Asia-Pacific Limited 14,700
Anek Srisanit* 9,300
Mongkol Thongnim* 1,200
Senut Cahvana* 1,200
Suneen Sirdsarvadvorakul* 1,200
Laxami Thang-Suwan* 1,200
Priyavom Nakchantuk* 1,200
(* held on trust for MBL Asia-Pacific Limited)
19)Name of Company: MBL RESEARCH AND CONSULTANCY GROUP (P) LIMITED
Authorised Capital: 4,000,000 Rupees divided into 400,000 shares of 10 Rupees
each
Issued Capital: 200,300 shares
Total paid up: 2,003,000 Rupees
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
The MBL Group plc 102,153
John Abraham 34,347
Jenny Abraham 34,346
Paul Abraham 29,454
Of the 102,153 shares owned by The MBL Group plc, John Abraham holds 7,753
shares, Jenny Abraham holds 7,754 shares and Paul Abraham holds 6,646 shares
which have been purchased by The MBL Group plc but not yet registered in the
name of The MBL Group plc due to delays in obtaining necessary consents from
the Reserve Bank of India (Exchange Control) and the Indian Board of
Investment (Foreign Ownership).
</TABLE>
<PAGE>
<TABLE>
<S> <C>
20)Name of Company: MARKET BEHAVIOUR LANKA (PVT) LIMITED
Authorised Capital: 100,000 shares of Sri Lankan Rupees 1.00 each
Issued Capital: 90,000 shares
Total paid up: 90,000 Sri Lankan Rupees
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
MBL Research and Consultancy Group (P) Ltd 69,980
John R. Goodyear* 10
John Abraham* 10
Ravi Bamunusinghe 10,000
Janaki Bamunusinghe 10,000
(*held on trust for MBL Research and Consultancy Group (P) Limited)
21)Name of Company: MARKET BEHAVIOUR BANGLADESH LIMITED
Authorised Capital: Takas 1,000,000 divided into 100,000 shares of Takas
10/= each
Issued Capital: 800,000 Shares
Total paid up: 800,000 Takas
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
MBL Research and Consultancy Group (P) Ltd 70,000
Quazi Muneer Uz Zaman 10,000
22)Name of Company: MERAC WLL LIMITED
Authorised Capital: 50,000 Dinars Divided into 500 shares of 100 Dinars each
Issued Capital: 500 shares
Total paid up: 50,000 Dinars
Shareholdings:
Name of Shareholder No. of Shares Held
------------------- ------------------
The MBL Group plc 210
Stuart Campbell Morris 175
Abdulnabi Al Sho'ala 115
23)Name of Company: MERAC EGYPT LIMITED
Authorised Capital: Egyptian Pounds 50,000
NOT DIVIDED INTO SHARES
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Equity participations
Name of Shareholder %
MERAC WLL Limited 80
Mohamed Ahmed Mahmoud 20
24)Name of Company: MERAC ARABIA COMPANY LTD
49% equity participation only. Held through MERAC WLL Ltd.
</TABLE>
<PAGE>
Schedule 3.5
Options and Other Rights
------------------------
The following minority shareholders have been granted informal options by The
MBL Group plc or where relevant its subsidiary intermediate holding company (MBL
Research and Consultancy Group (P) Limited or MBL Asia-Pacific Limited) to
subscribe shares at par or to purchase shares from The MBL Group plc or the
relevant subsidiary intermediate holding company in respect of the share capital
of Subsidiaries as set out below. In each case the relevant shareholders have
indicated an intention to exercise the options but also an intention to enter
into a shareholder and buy/sell agreement substantially in the form attached to
this Agreement as Exhibit D in respect of the whole of their respective
shareholding in the relevant subsidiary, including the shares under option
described below.
1 Subsidiary Company: MARKETING BLUEPRINT LIMITED
Name of Shareholder Shares to be subscribed
------------------- -----------------------
The MBL Group plc 500
A. J. Turton 500
2 Subsidiary Company: MARKET BEHAVIOUR (CHINA) LIMITED
Name of Shareholder Shares to be transferred
------------------- ------------------------
C N Robinson 20
M J Van Roo 60
J Wong 30
J So Kwok Ying 15
Name of transferor: MBL Asia-Pacific Limited
3 Subsidiary Company: MARKET BEHAVIOUR (THAILAND) LIMITED
(incorporated in Thailand)
Name of Shareholder Shares to be transferred
------------------- ------------------------
Allison Prebble 50
Kuruvin Boon-Long 50
<PAGE>
Name of transferor: MBL Asia-Pacific Limited
4 Subsidiary Company: MARKET BEHAVIOUR (VIETNAM) LIMITED
Name of Shareholder Shares to be transferred
------------------- ------------------------
Michael Pofter 200
Name of Transferor: MBL Asia-Pacific Limited
5 Subsidiary Company: MARKET BEHAVIOUR (MALAYSIA) SDN BHD
Name of Shareholder Shares to be subscribed
------------------- -----------------------
Lawrence Yap 1,250
Ivy David 1,250
MBL Asia-Pacific Limited 2,500
6 Subsidiary Company: MARKET BEHAVIOUR LANKA (PVT) LIMITED
Name of Shareholder Shares to be subscribed
------------------- -----------------------
R Bamunusinghe 2,500
J Bamunusinghe 2,500
MBL Research and Consultancy Group (P) Ltd 5,000
In addition the following transfers by Minority Shareholders in MBL RESEARCH AND
CONSULTANCY (P) LIMITED have been agreed and are to the knowledge of the Sellers
in the course of registration. The shareholder and buy/sell agreement
substantially in the form of Exhibit D to be signed by each shareholder in that
company will reflect these transfers.
<TABLE>
<CAPTION>
Shareholder Shares to be Acquired Shares to be transferred
- ----------- --------------------- ------------------------
<S> <C> <C>
John Abraham Nil 2,538
Jenny Abraham Nil 2,537
Paul Abraham Nil 2,175
R Suresh 6,000 Nil
Rohini Parthasarathy 1,250 Nil
Total 7,250 7,250
</TABLE>
<PAGE>
Schedule 3.8
Consents
--------
1.A change of ownership or control of The MBL Group plc will give rise, absent
consent from the relevant contracting party, to a right of termination under
the following Licence Agreements in favour of The MBL Group plc and/or its
various operating subsidiaries:
(1) Authorised Distributor Agreement between Simulation Research,
Incorporated an BJM Research and Consultancy Limited in respect of the
"Visionary Shopper" product, effective March 1, 1995.
(2) Stochastic Reaction Monitors Licence Agreement between Stochastic
Consulting Limited and various MBL Group subsidiaries.
(3) Licence Agreements between ADD+IMPACT Pty. Limited and various MBL Group
Subsidiaries.
Consents have been obtained confirming that the right of termination will not
be triggered in respect of any of the above.
2.In respect of the acquisition of shares in subsidiary companies by NFO or an
NFO subsidiary pursuant to any shareholder and buy/sell agreement, it should
be noted that Exchange Control Consent and/or Foreign Investment Board
approval may be required in respect of shares in:-
(a) MBL Research and Consultancy Group (P) Ltd
(b) Market Behaviour Lanka (PVT) Ltd
(c) Market Behaviour Bangladesh Ltd
<PAGE>
Schedule 3.14
Prohibited Actions
------------------
(1) The matters referred to in Schedule 3.5 (Options And Other Rights) are
repeated for the purposes of this Schedule 3.14, provided however that the
proposed issues and transfers of shares therein referred will not be affected
at or prior to the Closing.
(2) Since the Balance Sheet the following dividends have been declared and/or
paid by the Company or the specified MBL Subsidiaries
(a) The MBL Group plc
-----------------
Total dividend declared and paid (pound)600,000
(b) MBL Asia-Pacific Limited
------------------------
Total dividend declared and paid HK$6,000,000
(c) BJM Research and Consultancy Limited
------------------------------------
Total dividend declared and paid (pound)350,000
(d) Market Behaviour Limited
------------------------
Total dividend declared and paid (pound)150,000
(e) Market Behaviour (Hong Kong) Limited
------------------------------------
Total dividend paid HK$2,000,000
(f) Consensus-MB Limited
--------------------
Total dividend paid HK$180,000
(g) Trends-MBL, Inc.
----------------
Total dividend declared of Pesos 17,000,000 of which US$110,000 paid up to
the date of this Agreement
(h) Market Behaviour (International) Limited
----------------------------------------
Total dividend paid US$300,000
<PAGE>
Schedule 3.15
TAXES
-----
1) MARKET BEHAVIOUR (THAILAND) LIMITED (incorporated in Thailand) ("MBT")
From its incorporation in 1990, MBT has filed all its tax returns, issued all
its invoices for purposes of Thai VAT and accounted to the authorities for its
VAT liabilities using its actual office address in Soi Sama Han in Bangkok. To
date, since MBT is not in overall profit from inception (i.e. it still has
carried forward start up losses to set against current profits) there has been
no requirement to pay Thai Corporation Tax.
The registered office address of MBT, adopted on its incorporation, is that of
MBT's local legal advisers and has never been changed.
MBT has only recently been advised (and then only orally, with the relevant
advisers declining to advise in writing) that once MBT actually established its
operating office in Soi Sama Han the registered office address should have been
changed to that of the operating office. No such advice was previously given
either by MBT's legal advisers or its auditors. It now appears that as a result
of this omission to move the registered office address, MBT's tax returns and
also the VAT invoices issued and payments made to the relevant authorities might
not be recognised as complying with MBT's obligations on the technical ground
that the invoices and returns should have been made as from the registered
office address (and not simply from an operating office address). However, MBT
has also been advised (again orally with the relevant advisers declining to
confirm in writing) that it would not be prudent to raise this technicality
directly with the relevant authorities on the grounds that, should those
authorities subsequently raise the issue of their own volition, MBT will be
better placed to reach a favourable accommodation as an "innocent party" unaware
of the technical breach than as a self-confessed defaulter. If the matter is
subsequently raised by the authorities, the advice received is that it will be
possible to negotiate an accommodation with the relevant authorities in
settlement of any resulting liability, whether to additional tax, fines,
penalties or otherwise, for a sum not exceeding Thai Baht 1,000,000 (a figure
previously advised to NFO in oral discussions as approximating to
(pound)25,000.00 at the then prevailing exchange rate).
2) P.T. CONTINENTAL SENTRATAMA SURVEYS (CSS)
CSS has conducted its business in accordance with the practice generally adopted
by service-related companies in Indonesia which involves billing overseas
clients offshore (generally through Hong Kong) for market research work carried
out in Indonesia on behalf of such clients. CSS has, with the approval of its
local advisers, filed all of its statutory returns in the normal manner and the
relevant Indonesian authorities have not challenged its treatment of offshore
income. However, it is understood that, in common with other service companies
operating in this manner, the practice of billing overseas clients offshore
could in theory be open to challenge if the relevant tax inspector so decided.
There has been no indication of any intention to make such a challenge.
<PAGE>
Schedule 3.16
EMPLOYEE BENEFIT MATTERS
------------------------
1)In Addition to the Sellers and those employees who are also Minority
Shareholders (whose terms and conditions of employment are fully reflected in
the new Service Agreements prepared by NFO's advisers and to be signed by each
of the relevant individuals at or after the Closing) the remuneration of the
following employees in excess of (pound)50,000 p.a. has been increased since
the Balance Sheet Date to the sum specified below:
a) Susan Nosworthy (pound)60,000 p.a.
b) Margaret Short (pound)50,000 p.a.
c) Margery Hancock (pound)53,000 p.a.
d) Endellion Sharp (pound)53,500 p.a.
It should be noted that the first three individuals listed above are also to
enter into new service agreements in a form approved by NFO prior to the date
of this agreement.
2)BJM Research and Consultancy Limited ("BJM") operates a bonus scheme for all
employees based on the profitability of BJM in each financial year and paid to
employees pro-rata to salary earned during the financial year (so that an
employee joining part way through the year will enjoy a pro-rata bonus based
on one half year's salary) the amount available for distribution by way of
bonus on this pro-rata basis is calculated in accordance with the following
formula:-
a) 20% of the first (pound)l00,000 of profit before tax
b) in addition, 10% of all profits in excess of (pound)l00,000 before tax
C) 10% of all profit before tax in excess of 8% of annual net revenue of BJM
as defined in the audited financial statements of BJM
Provided that item b) is calculated after the deduction of item a) from the
profit and item c) is calculated after first deducting items a) and b) from
the profit figure.
3)Market Behaviour Limited and Marketing Blueprint Limited declare employee
bonuses at the discretion of their respective boards of directors.
4)Market Behaviour (Hong Kong) Limited has in years up to and including the
Balance Sheet Date paid performance related bonuses to C N Robinson and Jenny
So Kwok Ying calculated by reference to profits before tax. Those arrangements
will cease on signature of the new service agreement by each of these parties.
<PAGE>
5) In Asia-Pacific jurisdictions, where it is the usual local business practice,
the relevant MBL subsidiary pays an additional month's salary to employees at
Chinese New Year (that is to say a 13th month's salary is paid so that in the
relevant month the employee receives double the normal monthly salary). This is
allowed for in setting salary levels.
6)The Sellers and all Minority Shareholders who are also executive directors
and the first three employees listed at paragraph 1) above are entitled to
periods of notice in excess of three months reflected in the new service
agreements approved by NFO and to be entered into by each of them at or after
Closing.
7)Endellion Sharp has given notice of her intention to resign her employment as
head of qualitative research at BJM, effective September 1997. To the best of
the Sellers knowledge this decision is not connected with the pooling of
interests with NFO, since the relevant employee has no knowledge of the
proposed transaction.
8)No employee whose remuneration was in excess of (pound)50,000 p.a. has had his
or her employment terminated by any MBL Subsidiary within the twelve months
prior to the date of this agreement.
9) No MBL Subsidiary has any obligation or liability to contribute to any scheme
of the type referred to in Section 3.16 (i) except the following:
a) Each MBL Subsidiary in the UK makes payments into either The MBL Group
Pension Fund (which is a money purchase scheme in respect of which the
level of the employer's contributions is defined by contract according to
the employer's seniority) or into a personal portable pension plan for
the relevant individual (provided that the level of contribution will be
no higher than if the employee was a member of The MBL Group Pension
Fund). All payments under both arrangements are made to and through
Allied Dunbar [Assurance Company] Limited and are managed by the Courtney
Havers Partnership. Full details have been made available to NFO for
review.
b) Various medical and other insurance benefit schemes are maintained by MBL
Subsidiaries the details and extent of which vary on a company by company
basis but the cost of which up to the Balance Sheet Date is fully
reflected in the audited financial statements of each MBL Subsidiary.
c) Market Behaviour (Hong Kong) Limited, Market Behaviour Singapore (PTE)
Limited and Trends-MBL, Inc operate defined benefits pension schemes for
all or some of their employees as referenced in Notes to The MBL Group's
audited consolidated financial statements for the year ended on the
Balance Sheet Date.
<PAGE>
Schedule 3.17
Employee Relations
------------------
<TABLE>
<CAPTION>
COMPANY Full Time Personnel Contract Workers
------------------- ----------------
<S> <C> <C>
The MBL Group plc One Nil
BJM Research and Consultancy Limited 116 644
Market Behaviour Limited 16 Nil
Marketing Blueprint Limited 5 Nil
MBL Asia-Pacific Limited Nil Nil
Market Behaviour (Hong Kong) Limited 51 80
International Research Associates (Hong Kong) Limited 8 25
INRA (HK) Limited Nil Nil
Market Behaviour (International) Limited 41 100
Market Behaviour (China) Limited Nil Not available
Market Behaviour (Thailand) Limited Nil Nil
Market Behaviour (Vietnam) Limited 20 150
Consensus MB Limited Nil Nil
Market Behaviour (Malaysia) Sdn Bhd 22 28
Market Behaviour (Singapore) Pte Limited 11 50
Trends-MBL, Inc. 95 411
P.T. Continental Sentratama Surveys 26 180
Market Behaviour (Thailand) Limited 39 300
MBL Research and Consultancy (P) Limited 149 Nil
Market Behaviour Lanka (PVT) Limited 21 2
Market Behaviour Bangladesh Limited One Not available
MERAC WLL Ltd - -
MERAC - Egypt Ltd 16 10
</TABLE>
<PAGE>
Schedule 3.20
Contracts
---------
(1) The Sellers have provided NFO with access to all agreements entered into
with Minority Shareholders in MBL Subsidiaries in the 5 years preceding the
Closing Date. All such agreements will be superseded by either the relevant
Minority Shareholder's buy/sell agreement and/or service agreement. The
relevant contracts are the following:
<TABLE>
<CAPTION>
MBL Subsidiary Description Date
-------------- ----------- ----
<S> <C> <C>
BJM Research and Consultancy Ltd Share Purchase and Shareholders 17.01.94
Agreement
Market Behaviour Limited Share Purchase and Shareholders 1993
Agreement
Marketing Blueprint Limited Share Subscription and 2l.12.94
Shareholders Agreement
MBL Asia-Pacific Limited Share Transfer and Share Issue 05.06.95
Agreement
MBL Asia-Pacific Limited Share Purchase and Shareholders 16.06.95
Agreement
Market Behaviour (Hong Kong) Limited Shareholders Agreement 24.06.88
Market Behaviour (International) Limited Share Purchase and Shareholders 31.01.97
Agreement
Consensus-MB Limited Share Purchase and Shareholders 11.12.93
Agreement
Consensus-MB Limited Technical Service Agreement 11.12.93
International Research Associates Share Subscription and Shareholder
(Hong Kong) Limited 1993 Agreement
Market Behaviour (Malaysia) Sdn Bhd Share Subscription and Share- 03.04.95
holders Agreement
Trends-MBL, Inc Sale and Purchase Agreement 15.12.90
Opinion Research Consultants Share Purchase and Shareholders 05.07.93
PTE Limited Agreement
MBL Research and Consultancy Group Share Purchase and Shareholders 26.03.93
(P) Limited Agreement relating to Oracle
Research and Consultancy
Group (P) Limited (later MBL
Research and Consultancy
Group (P) Limited)
MBL Research and Consultancy Group Supplemental Share Purchase 11.07.96
(P) Limited Agreement
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Market Behaviour (Lanka) PVT Limited Share Subscription, Business 08.11.96
Transfer and Shareholders
Agreement
Market Behaviour Bangladesh Limited Joint Venture Agreement 15.07.96
Middle East Research and Consultancy Sponsorship Agreement 03.02.83
WLL Ltd (MERAC)
MERAC Arabia Company Limited Joint Venture Agreement
MERAC-Egypt Limited Shareholders Agreement 01.01.97
</TABLE>
(2) See contracts referred to in Schedule 3.8, which contain indemnities, and
involve the licence of intellectual property, and where approvals or consents
are required.
(3) With regard to borrowings, intra Group indebtedness is shown in the
audited financial statements of each Subsidiary as at the Balance Sheet Date.
With regard to external borrowings, please note the following:-
(a) The MBL Group plc has an overdraft facility available with Barclays Bank
plc of up to [(pound)500,000]. This facility is not currently being
utilised and no sums are outstanding to the Bank.
(b) BJM Research and Consultancy Limited has an overdraft facility available
with Barclays Bank plc of up to (pound)200,000. This facility is not
currently being utilised and no sums are due to the Bank.
(c) Market Behaviour (Singapore) PTE Limited has an overdraft facility of up
to S$245,000 available with DBS Bank. A copy of a facility letter dated
6 March 1996 has been made available to NFO for inspection. This
facility is currently utilised by the Company to meet its day to day
working capital requirements, with the amount outstanding under the
facility varying from day to day.
(d) MBL Research and Consultancy Group (P) Limited has an overdraft facility
of up to 7,500,000 Rupees and a term loan facility of 1,500,000 Rupees
available with State Bank of Hyderabad. These facilities are secured on
that Company's leasehold premises and on its book debts, and in addition
by personal guarantees given by the Indian executive directors. It is
suggested that when the executive directors cease to be shareholders in
the operating company in India, if not before, new arrangements will
need to be put in place with regard to this facility. Loan documentation
dated 21 June 1996 has been made available to NFO for inspection.
(4) The ten largest customers of each MBL Subsidiary as at the Balance Sheet
Date are as follows:-
(a) BJM Research and Consultancy Limited
------------------------------------
Gillette
Citroen
Coca Cola
British Gas
Post Office Counters
<PAGE>
Bass
L'Oreal
Chivas Glenlivet
Royal Mail Letters
Research Perspectives
(b) Market Behaviour Limited
------------------------
United Distillers
Seagram
Martell
British Airways
Allied Domecq
Guinness
United Airlines
Cahoots
M & S
Crookes Healthcare
(c) Marketing Blueprint Limited
---------------------------
Bass Taverns/Leisure
Management Horizons
Audi
Toby Restaurants
Grattan
Fiat
M.F.I.
Siemens
Wimpey
Renault
(d) Market Behaviour (Hong Kong) Limited
------------------------------------
Coca Cola
Philip Morris
San Miguel
Beecham
Greenwich Asso.
Martell/Seagram
Campbells
Australian Tourist Comm.
Reckitt & Colman
Jardine Group
(e) INRA (Hong Kong) Limited
------------------------
Kodak
Regional Services Dept.
Penn & Schoen
CNTA/HAB
Hong Kong Housing Authority
Chanel
Consensus-MBL
<PAGE>
Industrial Market Research
Carlsberg
Inchcape Building Products
(f) Market Behaviour (Thailand) Limited
-----------------------------------
Shell (Thailand)
Coca Cola (USA)
TRBI (UK)
Citibank (Thailand)
Avon (USA/Thailand)
Seagram (Thailand)
JWT (HK)
Colgate (Thailand)
Philip Morris (HK)
MBL (HK)
(g) Market Behaviour (Vietnam) Limited
----------------------------------
P & G
PMI
Dentsu
San Miguel
MBL-HK
MBL-S
Nikkei
CPC
MBL-Malaysia
Bates
(h) Market Behaviour (Malaysia) Sdn Bhd
-----------------------------------
MBL (S) Pte Ltd.
BP Malaysia
UMW Toyota Motor
SIFO AB
MBL (Hong Kong) Ltd
TIME Telecommunication
Motorola Electronics (S)
Citibank Berhad
Carlsberg Marketing
Cadbury Confectionery
(i) Trends-MBL, Inc.
----------------
SMC
Procter & Gamble
Jollibee
SWS
Coca-Cola
Eveready Battery
Kimberly Clark Phil.
California Mfg.
<PAGE>
John Hopkins
Nestle Phil.
(j) Merac WLL
---------
Unilever
BAT
Coca-Cola
NZDB
WGC
Research International
Savola
Shell
Vector GmbH
Modern Industries
(k) P.T, Continental Sentratama Surveys Ltd
---------------------------------------
Friesche Vlag
BAT
Sampoerna
Quest International
Philips
Daya Mitra
MBL HK
Sara Lee
The Marketing Partner
Multi Bintang
(1) Market Behaviour (International) Ltd - Taiwan Branch
----------------------------------------------------
Coca-Cola
Unilever
RJR
Citibank
MBL-HK
Bass
JW7
Nestle
Volvo
Cathay Pacific
(m) MBL-Research and Consultancy Group (P) Limited
----------------------------------------------
Nippon Research
Procter & Gamble
Brooke Bond (l) Ltd
Hindustan Lever Ltd
TVS Suzuki
BPL Ltd
MBL
Marico Industries Ltd
Smithkline Beecham Ltd
<PAGE>
Citibank
(n) Market Behaviour Lanka (P) Ltd
------------------------------
Ceylon Tobacco Corporation
Ceylon Lever
Ceylon Breweries
Procter & Gamble
Reckitt & Colman
(only top five client names provided BY Executive Directors)
(o) Market Behaviour (S) Pte Ltd
----------------------------
Coca-Cola
DHL
Goodman Fielder
Land Transport Authority
Ministry of Defence
Decision Data
MBL Hong Kong
Lion Sdn Bhd
Ministry of Health
Motorola Electronics
<PAGE>
Schedule 3.21
Intangible Property
-------------------
There is no Intellectual Property owned, used or licensed to or by any member of
The MBL Group which is not generally available to third parties (whether under
licence or otherwise) except;
(a) The Intellectual Property to which the contracts referred to in Schedule
3.8 relate; and
(b) "Opencode", a computer software program written by Douglas Johnson for
the purpose of analysing responses to market research questions which
are not answered as either "yes" or "no".
<PAGE>
Schedule 3.22
Accounts Receivable; Accounts Payable
-------------------------------------
A receivable in the sum of (pound)9,700 plus VAT thereon due from Marks and
Spencer plc to BJM Research and Consulting Limited, which has arisen since the
Balance Sheet Date and has not yet been provided for, may not prove collectable
in the ordinary course.
<PAGE>
Schedule 3.23
Real Estate
-----------
1 No member of The MBL Group holds any option to purchase or acquire, nor has
any member of The MBL Group granted any third party any option to purchase or
acquire any interest in real property.
2 The leasehold interests of the members of The MBL Group are all held on an
arm's length basis under leases negotiated in accordance with the commercial
terms customary in the relevant jurisdiction, whether in respect of office
premises or (where applicable) domestic accommodation provided to staff. To
the Sellers' knowledge, the terms and conditions attached to all of the
relevant leases, whether for office premises or domestic premises, were agreed
in the ordinary course of business, the leases were taken at rentals which
were consistent with the prevailing market conditions at the time and are
subject to such statutory regulations as to commercial or domestic leases as
are imposed in the relevant jurisdiction. The following details are available,
by reference to leases, copies of which have been made available to NFO for
inspection:
(a) BJM RESEARCH AND CONSULTANCY LIMITED. The lease of BJM's premises at 4-5
Bonhill Street, London EC2A 4BX was made on 1 July 1996 with Knighton
Estates Limited. There are no domestic property leases.
(b) MARKET BEHAVIOUR LIMITED. This company leases its premises at 9 Stanhope
Place, London W2 from the Church Commissioners for England under a lease
which has been subject to renewal. (Note that the domestic accommodation
at the premises currently occupied by the Sellers is part of the demise
and is restricted in its use and that it would not be possible for that
company to let the domestic accommodation to a third party user).
(c) MARKET BEHAVIOUR (HONG KONG) LIMITED occupies its premises at 1605
King's Road, Hong Kong under five separate leases of different units of
the Eastern Centre, three units being rented from Wu Pe, one unit from
Forwell Development Limited and one unit from Playing Card Manufactory
Limited. The leases vary in date from October 1994 through August 1996.
In addition, Market Behaviour (Hong Kong) Limited also rents a domestic
apartment for occupation by Chris Robinson.
(d) INTERNATIONAL RESEARCH ASSOCIATES (HONG KONG) LIMITED rents premises at
7th floor CC Wu Building, 302-308 Hennessy Road under a lease dated
September 1995 and made with Wue Ta Kwan, David and Wu Chung Lim, Dora.
This company does not rent any domestic accommodation.
(e) MARKET BEHAVIOUR (MALAYSIA) SDN BHD rents office premises at No.s 21 A,
B and C, Jalan SS22/23 Damansara Jaya, 47400 Petaling Jaya under a lease
with AVIA Corporation Sdn Bhd. Only an undated copy of this lease has
been available for inspection. This company does not rent any domestic
accommodation.
(f) MARKET BEHAVIOUR (SINGAPORE) PTE LIMITED rents office premises at Unit
03-10, Jit Poh Building, 19 Keppel Road, under a lease dated 31 January
1997 and made with Jit Poh Investments PTE Limited. This company does
not rent any domestic accommodation.
<PAGE>
(g) The resident representative office of MBL ASIA-PACIFIC LIMITED in
Vietnam is located at premises rented at 1 Ly Tu Trong Street, Ben Nghe
Ward, District 1, Ho Chi Minh City. In addition, domestic premises are
rented for the accommodation of Mike Potter.
(i) P.T. CONTINENTAL SENTRATAMA SURVEYS leases office premises in Jakarta at
Jalan Bangka Raya 18, Peta Manpang under a lease dated 21 July 1996 and
made with Michael Roland. In addition, domestic accommodation is leased
for three senior members of staff.
(j) TRENDS-MBL, INC. leases office premises at 2nd Floor Culmat Building,
127-133 E Rodriquez Sr. Avenue, Quezon City Metro Manila from Culmat
Realty Corporation under a lease dated 1 April 1996. In addition, a
residential unit is leased for use by an expatriate member of staff.
(k) MARKET BEHAVIOUR LANKA (PVT) LIMITED leases office premises at 145/3
Park Road, Colombo under a lease dated 8 September 1996 from D E
Wijeratne. No domestic accommodation is leased by this Company.
(l) MARKET BEHAVIOUR (THAILAND) LIMITED (THAI COMPANY). This Company leases
office premises and car parking spaces together with one residential
property for use by expatriate staff. No further details are available
for inclusion in this Schedule.
(m) MARKET BEHAVIOUR (INTERNATIONAL) LIMITED. This Company leases one main
and one subsidiary office building, together with five domestic
properties for use by expatriate staff. Leases are drawn up in Chinese
script and translations are not currently available.
(n) MBL RESEARCH AND CONSULTANCY GROUP (P) LIMITED leases a total of 14
properties, comprising its main office at Plot 401, Off Road No. 1,
Banjara Hills, Hyderabad, executive offices in Bombay, Delhi, Bangalore
and Madras and domestic accommodation for the executive directors and a
number of senior employees. Copies of the relevant lease agreement have
been made available for inspection by NFO.
(o) MERAC WLL LIMITED leases office premises in Dubai in the Emirates
Industries Building from Dr. Juma K Belhoul and fmm Emirates Industries.
There is also a lease of premises from Gulf & World Traders. In
addition, domestic premises are leased on behalf of the managing
director of MERAC.
(p) MERAC EGYPT leases premises in Cairo but the only available copy of the
lease is in Arabic.
<PAGE>
Schedule 3.26
Liabilities
-----------
Attention is drawn to the matters referred to in Schedule 3.15, Taxes.
<PAGE>
Schedule 3.27
Liens
-----
None save as referred to in Schedule 3.20 in respect of the Banking Facilities
of MBL Research and Consultancy Group (P) Limited in India.
<PAGE>
Schedule 3.28
Insurance
---------
In the UK, all insurances are maintained on a Group basis covering the Company,
BJM Research and Consultancy Limited, Market Behaviour Limited and Marketing
Blueprint Limited. A copy of the Schedule of Insurances currently maintained is
annexed.
Outside the UK, the Subsidiaries individually maintain appropriate insurance
coverage to meet at the least all statutory requirements and generally relating
to public liability, office contents, employee compensation and, depending on
the relevant jurisdiction, in some cases medical expenses and permanent health
insurance and even life assurance cover. In addition, where company vehicles are
provided, appropriate vehicle insurances are maintained. From the information
provided the Subsidiaries the following details are available:
(a) MARKET BEHAVIOUR (HONG KONG) LIMITED. A global office contents, public
liability and employee compensation policy with Netherlands Insurance
Company under Policy No. DA S097031461 H covering the period to 4 April
1998.
(b) INTERNATIONAL RESEARCH ASSOCIATES (HONG KONG) LIMITED. A single
commercial "multicover" policy with Winterthur Swiss Insurance (Asia)
Limited under Policy No. 01149627 and a Group Life and Health Insurance
Policy with Top Glory Insurance Company (Bermuda) Limited under Policy
No. 203730055.
(c) MARKET BEHAVIOUR (SINGAPORE) PTE LIMITED. An "office all in" policy with
Eagle Star Insurance under Policy No. ESD/POMR/96001284 and a workman's
compensation policy under Policy No. ESD/WWCO/96001468, together with a
medical expenses insurance with Commercial Union Assurance Co. plc under
Policy No. 01A201437HCI.
(d) P.T. CONTINENTAL SENTRATAMA SURVEYS in Indonesia, a fire and theft cover
with ING Insurance under Policy No. 8.3981297 and a medical expenses
insurance with CAR Asurans ljiwa under Policy No. 073209PST. There are
also vehicle insurances in Indonesia but details are not available for
inclusion in this Schedule.
(e) MARKET BEHAVIOUR (MALAYSIA) SDN BHD. A "commercial package insurance
(Nine to Five)" policy with American Home Assurance Company under Policy
No. 65410184 through to April 1998 and a group life insurance, medical
and permanent health insurance policy with American International
Assurance Co. under Policy No. GL50366, through April 1998.
(f) MARKET BEHAVIOUR (INTERNATIONAL) LIMITED (TAIWAN). This Company
maintains compulsory government insurances in respect of employee's
pension, injury compensation and maturity liabilities and in respect of
medical expenses. The Company also maintains additional covers in
respect of medical expenditure and life assurance depending on an
employee's length of service and status. Details are not available for
inclusion in this Schedule.
(g) MBL RESEARCH AND CONSULTANCY GROUP (P) LIMITED. A separate Schedule of
the insurances in place in respect of the Indian company is attached.
(h) MARKET BEHAVIOUR (THAILAND) LIMITED (THAI COMPANY). This Company
maintains insurances in respect of the office contents and cash held at
the premises, medical expenses
<PAGE>
(policies in respect of both local staff and the expatriate staff), life
assurance and vehicles. Details of the policies are not available for
inclusion in this Schedule.
(i) TRENDS-MBL, INC. A separate list of insurance policies maintained in the
Philippines is annexed.
(j) MARKET BEHAVIOUR LANKA (PVT) LIMITED. This Company maintains insurances
in respect of the office and its contents, medical expenses and life
assurance, public liability and vehicle insurances (three vehicles).
Details are not available for inclusion in this Schedule.
(k) MERAC WLL LIMITED. This Company maintains insurances with Norwich
Winterthur Insurance (Gulo Limited in respect of office "multicover"
under Policy No. 1102DO0048, group medical expenses cover under Policy
No. 0545DO0052 and group personal accident cover under Policy No.
064-1,DOOO48. Appropriate insurances are also maintained by MERA.Cs
subsidiary company in Egypt and its associated company in Saudi Arabia,
but details are not available for inclusion in this Schedule.
<PAGE>
RE: MBL RESEARCH AND CONSULTANCY GROUP (P) LTD.
Insurance
---------
<TABLE>
<CAPTION>
Policy No. Date Location Risk Covered Premium Paid Validity Period
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11/97/00174 New Delhi office equpt./Fire Rs. 591.00 17.6.96 to 16.6.97
14.6.96 policy
2123009/000/ New Delhi office equpt./ Rs. 2363.00 17.6.96 to 16.6.97
46/97 Burglary
00109 dt:20.6.96
Provisional New Delhi Cash insurance Rs. 698.00 17.6.96 to 16.6.97
cover note
no. 635462/14.6.96
050303/011/11 Hyderabad Fire policy Rs. 512.00 03.4.96 to 02.4.97
00154/96
050303/46/03 Hyderabad Burglary Rs. 3399.00 13.4.96 to 12.4.97
31001/96 dt:1.4.96
96/98 dt:19.6.96 Bombay Burglary Rs. 6003.00 19.6.96 to 18.6.96
120200/11/1/A/ Bombay Fire Rs. 477.00 19.6.96 to 18.6.97
29504/96 dt:19.6.96
96/98 dt:24.6.96 Bombay Burglary Rs. 720.00 19.6.96 to 18.6.97
4001/F/A/10229/97 Madras Fire Rs. 30.00 01.7.96 to 30.6.97
102/1162 dt:12.7.96 Kodambakkam
411901/F/A/ Madras/ Fire Rs. 30.000 18.7.96 to 17.7.97
10288/97 K.K. Nagar
050303/11/0314/ Hyderabad Computer Fire Rs. 337.00 29.11.95 to 28.11.96
95 dt:29.11.95
050303/05/03091/ Hyderabad Computer/ Rs. 1351.00 29.11.96 to 28.11.96
95 dt:29.11.95 Burglary
050503/11/0308/95 Bangalore Fire/Computers Rs. 30.00 24.11.95 to 23.11.96
dt:24.11.95
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
050303/46/03/ Bangalore Burglary/ Rs. 101.00 04.11.96 to
31090/95 Computers
dt:4.11.95
050303/44/11/ Hyderabad Fire/Computers Rs. 1738.00 11.9.96 to 10.9.97
26041/96
dt:11.9.96
050303/11/0318/95 Delhi Fire/Ac Rs. 60.00 06.12.95 to 05.12.96
dt:6.12.95
050303/46/03/ Delhi Burglary/Ac Rs. 245.00 24.11.95 to 23.11.96
31093/95
dt:6.12.95
11/97/00311 Delhi Fire/office equpt. Rs. 213.00 21.8.96 to 20.8.97
dt:20.8.96
212309/904 Delhi Burglary/office Rs. 851.00 21.8.96 to 20.8.97
00000/46/97/00191 equpt.
dt:26.8.96
050303/31 Hyderabad Vehicle Ins. Car Rs. 3841.00 16.07.96 to 15.07.97
001/16/02530/1996 No. AP09G3893
dt:16.7.96
551204/61/00138/96 Hyderabad Vehicle Ins. Car Rs. 5897.00 13.05.96 to 17.04.97
dt:13.5.96 No. AP10H3878
050303/31/001/11/ Hyderabad Vehicle Ins. Car Rs. 12409.00 12.06.96 to 11.06.97
01591/1996 No. AP09J3497
050303/01/21489/95 Hyderabad Vehicle Ins. Car Rs. 3986.00 27.12.95 to 26.12.96
dt:27.7.95 No. AP09F5055
400204/6100/137/96 Hyderabad Vehicle Ins. Car Rs. 5879.00 13.05.96 to 17.04.97
dt:13.5.96 No. AP10H3891
114021 Delhi Vehicle Ins. Car Rs. 9779.00 12.04.96 to 11.04.97
dt:12.4.96 No. PB10M5700
17100/95 Bombay Vehicle Ins. Rs. 8501.00 07.11.95 to 08.11.96
Premier 118
</TABLE>
<PAGE>
TRENDS-MBL
List of all Insurance policies maintained-
<TABLE>
<CAPTION>
INSURANCE PROPERTY/ AMOUNT OF PREMIUM
RISK COVERED COVERAGE EXPIRY DATE PAYMENT
(PESO)
<S> <C> <C> <C> <C>
A. OFFICE EQUIPMENT
FURNITURE & FIXTURE
LEASEHOLD IMPROVEMENT 5-98 11,693
B. AUTOS - COMPREHENSIVE
COVERAGE
1. TOYOTA COROLLA 2-98 10,160
2. TOYOTA COROLLA 310,000 7-97 11,390
3. TOYOTA COROLLA- 5-98 8,229
GAMBOA
4. TOYOTA LAND CRUISER 1,600,000 9-97 36,854
5. TOYOTA COROLLA 300,000 10-97 10,201
C. LIFE INSURANCE 24 X MONTHLY 5-97 17,744
INCLUDING ACCIDENTAL BASE PAY
DEATH-REGULAR
EMPLOYEES
D. MEDICAL INSURANCE 75,000/ILLNESS 6-97 200,500
REGULAR EMPLOYEES PER EMPLOYEE
E. ACCIDENTAL DEATH 10,000/ 5-97 13,630
W/ MEDICAL EMPLOYEE
REIMBURSEMENT
CONTRACTUAL EMPLOYEE
F. EMPLOYEES COMPENSATION VARIOUS CONTINUING P110/EMPLOYEE
AND PAG-IBIG(?) MONTHLY
Contribution (Legislation
by law)
</TABLE>
THAT ALL PREMIUMS ON INSURANCE POLICIES MAINTAINED BY THE COMPANY ARE PAID OR
UP-TO-DATE.
<PAGE>
SCHEDULE 3.29
POTENTIAL CONFLICTS OF INTEREST
-------------------------------
NONE
[FORM OF]
MINORITY SHAREHOLDER
SHARE PURCHASE AGREEMENT
MINORITY SHAREHOLDER SHARE PURCHASE AGREEMENT (the
"AGREEMENT"), dated as of July 11, 1997, between__________________ (the
"SHAREHOLDER"), NFO Research Inc., a Delaware corporation ("NFO"), and NFO UK
Inc., a Delaware corporation ("NFO-UK"), and a wholly-owned subsidiary of NFO.
A. BJM Research and Consultancy Ltd. is a company under the laws of
England and Wales ("MBL SUB"), and is a direct subsidiary of the MBL Group plc,
a company incorporated under the laws of England and Wales (Registration No.
2077760) ("THE MBL GROUP").
B. The Shareholder is the owner of ____ shares of the outstanding
share capital (such Shareholder's shares hereinafter referred to as the
"SHARES") of MBL sub, representing ___ of the issued and outstanding share
capital of MBL Sub.
C. On July 11, 1997, NFO, NFO-UK and the shareholders of The MBL
Group executed and delivered a Share Purchase Agreement, pursuant to which
NFO-UK acquired (the "ACQUISITION") all of the outstanding ordinary shares of
(pound)1.00 each of The MBL Group.
D. Concurrently with the Acquisition, NFO and the Shareholder
negotiated the terms of this Agreement and agreed that (i) on the date hereof,
NFO-UK will purchase from the Shareholder and the Shareholders will sell to
NFO-UK a portion of the Shares owned by the Shareholder aggregating ____ Shares
(the "FIRST PORTION"), and (ii) on the third anniversary of the date hereof, or
on such earlier date that the Shareholder ceases to be employed by MBL Sub,
NFO-UK will purchase form the Shareholder the remaining portion of the Shares
aggregating ___ Shares (the "REMAINING PORTION"), all on the terms and
conditions and for the consideration described below in this Agreement.
E. Simultaneously with the purchase and sale of the First Portion
and on the date hereof, as further inducement to NFO and NFO-UK to enter into
this Agreement, the Shareholder will enter into a three-year Service Agreement
with MBL Sub (the "SERVICE AGREEMENT").
NOW, THEREFORE, in reliance upon the representations and warranties
made herein and in consideration of the mutual agreements contained herein, NFO,
NFO-UK and the Shareholder hereby agree as follows:
1. PURCHASE AND SALE OF SHARES. On the date hereof, the Shareholder
shall deliver to NFO-UK duly executed share transfers in respect of all of the
Shares in favour of NFO-UK (or comparable instruments), together with the
relative share certificates (if appropriate) and all other appropriate documents
required to effect such share transfer duly executed in blank and any power of
attorney or other authority under which such transfers have been executed, to
hold in escrow until sold to NFO-UK in accordance with the terms of this
Agreement.
<PAGE>
(a) SALE AND TRANSFER OF THE FIRST PORTION. On the First
Closing Date (as defined below), the Shareholder shall sell, transfer and assign
to NFO-UK the legal and beneficial ownership in the Shares constituting the
First Portion (including all rights, title and interest in and to any dividends,
cash, instruments and other property that from time to time would thereafter be
received, receivable or otherwise distributed in respect of or in exchange for
any of such Shares) at the closing provided for in Section 2 hereof (herein
called the "FIRST CLOSING" and the date of which is herein called the ("FIRST
CLOSING DATE") for the consideration specified in Section l(b) hereof.
(b) FIRST PORTION PURCHASE PRICE. In consideration for the
First Portion, NFO and NFO-UK shall pay to the Shareholder U.S.$_______ per
Share (the "PER SHARE PURCHASE PRICE") for each Share constituting the First
Portion, for an aggregate purchase price (the "FIRST PORTION PURCHASE PRICE")
equal to U.S.$_______. Payment of the First Portion Purchase Price shall be made
to the Shareholder on the First Closing Date in two parts, (i) U.S.$________
shall be in the form of newly-issued, unregistered shares of common stock, par
value $.01 per share (" NFO COMMON STOCK"), of NFO, and (ii) U.S.$________ shall
be in the form of cash by check or by wire transfer of immediately available
funds to an account designated by the Shareholder. For purposes of calculating
the amount to be paid to the Shareholder in shares of NFO Common Stock in
respect of both the First Portion Purchase Price and the Remaining Portion
Purchase Price (as defined in Section 3(b) hereof), each share of NFO Common
Stock shall be valued at the average of the "closing price" per share of NFO
Common Stock for the 15 consecutive trading day period ending the day before the
First Closing Date or the Second Closing Date, as the case may be. The "closing
price" for any day shall be the last reported sale price or, in the case no such
sale takes place on such day, the average of the last reported bid and ask
quotations for NFO Common Stock on the automated quotation system of the Nasdaq
Stock Market on such day (the "NFO COMMON STOCK VALUATION").
(c) DELIVERY OF FIRST PORTION. On the First Closing Date,
NFO-UK shall remove from escrow the Shares constituting the First Portion,
together with the corresponding duly executed share transfers (or comparable
instruments), relative share certificates (if appropriate) and other documents
required to effect such share transfer and any power of attorney or other
authority in respect thereof held in escrow by NFO-UK.
2. FIRST CLOSING. The First Closing provided for in Section 1 hereof
will take place at the offices of The MBL Group plc, 4-5 Bonhill Street, London,
EC2A 4BX, England at 11:00 a.m., local time, on July 11, 1997 or at such other
time or place or on such other date as NFO-UK and the Shareholder mutually agree
after all requisite approvals as may be required hereunder shall have been
obtained.
3. PURCHASE AND SALE OF THE REMAINING PORTION.
(a) SALE AND TRANSFER OF THE REMAINING PORTION. On the Second
Closing Date (as defined below), the Shareholder shall sell, transfer and assign
to NFO-UK the legal and beneficial ownership in the Shares constituting the
Remaining Portion (including all rights, title and interest in and to any
dividends, cash, instruments and other property that from time to time would
thereafter be received, receivable or otherwise distributed in respect of or in
exchange for any of such Shares) at the closing provided for in Section 4 hereof
(herein called the "SECOND CLOSING" and the date of which is herein called the
"SECOND CLOSING DATE") for the consideration specified in Section 3(b) hereof,
PROVIDED, HOWEVER, that if the
2
<PAGE>
Shareholder ceases to be employed by MBL Sub prior to the third anniversary of
the date hereof as a result of termination by MBL Sub pursuant to Section
13.2(a) of the Service Agreement or termination of the Service Agreement by the
Shareholder, the Second Closing shall occur on a date not more than thirty days
following the date of any such cessation of employment (and such date shall be
considered the Second Closing Date), and the consideration to be paid by NFO and
NFO-UK for the Remaining Portion at such time shall be equal to the product of
(i) the Per Share Purchase Price MULTIPLIED by (ii) the number of Shares
constituting the Remaining Portion MULTIPLIED by (iii) 0.5, payable entirely in
cash on such Second Closing Date.
(b) REMAINING PORTION PURCHASE PRICE. So long as the
Shareholder is employed by MBL Sub (or another subsidiary or affiliate of MBL
Sub) until the third anniversary of the date hereof or if the Shareholder ceases
to be employed by MBL Sub prior to the third anniversary of the date hereof as a
result of termination by MBL Sub that is not pursuant to Section 13.2(a) of the
Service Agreement, in consideration for the Remaining Portion, NFO and NFO-UK
shall pay to the Shareholder on the Second Closing Date an aggregate purchase
price (the "REMAINING PORTION PURCHASE PRICE" ) equal to the U.S. Dollar
equivalent of the product of (i) the quotient calculated by dividing Net Income
(as defined in Section 3(c) hereof) for the periods ending December 31, 1997,
December 31, 1998 and December 31, 1999 by 3 (the "THREE-YEAR AVERAGE NET
INCOME") MULTIPLIED by (ii) 12.65 MULTIPLIED by (iii) 0.01 PROVIDED, HOWEVER,
that under no circumstance will the Remaining Portion Purchase Price be less
than an amount equal to the product of (i) the Per Share Purchase Price
MULTIPLIED by (ii) the number of Shares constituting the Remaining Portion. The
Remaining Portion Purchase Price shall be payable 25% in the form of
newly-issued, unregistered shares of NFO Common Stock, based on the NFO Common
Stock Valuation calculated at the Second Closing Date as specified in Section
l(b) hereof and 75% in the form of cash by check or by wire transfer of
immediately available funds to an account designated by the Shareholder. For
purposes hereof, the Remaining Portion Purchase Price shall be calculated using
the U.S. Dollar - U.K. Pound spot exchange rate published in the New York
edition of the WALL STREET JOURNAL two days prior to the Second Closing Date.
(c) DEFINITION OF NET INCOME. For purposes of this Agreement,
"Net Income" shall be determined in accordance with United Kingdom generally
accepted accounting principles prepared on a basis consistent with the past
practices of MBL Sub, and defined as the after-tax income of MBL Sub, excluding
extraordinary items, minority interest expenses and cumulative effect of
accounting changes (as provided in the audited financial statements of MBL Sub
for the relevant periods), PROVIDED, that, if applicable to MBL Sub, Net Income
shall be adjusted as appropriate (to the extent not already adjusted) for the
allocation of all regional and MBL Group holding company-related costs on a
commercially reasonable and fair basis.
(d) DELIVERY OF REMAINING PORTION. On the Second Closing Date,
NFO-UK shall remove from escrow the remaining Shares (constituting the Remaining
Portion), together with the corresponding duly executed share transfers (or
comparable instruments), the relative share certificates (if appropriate) and
other documents required to effect such transfer and any power of attorney or
other authority in respect thereof held in escrow by NFO-UK.
3
<PAGE>
4. SECOND CLOSING. The Second Closing provided for in Section 3
hereof (subject to the proviso contained therein) will take place at the offices
of The MBL Group plc, 4-5 Bonhill Street, London EC2A 4BX, England at 10:00
a.m., local time, on the third anniversary of the date hereof or at such other
time or place or on such other date as NFO-UK and the Shareholder mutually agree
after all requisite approvals as may be required hereunder shall have been
obtained.
5. REPRESENTATIONS AND WARRANTIES OF NFO AND NFO-UK. NFO and NFO- UK
represent and warrant to the Shareholder that on the date hereof and on the
Second Closing Date:
(a) ORGANIZATION AND GOOD STANDING. Each of NFO and NFO-UK is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, with full corporate power and authority to
conduct its business as it is now being conducted, and to own or use the
properties or assets that it purports to own or use. Each of NFO and NFO-UK is
duly qualified to do business and is in good standing in each jurisdiction
except where the failure to be so qualified would not have material adverse
effect on its business, financial condition or results of operations.
(b) AUTHORITY, NO CONFLICT. This Agreement constitutes the
legal, valid and binding obligation of each of NFO and NFO-UK, enforceable
against each of NFO and NFO-UK in accordance with its terms, subject as to
enforcement, to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting, creditors' rights generally and to general principles of
equity (regardless of whether enforcement is sought at a proceeding at law or
equity). The execution and delivery of this Agreement and the consummation or
performance thereof by NFO and NFO-UK has been duly authorized by all necessary
corporation action of each of NFO and NFO-UK and do not contravene the terms of
its Certificate of Incorporation or By-laws, or any material contract,
agreement, license or permit to which NFO or NFO-UK may be a party.
(c) STATUS OF NFO SHARES. All shares of NFO Common Stock
delivered pursuant to this Agreement shall, when delivered, be duly authorized,
validly issued, fully paid and non-assessable.
(d) PRIVATE OFFERING; BROKERS AND FINDERS. No form of general
solicitation or general advertising was used by either NFO or NFO-UK or any
representatives thereof in connection with the transactions contemplated hereby,
and neither NFO nor NFO-UK has employed any broker, finder, consultant or
intermediary in connection with the transactions contemplated by this Agreement
which would be entitled to a broker's, finder's or similar fee or commission in
connection therewith or upon the consummation thereof.
6. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The
Shareholder represents and warrants to NFO and NFO-UK that on the date hereof
and on the Second Closing Date:
(a) AUTHORITY; NO CONFLICT. This Agreement constitutes the
legal, valid and binding obligation of the Shareholder, enforceable in
accordance with its terms, subject as to enforcement, to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally and to general principles of equity (regardless of whether enforcement
is sought at a proceeding at law or equity). The execution and
4
<PAGE>
delivery of this Agreement and the consummation or performance thereof by the
Shareholder do not contravene the terms of any contract, agreement, license or
permit to which the Shareholder may be a party.
(b) TITLE TO THE SHARES. The Shareholder has full power and
the right to transfer the legal and beneficial title to the Shares. The Shares
are now and shall on the Second Closing Date be free from all claims, options,
restrictions, liens, mortgages, charges and other encumbrances (whether monetary
or not) or security interest of any kind and from all other rights exerciseable
by third parties and the Shareholder will execute at its own cost and expense
such documents as NFO considers necessary to transfer the legal and beneficial
ownership of the Shares to NFO and secure to NFO the rights attaching thereto.
(c) PRIVATE OFFERING. Prior to the date hereof the Shareholder
(i) has been given full access to all material information concerning the
business, assets, financial condition or results of operations of NFO (the
"CONDITION OF NFO") to which it has requested access; (ii) has had an
opportunity to ask questions of, and to receive information from, NFO and
persons acting on its behalf concerning the Condition of NFO; (iii) has
conducted an independent investigation of the business affairs and financial or
other conditions of NFO; (iv) acknowledges that (A) he is not a citizen of the
United States; (B) he resides on a full time basis and is physically located
outside of the United States; and (C) his decision to invest in shares of NFO
Common Stock was fully made outside of the United States; (v) acknowledges that
he has been advised that the shares of NFO Common Stock being acquired by him
have not been registered under the Securities Act; and that NFO has no intention
to register such shares under the Securities Act; and (vi) is acquiring the
shares of NFO Common Stock for his own account for investment and not for resale
or distribution.
(d) NO MATERIAL ADVERSE CHANGE. To the Shareholder's
knowledge, after due inquiry, since the First Closing Date (i) there has been no
material adverse change in the business, financial condition, results of
operations or prospects (the "CONDITION") of MBL Sub that the Shareholder has
not reported to NFO; (ii) there is no condition or state of facts or any change
that is threatened that if it were to occur could reasonably be expected to have
a material adverse effect on the Condition of MBL Sub that the Shareholder has
not reported to NFO; and (iii) there has not been any damage, destruction or
loss materially adversely affecting the Condition of MBL Sub (whether or not
covered by insurance) that the Shareholder has not reported to NFO.
7. CERTAIN COVENANTS AND AGREEMENTS.
(a) FURTHER ASSURANCES. Subject to the terms and conditions of
this Agreement, the parties hereto hereby agree to use all reasonable efforts to
take or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, including duly preparing and filing all necessary applications
with the appropriate banking and/or governmental authorities and all other
actions as may be required under any applicable laws, to consummate the
transactions contemplated by this Agreement. The parties agree to execute and
deliver such other documents, certificates, agreements and other writings and to
take such other actions as may be reasonably necessary or desirable in order to
consummate or implement expeditiously the transactions contemplated by this
Agreement.
(b) SHAREHOLDERS' AGREEMENT. During the period commencing on
the date hereof and ending on the Second Closing Date, the Shareholder agrees
not to in any
5
<PAGE>
way encumber, assign, sell, convey, transfer or dispose of, in whole or in part,
whether voluntarily or by operation of law, and whether outright or for security
any of his Shares (whether all of the Shares or the Shares constituting the
Remaining Portion). Any attempt to transfer any Shares or any rights thereunder
in violation of the preceding sentence shall be null and void AB INITIO and MBL
Sub shall refuse to register any such transfer.
(c) HOLDING PERIOD. The Shareholder agrees not to, directly or
indirectly, offer, sell, contract to sell, grant any option to purchase or
otherwise dispose of (directly or indirectly) any shares of NFO Common Stock
delivered to the Shareholder pursuant to this Agreement (whether on the First
Closing Date, the Second Closing Date or otherwise) for a period of one year
following the date of any such delivery or such longer time as required by
United States securities laws.
(d) RETURN OF SHARES. If NFO-UK fails or refuses to purchase
any Shares for any reason on the First Closing Date or the Second Closing Date
pursuant to this Agreement, then, after a sixty day period following delivery of
notice by the Shareholder as to such failure during which NFO and NFO-UK shall
be entitled to cure any such failure or refusal to purchase, NFO-UK shall
surrender to the Shareholder all Shares it shall at that time be holding in
escrow pursuant to Section 1 hereof.
(e) GUARANTEE. NFO agrees to cause NFO-UK to meet all of its
payment obligations hereunder.
(f) CONDUCT. The parties hereto hereby agree, prior to the
First Closing Date through the Second Closing Date, not to take any action or
actions (or omit to take any action or actions), that would cause any of the
representations and warranties contained in this Agreement to be untrue.
(g) SPECIFIC PERFORMANCE. The parties hereto intend that all
of the parties have the right to seek damages or specific performance in the
event that any other party hereto fails to perform such party's obligations
hereunder. Therefore, if any party shall institute any action or proceeding to
enforce the provisions hereof, any party against whom such action or proceeding
is brought hereby waives any claim or defense therein that the plaintiff party
has an adequate remedy at law.
(h) RIGHT OF DISCHARGE RESERVED. The Shareholder hereby
acknowledges and agrees that nothing in this Agreement shall confer upon the
Shareholder the right to continue in the service of MBL Sub or any of its
affiliates or affect the right that MBL Sub or such affiliate may have to
terminate the service of the Shareholder.
8. INDEMNIFICATION.
(a) SURVIVAL OF REPRESENTATIONS. The representations and
warranties of NFO-UK and the Shareholder shall survive the closing dates until
the expiration of twelve months after the Second Closing Date.
(b) INDEMNIFICATION OF NFO AND NFO-UK. Effective upon the
First Closing, the Shareholder hereby agrees to indemnify and hold NFO-UK
harmless from and against any claim, loss, damage, liability, obligation, or
expense (including, without limitation, costs and expenses of litigation and
reasonable attorneys' fees) ("LOSSES" ) incurred by NFO-
6
<PAGE>
UK or any of its subsidiaries and affiliates occurring as a result of or arising
from any breach of any representation or warranty or failure to do and perform
any covenant or agreement of the Shareholder contained herein up to an amount
equal to the sum of the First Portion Purchase Price plus the Remaining Portion
Purchase Price; PROVIDED, that there can be no claim of breach for Losses
occurring as a result of or arising from the Shareholder's failure to notify
NFO-UK of a material adverse change in the condition of MBL Sub pursuant to
Section 6(d) hereof in the event of (i) a change in overall economic or
political conditions in the industry and/or jurisdiction in which MBL Sub
conducts its business; (ii) acts of God; or (iii) riot, war or armed conflict.
(c) INDEMNIFICATION OF THE SHAREHOLDER. Effective upon the
First Closing, NFO-UK hereby agrees to indemnify and hold the Shareholder
harmless from any Losses incurred by the Shareholder occurring as a result of or
arising from any breach of a representation or warranty or failure to do and
perform any covenant or agreement of NFO-UK contained herein.
9. EXPENSES. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.
10. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York (without regard
to its law with respect to conflicts of laws), including all matters of
construction, validity, and performance; PROVIDED, that no award for punitive
damages relating to the breach or alleged breach of this Agreement shall be
permitted.
11. COUNSEL. Each party acknowledges that it has been or has had the
opportunity to be represented by independent legal counsel of its own choice
through all of the negotiations which preceded the execution of this Agreement.
Each party acknowledges that it has read this Agreement and consents to all the
terms and conditions contained herein without any reservation whatsoever and it
had the same explained by counsel, who have answered any and all questions which
has been asked with regard to the meaning of any of the provisions hereof.
12. NOTICES. All notices, requests, permissions, waivers, and other
communica tions hereunder shall be in writing and shall be deemed to have been
duly given if signed by the respective persons giving them (in the case of any
corporation the signature shall be by an officer thereof) and delivered by hand,
by telecopier (with a confirmed receipt thereof) or deposited in the United
States mail (registered, return receipt requested), properly addressed and
postage prepaid:
(a) if to the Shareholder, to:
c/o BJM Research and Consultancy Ltd.
4-5 Bonhill Street
London EC2A 4BX
England
Telecopy No.:______________________
with a copy to:
7
<PAGE>
Winward Fearon
35 Bow Street
London WC2E 7AU
England
Telecopy No.: 011-44-171-420-2801
Attention: Adrian Luto, Esq.
(b) if to NFO-UK, to:
c/o NFO Research, Inc.
2 Pickwick Plaza
Suite 400
Greenwich, Connecticut 06830
Telecopy No.: (203) 629-8885
Attention: Chief Financial Officer
(c) with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Telecopy No.: (212) 757-3990
Attention: James M. Dubin, Esq.
Such names and addresses may be changed by such notice.
13. ENTIRE AGREEMENT, AMENDMENTS, ETC. This Agreement contains the
entire understanding of the parties hereto with respect to the subject matter
contained herein and therein supersedes and cancels all prior agreements with
respect hereto and thereto (including, without limitation, all prior shareholder
agreements relating to MBL Sub to which the Shareholder may be a party) and may
be amended only by a written instrument executed by the parties or their
respective successors or assigns. There are no restrictions, promises,
representations, warranties, agreements or undertakings of any party hereto with
respect to the transactions under this Agreement other than those set forth
herein or made hereunder. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. This Agreement may be executed in
one or more counterparts and each counterpart shall be deemed to be an original.
14. BINDING EFFECT, ASSIGNMENT. This Agreement shall be binding upon
and shall inure to the benefit of the parties and their respective successors
and legal representatives. This Agreement is not assignable except by operation
of law, except that NFO-UK may assign its rights hereunder to any of its
affiliates or to any successor to all or substantially all of its business or
assets.
15. SEVERABILITY. The invalidity of any portion hereof shall not
affect the validity, force, or effect of the remaining portions hereof.
8
<PAGE>
16. WAIVER. The parties may by subsequent written agreement (i)
extend the time for the performance of any of the obligations or other acts of
the parties hereto; (ii) waive any inaccuracies in the representations contained
in this Agreement or in any document delivered pursuant to this Agreement; (iii)
waive compliance with or modify any of the covenants contained in this
Agreement; and (iv) waive or modify performance of any of the obligations of any
of the parties hereto. Any agreement on the part of any party for such
extension, modification or waiver shall be validly and sufficiently authorized
for the purposes of this Agreement if in writing and authorized by the proper
officers of NFO-UK on behalf of NFO-UK and by the Shareholder.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
-------------------------------
NFO RESEARCH, INC.
By:
-----------------------------------
Name: Patrick G. Healy
Title: Executive Vice President-
Finance and Chief Financial
Officer
NFO UK, INC.
By:
-----------------------------------
Name: Patrick G. Healy
Title: Executive Vice President
9
EXHIBIT 3
NEWS RELEASE
CONTACT: Patrick G. Healy
Executive Vice
President -
Finance and CFO
203-629-4627
e-mail: [email protected]
NFO RESEARCH, INC. ACQUIRES THE MBL GROUP PLC;
PROVIDES NFO WITH IMMEDIATE MARKET RESEARCH
CAPABILITIES IN EUROPE, MIDDLE EAST, INDIA AND SOUTHEAST ASIA
Greenwich, Connecticut -- July 14, 1997 -- NFO Research, Inc. (NASADAQ.NFOR)
today announced the acquisition of 100% of the outstanding stock of the MBL
Group Plc, a leading international market research firm with 27 offices in 17
countries throughout the world. The acquisition was effected through the
issuance of approximately 1.36 million shares of NFO common stock. NFO also
announced that it has or will shortly enter into agreements with minority
shareholder employees of the various MBL Group operating companies whereby NFO
has agreed to repurchase a portion of the minority shares during 1997 and the
remainder in three years. The total purchase price for 100% of the outstanding
stock of all The MBL Group companies is estimated to be US$55 million. The
acquisition, excluding transaction costs, is expected to have a positive effect
on NFO's 1997 earnings per share.
The MBL Group Plc operating companies span the UK, the Middle East, Asia,
Mainland China and Southeast Asia. Its operating companies have a very strong
market presence, generally ranking within the top three companies in MBL's
Southeast Asian markets and ranking ninth in the UK. MBL's revenues in 1996 were
approximately US$45 million, assuming full consolidation of all subsidiaries and
affiliates. Market research industry data indicate that this combination will
make NFO the largest US-based custom market research firm and the ninth largest
market research organization in the world.
William E. Lipner, Chairman and Chief Executive Officer of NFO Research, Inc.,
said, "The addition of MBL, with its wide geographic presence, strong client
relationships and excellent staff resources and proprietary systems, is a very
significant step forward in NFO's evolution into a worldwide marketing
information business. This broader geographic platform creates exciting
opportunities to further expand NFO's vertical presence in our critical high
growth markets such as healthcare, financial services and hi-tech market
segments. In addition, we're looking forward to the opportunity to extend our
worldwide access panel activities utilizing MBL's operations across the Middle
East, Asia and the Asia-Pacific region."
Lipner added, "John and Mary Goodyear and their worldwide MBL Group management
team have built an outstanding network of market research companies in areas of
keen interest to us. The MBL Group's origins are in the UK, and their British
operations are very strong - both in the UK research and internationally and
will
<PAGE>
significantly increase and strengthen our presence there. At the same time,
MBL's strong market presence in the Asia-Pacific region, India, China and the
Middle East will provide NFO with strong capabilities in these high growth
markets. This addition to our established operations in the US and Europe
positions NFO as a truly global research services provider. We are delighted
that The MBL Group has become part of the NFO worldwide organization."
John R. Goodyear, Chairman and CEO of The MBL Group Plc, said, "I am pleased to
have the MBL group of companies link up with NFO and play a leading role in
helping to make NFO one of the world's top multi-country international research
groups.
"Combining our interests with those of NFO has major advantages for both sides.
We bring to NFO and its subsidiaries unparalleled international experience over
more than a quarter of a century and more than 100 countries worldwide -- with
great strength in the markets of the Middle East, Asia and Southeast Asia. NFO
brings to us its own expertise as well as that of its subsidiaries, not only in
access panels, but in such sectors as healthcare research, financial services,
hi-tech, travel and customer satisfaction research.
"Joining forces with NFO brings with it the resources and strengths of a public
company and will provide an even stronger basis for growth and development than
The MBL Group companies alone have achieved over the last decade. The two groups
have fantastic complementarity and together provide a really strong springboard
for worldwide development. The future looks great!"
NFO Research, Inc. is a leading provider of custom and syndicated market
information to America's largest companies as well as the international business
community. Through its pre-recruited consumer panel and other specialized
databases, NFO offers access to more than 525,000 US households (over 1.3
million people) and, through a joint venture, to over 100,000 European
households. The Company provides its services to over 1,700 clients in key
market segments such as packaged goods and foods, healthcare, financial
services, hi-tech/telecommunications and travel & leisure. The Company now
provides its services in 21 countries and has over 4,400 full and part-time
employees.
Statements in this press release relating to matters that are not historical
facts are forward-looking statements. Such forward-looking statements are based
on the Company's current forecasts and actual results may differ materially. To
understand the risks which may affect the Company's future performance, please
refer to Part 1 of NFO's 1996 Annual Report of Form 10-K.
