<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 24, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
MEDIA METRIX, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 8732 11-3374729
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
-----------------------
35 EAST 21(ST) STREET
NEW YORK, NEW YORK 10010
(212) 460-7980
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
-----------------------------
TOD JOHNSON
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
MEDIA METRIX, INC.
35 EAST 21(ST) STREET
NEW YORK, NEW YORK 10010
(212) 460-7980
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-----------------------------
with copies to:
<TABLE>
<S> <C>
RICHARD H. GILDEN, ESQ. ALEXANDER D. LYNCH, ESQ.
STEVEN I. SUZZAN, ESQ. BABAK YAGHMAIE, ESQ.
FULBRIGHT & JAWORSKI L.L.P. BROBECK, PHLEGER & HARRISON LLP
666 FIFTH AVENUE 1633 BROADWAY, 47(TH) FLOOR
NEW YORK, NEW YORK 10103 NEW YORK, NEW YORK 10019
(212) 318-3000 (212) 581-1600
</TABLE>
-----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
-----------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
-----------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE (1) REGISTRATION FEE
<S> <C> <C>
Common stock, $.01 par value per share $48,300,000 $13,427.40
</TABLE>
(1) Estimated solely for purpose of calculating the registration fee pursuant to
Rule 457(o) under the Securities Act of 1933, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
WE WILL AMEND AND COMPLETE THE INFORMATION IN THIS PROSPECTUS. ALTHOUGH WE ARE
PERMITTED BY US FEDERAL SECURITIES LAWS TO OFFER THESE SECURITIES USING THIS
PROSPECTUS, WE MAY NOT SELL THEM OR ACCEPT YOUR OFFER TO BUY THEM UNTIL THE
DOCUMENTATION FILED WITH THE SEC RELATING TO THESE SECURITIES HAS BEEN DECLARED
EFFECTIVE BY THE SEC. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES
OR OUR SOLICITATION OF YOUR OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION
WHERE THAT WOULD NOT BE PERMITTED OR LEGAL.
<PAGE>
SUBJECT TO COMPLETION -- FEBRUARY 24, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS
, 1999
LOGO
SHARES OF COMMON STOCK
- ----------------------------------------------------------------------
THE COMPANY:
THE OFFERING:
- We are the leading provider
of
- Media Metrix is offering
shares of its Internet
audience
measurement
common stock.
products and services.
- The underwriters have an
option to
- Media Metrix, Inc.
purchase an additional
shares 35 East 21(st)
Street
from Media Metrix and shares
New York, New York 10010
from existing stockholders to
cover (212) 460-7980
over-allotments.
- This is our initial public
offering, and
PROPOSED SYMBOL & MARKET:
no public market currently
exists for
- MMXI/Nasdaq National Market
our shares.
- We plan to use the proceeds
from
this
offering for international
expan sion,
new product development, to
redeem
all outstanding shares of
redeemable
preferred stock and for
general
corporate purposes,
includ ing
working capital.
- Closing: , 1999
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Per Share Total
- ----------------------------------------------------------------------
<S> <C> <C>
Public offering price (Estimated): $ $
Underwriting fees:
Proceeds to Company:
- ----------------------------------------------------------------------
</TABLE>
THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 4.
- --------------------------------------------------------------------------------
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS DETERMINED WHETHER THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. NOR HAVE THEY MADE, NOR WILL THEY MAKE, ANY
DETERMINATION AS TO WHETHER ANYONE SHOULD BUY THESE SECURITIES. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
DONALDSON, LUFKIN & JENRETTE
BANCBOSTON ROBERTSON STEPHENS
<PAGE>
[INSERT GRAPHICS]
Media Metrix: The Power of Relevant Knowledge The Authoritative Source for
Internet Audience Measurement
[Graphic Showing click-by-click details from two panelists data logs.]
[Graphic of four computer screens on gatefold. First screen in top left corner
has picture of Top Rankings list from the Media Metrix Web site. Second screen
in top right corner has picture of a press release captioned "Media Metrix
Releases Results of '98 Holiday Shopping Season." Third screen in middle right
of page shows Web Report: Travel/Tourism. Fourth screen in middle bottom shows a
site analysis report from the Media Metrix Web site.]
Text to left of first screen: Internet Ratings. Our customers rely on our
audience measurement data to make critical business decisions.
Text to right of second screen:
Text above third screen: Competitive Intelligence. Media Metrix's in depth
clickstream data provides market and competitive intelligence to companies
competing in the digital age.
Text to the right of fourth screen: Ad Buying and Selling. Media Metrix audience
ratings are used as a basis for buying and selling Internet advertising.
[Graphic in center of page is a three dimensional axis.]
One spoke ends in caption "What We Deliver." Listed along axis are, in order
from center: audience ratings, e-commerce tracking, demographic segmentation,
custom analysis and technology usability. Arrow points from "audience ratings"
on spoke to fourth screen.
Second spoke ends in "What We Measure." Listed along axis are, in order from
center: software and hardware, digital media, internet, online services and
world wide web. Arrow points from "internet" on axis to first screen.
Third axis ends in "Who Uses It." Listed on axis are, in order from center:
technology companies, financial analysts, web sites, ad agencies, e-commerce
marketers and media organizations. Arrow points from "financial analysts" on
axis to third screen. Arrow points from "e-commerce marketers" on axis to second
screen.
Logo in lower left corner.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary............................
Risk Factors..................................
Use of Proceeds...............................
Dividend Policy...............................
Capitalization................................
Dilution......................................
Selected Financial Data.......................
Management's Discussion and Analysis of
Financial Condition and Results of
Operations..................................
Business......................................
<CAPTION>
PAGE
<S> <C>
Management....................................
Certain Transactions..........................
Principal Stockholders........................
Description of Capital Stock..................
Shares Eligible for Future Sale...............
Underwriting..................................
Legal Matters.................................
Experts.......................................
Where You Can Find Additional Information.....
Index to Financial Statements................. F-1
</TABLE>
<PAGE>
PROSPECTUS SUMMARY
THE INFORMATION BELOW IS ONLY A SUMMARY OF MORE DETAILED INFORMATION
INCLUDED IN OTHER SECTIONS OF THIS PROSPECTUS. THE OTHER INFORMATION IS
IMPORTANT, SO PLEASE READ THIS ENTIRE PROSPECTUS CAREFULLY. UNLESS STATED
OTHERWISE, THE INFORMATION CONTAINED IN THIS PROSPECTUS ASSUMES THAT THE
UNDERWRITERS' OVER-ALLOTMENT OPTION IS NOT EXERCISED AND THAT WE HAVE COMPLETED
A 1.4648-FOR-ONE SPLIT OF OUR COMMON STOCK, WHICH IS EXPECTED TO OCCUR PRIOR TO
THE CLOSING OF THIS OFFERING.
MEDIA METRIX
OUR BUSINESS
We are the leading provider of Internet audience measurement products and
services. We measure usage of the entire Internet, including the Web and
proprietary on-line services like America Online. Our products and services
enable the continued growth and development of the Internet by providing
reliable, third-party audience measurement data that our customers use as a
basis for making critical business decisions. We collect these data by measuring
Internet usage from a representative sample, or panel, of personal computer
users with our proprietary tracking technology. We maintain the largest panel of
Internet users under continuous measurement in the world. We have the only panel
currently reporting Internet usage both at work and at home, as well as the
usage of proprietary on-line services. We are the authoritative source for
Internet audience measurement data. In January 1999, our data were cited in more
than 400 print and on-line articles.
We have been at the forefront of the development and coordination of
technology and standards needed to facilitate advertising and transactions
between companies doing business over the Internet. Our customers include most
of the leading Internet advertisers and advertising agencies, the most heavily
trafficked Internet properties, leading technology companies and financial
institutions. They include Amazon.com, America Online, Buena Vista/Disney, eBay,
E*Trade, Fidelity, IBM, Infoseek, Interpublic Group, Microsoft, Omnicom, Time
Warner and Yahoo! The quality and depth of our customer base and our high
customer retention rate reflect our position as the leading Internet audience
measurement service.
OUR MARKET OPPORTUNITY
Advertising is a critical revenue stream for providers of Internet content
and services. As Web sites and on-line content providers seek to increase
advertising revenues, and as on-line advertisers seek to determine where they
should spend their marketing dollars, demand is growing for reliable statistics
and standardized methods to evaluate Internet usage. As a result, a standard for
Internet audience measurement must emerge which will:
- measure a large and representative sample of Internet users;
- track activity on the entire Internet, not just the Web, so that key
properties like America Online and other proprietary on-line services and
technologies are included;
- measure the Internet audience both at work and at home, because Internet
usage differs in these two environments; and
- be unbiased and independent from advertisers and content providers.
OUR STRATEGY
Our goal is to capitalize on our current leadership position in order to
become the accepted standard for Internet audience measurement. We intend to
achieve this goal through the following strategies:
- continue our industry leadership;
- develop products to accelerate e-commerce growth;
- expand and increase penetration of our client base;
- expand internationally; and
- develop new products and services.
OUR HISTORY
Our business was originally conducted as a division within The NPD Group,
Inc., a leading marketing research firm. In March 1996, NPD formed PC Meter, a
Delaware limited partnership, to conduct our business. We were formed as a
Delaware corporation in March 1997. In April 1997, we
1
<PAGE>
merged with PC Meter. In November 1998, we merged with RelevantKnowledge, Inc.,
our leading competitor.
Our principal executive offices are located at 35 East 21(st) Street, New
York, New York 10010, and our telephone number is (212) 460-7980.
Media Metrix, PC Meter, RelevantKnowledge, E-Trends, The Power of Relevant
Knowledge, and the Media Metrix logo are our trademarks. Any other trademark,
trade name or service mark of any other company appearing in this prospectus
belongs to its holder.
THE OFFERING
<TABLE>
<S> <C>
Common stock offered by Media Metrix......... shares
Common stock to be outstanding after the
offering................................... shares
Use of proceeds.............................. We intend to use the net proceeds from this
offering to fund international expansion, new
product development, the redemption of our
outstanding redeemable preferred stock and
for general corporate purposes, including
working capital.
Proposed Nasdaq National Market Symbol....... MMXI
</TABLE>
The outstanding share information is based on our shares outstanding as of
January 31, 1999. This information excludes:
- 153,072 shares of common stock subject to options granted under our 1998
Equity Incentive Plan and outstanding as of January 31, 1999 at a weighted
average exercise price of $2.39 per share;
- 496,283 shares of common stock subject to options granted under our
earlier Stock Option Plan and outstanding as of January 31, 1999 at a
weighted average exercise price of $0.84 per share;
- 579,328 additional shares of common stock reserved for issuance under our
1998 Equity Incentive Plan; and
- 899,759 shares of common stock reserved for outstanding warrants at a
weighted average exercise price of $2.32 per share.
2
<PAGE>
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table summarizes the statement of operations data for our
business and our predecessor business. The pro forma data give effect to our
merger with RelevantKnowledge as if it took place on January 1, 1998. For a more
detailed explanation of these financial data, see "Selected Financial Data" and
our financial statements located elsewhere in this prospectus.
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION YEAR ENDED PRO FORMA
THROUGH DECEMBER 31, YEAR ENDED
DECEMBER 31, ------------------------------- DECEMBER 31,
1995 1996 1997 1998 1998
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................................ $ -- $ 1,033 $ 3,188 $ 6,331 $ 8,145
Gross profit (loss)................................. (140) (711) (275) 2,210 1,145
Loss from operations................................ (372) (3,376) (4,679) (7,203) (16,038)
Net loss applicable to common stockholders.......... (372) (3,376) (4,874) (7,452) (16,191)
Basic and diluted net loss per common share
applicable to common stockholders................. $ (0.06) $ (0.52) $ (0.75) $ (0.98) $ (1.49)
Shares used in calculating basic and diluted net
loss per common share applicable to common
stockholders...................................... 6,523 6,523 6,523 7,618 10,856
</TABLE>
The following balance sheet data give effect to our sale of shares of
common stock in this offering at an assumed initial public offering price of
$ per share, after deducting the underwriting discount and estimated offering
expenses, and the application of net proceeds from this offering.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
-------------------------
ACTUAL AS ADJUSTED
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................................................... $ 8,012
Working capital......................................................................... 1,057
Total assets............................................................................ 16,060
Redeemable preferred stock.............................................................. 4,680
Total stockholders' equity.............................................................. 2,622
</TABLE>
3
<PAGE>
RISK FACTORS
BEFORE YOU INVEST IN OUR COMMON STOCK, YOU SHOULD BE AWARE OF VARIOUS RISKS,
INCLUDING THOSE DESCRIBED BELOW. YOU SHOULD CAREFULLY CONSIDER THESE RISK
FACTORS, TOGETHER WITH ALL OF THE OTHER INFORMATION INCLUDED IN THIS PROSPECTUS,
BEFORE YOU DECIDE WHETHER TO PURCHASE SHARES OF OUR COMMON STOCK. ANY OR ALL OF
THESE RISKS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, RESULTS OF
OPERATIONS OR FINANCIAL CONDITION. THE RISKS SET OUT BELOW MAY NOT BE
EXHAUSTIVE. KEEP THESE RISK FACTORS IN MIND WHEN YOU READ FORWARD-LOOKING
STATEMENTS ELSEWHERE IN THIS PROSPECTUS. THESE ARE STATEMENTS THAT RELATE TO OUR
EXPECTATIONS FOR FUTURE EVENTS AND TIME PERIODS. GENERALLY, THE WORDS
"ANTICIPATE," "EXPECT," "INTEND" AND SIMILAR EXPRESSIONS IDENTIFY
FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND
UNCERTAINTIES, AND FUTURE EVENTS AND CIRCUMSTANCES COULD DIFFER SIGNIFICANTLY
FROM THOSE ANTICIPATED IN THE FORWARD-LOOKING STATEMENTS.
WE DO NOT HAVE A LONG OPERATING HISTORY.
We began our operations as a division of NPD in October 1995. We have only
operated as an entity independent of NPD since March 31, 1996. Our operating
history is therefore limited. In addition, we recently merged with
RelevantKnowledge and have been operating as one company only since early
November 1998.
You must consider the risks and difficulties frequently encountered by
early-stage companies in new and rapidly evolving markets. Some of these risks
and uncertainties relate to our ability to:
- anticipate and adapt to our evolving market;
- implement sales and marketing initiatives;
- enhance the Media Metrix brand;
- attract, retain and motivate qualified personnel;
- respond to actions taken by our competitors;
- effectively manage our growth by building a solid base of operations and
technology; and
- integrate acquired businesses, consumer panels, technologies and services.
We cannot assure you that we will be successful in addressing these risks
and uncertainties. Our failure to do so could have a material adverse effect on
our business, results of operations and financial condition.
WE HAVE A HISTORY OF OPERATING LOSSES AND NEGATIVE CASH FLOW.
Our ability to generate significant revenues is uncertain. Although our
revenues have continued to grow, we are not yet profitable. We incurred losses
from operations of $3.4 million in 1996, $4.7 million in 1997 and $7.2 million
in 1998. We expect our operating and net losses to continue. If the merger with
RelevantKnowledge had taken place on January 1, 1998, our pro forma loss from
operations for 1998 would have been $16.0 million. Our ability to generate
profits in the future will depend on a number of factors, including:
- maintaining and enhancing our position as the leading Internet audience
measurement service;
- keeping our costs in line with our budget;
- retaining our existing customers;
- increasing our sales to existing customers;
- obtaining new customers;
4
<PAGE>
- increasing business and consumer acceptance of the Internet as a source of
information and as a place to buy and sell goods and services;
- the growth of advertising and e-commerce on the Internet;
- regulation of the Internet by Federal or local governments;
- the health of the general economy; and
- economic conditions that uniquely affect the Internet.
We intend to invest heavily in our technologies, additional products and
services and international expansion. As a result, we will need to achieve
significant revenue increases to achieve and maintain profitability. Although
our revenues and the number of our clients have continued to increase, we may
not be able to continue to grow and to expand our business. The number of
clients or the number of products and services for which our clients subscribe
may grow more slowly than we anticipate or may decrease in the future. Even if
we become profitable, we may not sustain or increase our profits on a quarterly
or annual basis in the future.
THE INTERNET AUDIENCE MEASUREMENT INDUSTRY IS NEW AND RAPIDLY EVOLVING.
To date, no Internet audience measurement service has been adopted as the
universally accepted standard. Our existing and potential customers may
challenge or refuse to accept our audience measurement reports. Our customers
may be dissatisfied with our methodology for measuring Internet audiences or may
feel that our panel is not representative of Internet users. Furthermore,
another Internet audience measurement service may be adopted as the industry
standard. As a result, our customers may turn to alternative services provided
by current or potential competitors.
WE DEPEND ON CONTINUED GROWTH IN USE OF THE INTERNET.
Our business would be adversely affected if Internet usage for the exchange
of information and for commerce does not continue to grow rapidly. Internet
usage may be inhibited for a number of reasons, including:
- inadequate network infrastructure;
- security concerns;
- inconsistent quality of service; or
- lack of availability of cost-effective, high-speed service.
Even if Internet usage grows, the Internet infrastructure may not be able to
support the demands placed on it by this growth. As a result, its performance
and reliability may decline. In addition, Web sites and proprietary on-line
services have experienced interruptions in their service as a result of outages
and other delays occurring throughout their infrastructure. If these outages or
delays frequently occur in the future, Internet usage as a medium for the
exchange of information and for commerce could grow more slowly or decline.
THE ACCEPTANCE AND EFFECTIVENESS OF INTERNET ADVERTISING IS UNPROVEN.
Our future success will depend on an increase in the use of the Internet as
an advertising medium. The Internet advertising market is new and rapidly
evolving. It cannot yet be compared with the traditional advertising market to
gauge its effectiveness. As a result, there is significant uncertainty about the
demand and market acceptance for Internet advertising. Many of our current or
potential customers have little or no experience using the Internet for
advertising purposes. The adoption of
5
<PAGE>
Internet advertising, particularly by entities that have historically relied on
traditional media for advertising, requires the acceptance of a new way of
conducting business. These companies may find Internet advertising to be less
effective for promoting their products and services as compared to traditional
advertising. In addition, most current and potential Web publisher customers
have little or no experience in generating revenues from the sale of advertising
space on their Web sites. We cannot assure you that the market for Internet
advertising will continue to emerge or will become sustainable. If the market
for Internet advertising fails to develop or develops more slowly than we
expect, then our business, results of operations and financial condition could
be materially and adversely affected.
WE MAY FAIL TO SUCCESSFULLY INTEGRATE RELEVANTKNOWLEDGE.
We recently merged with RelevantKnowledge. Our success will depend, in part,
on our ability to fully integrate the operations and management of
RelevantKnowledge. A successful integration requires, among other things, the
integration of RelevantKnowledge's product offerings and technology into ours
and the coordination of their research and development, sales and marketing and
financial reporting efforts with ours. We cannot assure you that we will
accomplish the integration smoothly or successfully. We cannot assure you that
we will realize the anticipated benefits of the RelevantKnowledge merger. The
success of the integration will require the dedication of management and other
personnel resources which may temporarily distract their attention from our
day-to-day business.
OUR OPERATING RESULTS MAY FLUCTUATE FROM QUARTER TO QUARTER.
Our operating results have varied from quarter to quarter. Our operating
results may continue to vary as a result of a variety of factors. These factors
include:
- our ability to retain our current clients;
- our ability to sell additional products and services to current clients;
- our ability to attract new clients;
- our ability to maintain customer satisfaction;
- the announcement or introduction of new products and services by us or our
competitors;
- price competition;
- our ability to upgrade and to develop our systems and infrastructure to
accommodate our growth;
- our ability to attract new personnel;
- the timing, cost and availability of advertising in traditional media;
- the impact of possible acquisitions both on our operations and on our
reported operating results due to associated accounting charges;
- technical difficulties or service interruptions; and
- the amount and timing of operating costs and capital expenditures relating
to expansion of our business, including our planned international
expansion.
Many of these factors are beyond our control. While we expect our revenues
to increase in proportion to the increase in advertising on the Internet, we
cannot assure you that this will occur. In addition, we cannot assure you that
advertising on the Internet will continue to grow at forecasted levels, or at
all. A substantial portion of our current and future costs are fixed. These
costs consist of the expense of recruiting and maintaining our panel and
collecting and processing data generated by the panel. We may have to increase
our current budget if we need to change the size or composition of
6
<PAGE>
the panel. In addition, if our revenues fall short of expectations, we may not
be able to adjust our budgeted expenses to compensate for this shortfall on a
timely basis. Further, as a strategy for remaining competitive, we may have to
make certain pricing, service or marketing decisions that could have a material
adverse effect on our business, results of operations and financial condition.
Due to these factors, period-to-period comparisons of our revenues and
operating results are not necessarily meaningful. Therefore, you should not rely
on these comparisons as indicators of our future performance. We also cannot
assure you that we will be able to:
- sustain the rates of revenue growth we have experienced in the past;
- improve our operating results; or
- sustain our profitability on a quarterly basis.
In addition, our operating results in future periods may be below the
expectations of securities analysts and investors. If that occurs, the market
price of our common stock could be materially and adversely affected.
WE OPERATE IN HIGHLY COMPETITIVE MARKETS.
The market for Internet audience measurement services is new and rapidly
evolving. We expect competition in this market to intensify in the future.
Currently, our only known direct competition in measuring the Web is NetRatings.
NetRatings recently announced a strategic relationship with Nielsen Media
Research, Inc. Nielsen Media Research is the leading provider of television
audience measurement services and has significantly more financial and other
resources than do we. In light of this announcement, it is possible that
NetRatings may become a significant competitor.
We also compete indirectly with operators of site-centric and other
consumer-centric measurement systems. Site-centric measurement systems measure
audience visits at a specific Web site by monitoring the Web site's server.
Consumer-centric systems measure the market either in a manner similar to us or
qualitatively through on-line and telephonic interviews.
In addition, we may face competition from individual Web sites that develop
an independent method of measuring their own audience or from other companies
that develop alternative audience measurement technologies to those already
provided by us.
Competitive pressures could have a material adverse effect on our business,
results of operations and financial condition. We believe that the principal
competitive factors in our market are:
- creating representative consumer and business panels; and
- providing audience measurement services for the entire Internet, including
the Web and proprietary on-line services.
Certain of our competitors have:
- longer operating histories;
- larger customer bases;
- greater brand recognition in similar businesses; and
- significantly greater financial, marketing, technical and other resources.
In addition, some of our competitors may be able to:
- devote greater resources to marketing and promotional campaigns;
- adopt more aggressive pricing policies; and
7
<PAGE>
- devote substantially more resources to technology and systems development.
Increased competition may result in reduced operating margins, loss of
market share and diminished value in our services, as well as different pricing,
service or marketing decisions. We cannot assure you that we will be able to
compete successfully against current and future competitors.
WE FACE MANY CHALLENGES IN CONNECTION WITH OUR PLANNED INTERNATIONAL EXPANSION.
Our current strategy includes expansion of our services to measure Internet
audiences outside of the United States. Our expansion into international markets
will require management attention and resources. The international markets for
audience measurement services have historically been extremely localized and
difficult to penetrate. We cannot assure you that we will be able to develop new
products and services based on data obtained in those markets. We cannot assure
you that we will be successful in marketing our products and services to clients
in markets outside the United States. In addition, our international operations
will be subject to a number of inherent risks, including:
- the impact of recessions in economies outside the United States;
- changes in regulatory requirements;
- reduced protection for intellectual property rights in some countries;
- potentially adverse tax consequences;
- economic and political instability; and
- fluctuations in currency exchange rates.
These risks may have a material adverse effect on our business, results of
operations or financial condition.
WE WILL DEPEND ON STRATEGIC RELATIONSHIPS IN INTERNATIONAL MARKETS.
The success of our international expansion will depend on our ability to:
- recruit and maintain at-home and at-work panels that are representative of
a geographic area;
- control costs and effectively manage foreign operations; and
- effectively market and sell any new products or services.
These challenges require skills and expertise in foreign countries that we
do not currently have. We believe that our success in penetrating markets
outside of the United States will depend on our ability to develop and to
maintain strategic relationships with local audience measurement or marketing
research companies. If we do not succeed in attracting or retaining strategic
partners in markets outside the United States, our business, financial condition
and results of operations could be materially adversely affected.
OUR MARKET IS SUBJECT TO RAPID CHANGE.
Our market is characterized by:
- rapidly changing technology;
- evolving industry standards;
- introductions and enhancements of competitive products and services; and
- changing customer demands.
8
<PAGE>
Accordingly, our future success depends on our ability to:
- adapt to rapidly changing technologies;
- adapt our services to evolving industry standards; and
- improve the features, reliability and timeliness of our product and
service offerings in response to competitive product and service offerings
and evolving demands of the marketplace.
We cannot assure you that we will succeed in addressing these issues. In
addition, the widespread adoption of new Internet networking technologies or
other technological changes could require us to expend substantial amounts of
capital to change our services or infrastructure. These changes may also involve
new technologies that may not be measurable by our current methods.
WE MAY NOT BE ABLE TO EFFECTIVELY MANAGE OUR INTERNAL GROWTH.
We are currently experiencing a period of rapid expansion. We anticipate
that future expansion will be necessary in order to accommodate our needs and to
take advantage of new opportunities in the market for audience measurement
services on the Internet. In order to succeed, we will need to attract and hire
additional technical and management personnel. As a result, we expect to add key
personnel in the near future to manage our expected growth. We also will need to
expand our technical, finance, administrative and operations staff. We cannot
assure you that current and planned personnel, systems, procedures and controls
will be adequate to support our future operations. We may not be able to hire
and retain our personnel. We also may not be able to exploit existing and
potential strategic relationships and market opportunities. If we fail to
effectively manage our internal growth, our business, results of operations and
financial condition could be materially adversely affected.
WE DEPEND ON RENEWALS OF OUR SUBSCRIPTION BASED SERVICES.
We have historically derived substantially all of our revenues from
subscriptions for our syndicated products. In our limited history, we have
experienced high renewal rates. However, we cannot assure you we will continue
to experience high renewal rates. Our subscription renewal rates may also
decline as a result of a consolidation in our customer base or if a significant
number of our customers cease operations. If our renewal rate percentage
declines, it could have a material adverse effect on our business, results of
operations and financial condition.
WE MUST FURTHER DEVELOP OUR BRAND NAME.
We believe that maintaining and strengthening the Media Metrix brand is an
important aspect of our business. Our brand name is critical in our efforts to
attract clients. We believe that the importance of brand recognition will
increase due to the increasing number of competitors entering the market for
Internet audience measurement. Our ability to promote and position the Media
Metrix brand depends largely on:
- the success of our marketing efforts; and
- our ability to provide our customers with high quality products.
To promote the Media Metrix brand in response to competitive pressures, we
may find it necessary to increase our marketing budget or otherwise increase our
financial commitment to creating and maintaining brand loyalty among our
clients. If we fail to promote and maintain our brand, or incur excessive
expenses attempting to promote and maintain our brand, our business, results of
operations and financial condition will be materially adversely affected.
9
<PAGE>
WE MAY ENCOUNTER RISKS ASSOCIATED WITH NEW PRODUCT DEVELOPMENT.
Our future success depends in part on our ability to offer new products and
services on a timely and cost-effective basis. In order to gain market
acceptance, our new products and services must address:
- specific industries and businesses;
- changes in client requirements; and
- changes in technologies.
The process of developing and launching new products or services is
inherently risky and costly. Moreover, we cannot assure you that once launched,
our products and services will be accepted by our customers.
OUR SYSTEMS MAY FAIL.
Our success depends on the efficient and uninterrupted operation of our
computer and communications systems. Some personal computers, servers and
portions of our network are provided to us by NPD under a management services
agreement. NPD also provides us with the use of mini-computers that we use to
process data received from panelists. Later this year, we plan to separate our
systems from those of NPD and to construct an independent network. Any failure
of the current or the new networks could impede the processing of data, customer
orders and day-to-day management of our business. This could have a material
adverse effect on our business, results of operations and financial condition.
Our systems and operations are vulnerable to damage or interruption from:
- telecommunication failures;
- power loss;
- fires;
- floods;
- physical and electronic break-ins;
- sabotage; and
- intentional acts of vandalism and similar events.
We do not presently have fully redundant systems. We do not carry sufficient
business interruption insurance to compensate us fully for losses that may
occur. Despite any precautions we take, a natural disaster or other
unanticipated problems which lead to the corruption or loss of data at the NPD
facility or our own facilities could result in interruptions in the services we
provide. In addition, our data bases are growing rapidly, and the systems
currently in place may not be sufficient to handle any further expansion. This
could lead to systems failure or to a corruption of our data and could have a
material adverse effect on our business, results of operations and financial
condition.
WE DEPEND ON OUR KEY PERSONNEL.
Our future success depends on the continued services and on the performance
of our senior management and other key employees, in particular the services of
Tod Johnson, our Chief Executive Officer. Mr. Johnson also serves as the Chief
Executive Officer of NPD. We anticipate Mr. Johnson will spend a substantial
portion of his time on our matters. However, he will not be able to devote all
of his time to our affairs. As a result, Mr. Johnson's other responsibilities
could divert his attention from our affairs.
10
<PAGE>
Our performance depends on our ability to retain and to motivate our key
employees. The loss of the services of any of our key employees could have a
material adverse effect on our business, results of operations and financial
condition. We do not have long-term employment agreements with any of our key
personnel. We do not maintain any "key person" life insurance policies. In
addition, we are likely to need to recruit additional senior management
personnel as our business grows, particularly in the international arena. Our
future success depends on our ability to hire and to retain highly skilled
personnel. Competition for these candidates is intense. We cannot assure you
that we will be able to successfully attract, integrate or retain sufficiently
qualified personnel. Our inability to retain and attract the necessary personnel
could have a material adverse effect on our business, results of operations and
financial condition.
WE MAY FAIL TO INTEGRATE ACQUISITIONS.
If appropriate opportunities present themselves, we intend to acquire other
complementary businesses, technologies, services or products. We currently have
no understandings or agreements relating to any acquisition. We cannot assure
you that we will be able to complete future acquisitions successfully or to
integrate an acquired entity with our current business. An acquisition may
result in unforeseen operating difficulties and expenditures. They may also
require significant management attention that would otherwise be available for
ongoing development of our business. Moreover, we cannot assure you that the
anticipated benefits of any acquisition will be realized. We may:
- issue additional equity securities which would dilute stockholders;
- incur debt;
- incur contingent liabilities; and
- incur amortization expenses related to goodwill and other intangible
assets.
WE DEPEND ON THE NPD GROUP, INC.
We were originally formed as a division of NPD. Throughout our development,
we have relied on services and financing provided to us by NPD. When we became
an independent operating entity, we entered into a management services
agreement, license agreement and services agreement with NPD. These agreements
allow us to continue to use some of NPD's software and services on an as-needed
basis. Under the management services agreement, NPD provides us with managerial
services. Under the license agreement, we license some of NPD's technologies
necessary for the operation of our services. The services agreement provides for
payment of a licence fee by NPD for access to information collected from our
panel.
NPD may be able to exert influence over our business and affairs due to
these arrangements. Also, the loss of the services provided by NPD under the
management services agreement or the loss of the license of certain computer
software under the license agreement could have a material adverse effect on our
business, financial condition and results of operations. See "Certain
Transactions--Transactions with Directors and Executive Officers."
WE MAY NOT BE ABLE TO PROTECT AND ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS.
We regard the protection of our patents, copyrights, service marks,
trademarks and trade secrets as important to our future success. We rely on a
combination of patent, copyright, trademark, service mark and trade secret laws
and contractual restrictions to establish and protect our proprietary rights. We
have entered into confidentiality and invention assignment agreements with our
employees and contractors, and nondisclosure agreements with parties we do
business with in order to limit access to and disclosure of our proprietary
information. We cannot assure you that these contractual arrangements or the
other steps we have taken will be sufficient to protect our intellectual
property from
11
<PAGE>
infringement or misappropriation. Moreover, others may independently develop
similar or superior technologies.
We seek to obtain the issuance of patents and the registration of our
trademarks and service marks in the United States and in selected other
countries. We cannot assure you that patents or trademark registrations will be
issued with respect to pending or future applications or that our patents and
trademarks will be upheld as valid. Effective patent, trademark, service mark,
copyright and trade secret protection may not be available in every country in
which our services are offered. We also expect to license certain of our
proprietary rights to strategic partners in the course of our planned
international expansion. While we will attempt to ensure that the quality of our
service is maintained by our strategic partners, we cannot assure you that they
will not take actions that might materially adversely affect the value of our
proprietary rights or reputation. This could have a material adverse effect on
our business, results of operations and financial condition.
We also rely on technologies that we license from third parties, like NPD.
NPD licenses to us some key software products and database technologies. We
cannot assure you that these licenses will not infringe on the proprietary
rights of others. We also cannot assure you that these third-party technology
licenses will continue to be available to us on commercially reasonable terms,
if at all. As a result, we may need to obtain substitute technology of lower
quality or performance standards or at greater cost. This could materially
adversely affect our business, results of operations and financial condition.
To date, we have not been notified that our technologies infringe the
proprietary rights of third parties. We cannot, however, assure you that third
parties will not claim that we have infringed their proprietary rights. We
expect that the number of infringement claims in our market will increase as the
number of services and competitors in our industry grows. These claims, whether
meritorious or not, could be:
- time-consuming;
- result in costly litigation; or
- require us to enter into royalty or licensing agreements.
Royalty or licensing agreements might not be available on terms we find
acceptable or at all. As a result, any such claim could have a material adverse
effect upon our business, results of operations and financial condition.
WE MAY BE EXPOSED TO POSSIBLE LIABILITY FOR SUPPLYING INACCURATE INFORMATION TO
OUR CUSTOMERS.
We may face liability for information that we supply to customers if the
information is inaccurate. The information in our databases, like that in any
database, may contain inaccuracies that our customers may not accept. Any
dissatisfaction by our customers with our measurement methodologies or databases
would have a material adverse effect on our ability to attract new customers and
retain existing customers. We have not experienced a situation where a customer
has made a claim against us after receiving inaccurate data. Our customer
contracts generally provide that each customer must indemnify us for any damages
arising from the use of data, reports or analyses by the customer or the
performance of any consulting, analytic or other services by us. However, we
cannot be certain our contract provisions provide sufficient protection. Any
liabilities which we may incur because of irregularities or inaccuracies in the
data we supply to our customers could have a material adverse effect on our
business, operating results and financial condition.
12
<PAGE>
WE FACE RISKS RELATED TO STORAGE OF PERSONAL INFORMATION ABOUT OUR PANELISTS.
We do not attempt to capture information regarding our panelists' banking,
credit card or password data. This information, however, may come into our
possession. We have a non-disclosure policy regarding personal information
received from our panelists. Our panel data are released only in an aggregated
format or in a form not identifiable on an individual basis. However, if someone
penetrates our network security or otherwise misappropriates sensitive data
about our panelists, we could be subject to liability. These liabilities could
include claims for unauthorized purchases with credit card information,
impersonation or other similar fraud claims. They could also include claims for
other misuses of personal information, like for unauthorized marketing purposes.
These claims could result in litigation and could have a material adverse effect
on our business, results of operations and financial condition.
WE FACE RISKS OF INDUSTRY INITIATIVES.
Certain key industry organizations, including the Internet Advertising
Bureau, the Media Ratings Council, the Advertising Research Foundation and FAST
Forward, have begun initiatives focusing on appropriate standards for Internet
audience measurement. We have been working closely with all of these
organizations in an effort to ensure that we are in compliance with any
recommended measurement guidelines. However, we may not comply with industry
guidelines which we believe are not economically feasible or otherwise not
consistent with our business strategy. To the extent that our measurement
approach diverges from the course of action recommended by some or all of these
trade groups, our business, results of operations and financial condition could
be materially and adversely affected.
THERE ARE RISKS ASSOCIATED WITH YEAR 2000 COMPLIANCE.
Many currently installed computer systems and software products are coded to
accept only two-digit entries in the date code field and cannot reliably
distinguish dates beginning on January 1, 2000 from dates prior to the year
2000. Many companies' software and computer systems may need to be upgraded or
replaced in order to correctly process dates beginning in 2000. We have reviewed
our proprietary technology and systems and have determined that we do not face
any significant year 2000 issues. We are currently in the process of correcting
any deficiencies which have been identified in our systems and expect to conduct
a test of the updated software by the end of the first quarter of 1999.
Although we believe that our systems are year 2000 compliant, we rely on
equipment and software provided by third parties that may not be year 2000
compliant. The failure of third-party equipment or software to properly process
dates for the year 2000 and any failure by these third parties to resolve any
year 2000 issues could cause us to incur unanticipated expenses. These expenses
could have a material adverse effect on our business, results of operations and
financial condition. Finally, to the extent that year 2000 issues have a
negative impact on consumers and undermine the public's faith in the Internet as
a medium for the exchange of information and commerce, growth of the Internet
could slow. As a result, our business, results of operations and financial
condition could be materially adversely affected.
In addition, we collect our panel data from a diverse group of individual
personal computer users who use a variety of computer hardware and software that
may not be year 2000 compliant. As a result, we may encounter difficulties in
gathering and accurately measuring data from our panel. In addition, it is
possible that data collected from some of these users may contain inaccuracies
resulting from year 2000 issues. These difficulties could have a material
adverse effect on our business, results of operations and financial condition.
13
<PAGE>
WE FACE RISKS ASSOCIATED WITH POTENTIAL GOVERNMENTAL REGULATION.
We are currently not subject to direct federal, state or local regulation or
laws or regulations applicable to the Internet, other than regulations
applicable to businesses generally. However, due to the increasing popularity
and use of the Internet, it is possible that a number of laws and regulations
may be adopted covering:
- user privacy;
- freedom of expression;
- pricing;
- content;
- quality of products and services;
- taxation;
- advertising;
- intellectual property rights; and
- information security.
The nature and effect of any proposed legislation or regulation cannot be
fully determined. These could have a material adverse effect on our business,
results of operations and financial condition.
The adoption of any such legislation could also dampen the growth in use of
the Internet generally and decrease its acceptance as a communications,
commercial and advertising medium. Any legislation which could have any adverse
effect on the growth of the Internet could decrease the demand for our services
and could have a material adverse effect on our business, results of operations
and financial condition.
Several states have proposed legislation that would limit the uses of
personal user information gathered using the Internet. These regulations have
required proprietary on-line service and Web site owners to establish privacy
policies. The Federal Trade Commission has also recently settled a proceeding
with one on-line service regarding the manner in which personal information is
collected from users and provided to third parties. Also, the European Union
recently enacted its own privacy regulations that may result in limits on the
collection and use of certain user information. Because all of our panelists
consent to the retrieval of their personal data, to date these regulations and
proceedings have not impacted our operations. However, changes to existing laws
or the passage of new laws intended to address these issues could, among other
effects:
- create uncertainty in the marketplace that could reduce demand for our
services;
- limit our ability to collect and to use data from our panels;
- increase the cost of doing business as a result of litigation costs or
increased service delivery costs;
- decrease the efficacy of Internet advertising; or
- in some other manner have a material adverse effect on our business,
results of operations and financial condition.
14
<PAGE>
WE FACE UNCERTAINTY ABOUT ADDITIONAL FINANCING FOR OUR FUTURE CAPITAL NEEDS.
We currently anticipate that our available funds, together with the proceeds
of this offering, will be sufficient to meet our anticipated needs for working
capital, capital expenditures and business expansion for at least the next 18
months. If we are unable to increase our revenues as anticipated, we will need
to raise additional funds. Although we have historically received financing from
NPD, we will not be able to rely on NPD's assistance in the future. We may need
more money sooner if we:
- decide to expand faster than planned;
- develop new or enhanced services or products ahead of schedule;
- need to respond to competitive pressures; or
- need to acquire complementary products, businesses or technologies.
If we raise more money through the sale of equity or convertible debt
securities, your percentage ownership will be reduced. In addition, these
transactions may dilute the value of the stock outstanding. We may have to issue
securities that may have rights, preferences and privileges senior to our common
stock. We cannot assure you that we will be able to raise more money on terms
favorable to us or at all. If future financing is not available or is not
available on acceptable terms, we may not be able to fund our future needs. This
could have a material adverse effect on our business, results of operations and
financial condition.
OUR PRINCIPAL STOCKHOLDERS, EXECUTIVE OFFICERS AND DIRECTORS HAVE SUBSTANTIAL
CONTROL OVER OUR AFFAIRS.
Our executive officers and directors and entities affiliated with them will,
in the aggregate, beneficially own approximately % of our common stock
following this offering. In particular, NPD, which is controlled by Tod Johnson,
our Chairman and Chief Executive Officer, will own approximately % of our
outstanding common stock. These stockholders acting together will have the
ability to exert substantial influence over all matters requiring approval by
our stockholders. These matters include the election and removal of directors
and any merger, consolidation or sale of all or substantially all of our assets.
In addition, they may dictate the management of our business and affairs. This
concentration of ownership could have the effect of delaying, deferring or
preventing a change in control, or impeding a merger or consolidation, takeover
or other business combination.
THERE MAY BE AN ADVERSE EFFECT ON THE MARKET PRICE OF OUR STOCK AS A RESULT OF
SHARES BEING AVAILABLE FOR SALE IN THE FUTURE.
After this offering, we will have shares of common stock
outstanding, or shares if the underwriters over-allotment option is
exercised in full. Of these shares, the shares sold in this offering will be
freely tradeable without further restriction or further registration under the
Securities Act, except for shares purchased by an affiliate of ours, which will
be subject to the limitations of Rule 144 under the Securities Act. The
remaining shares are "restricted shares," and will become eligible
for sale in the public market at various times after 180 days after the date of
this prospectus, subject to the limitations and other conditions of Rule 144
under the Securities Act.
Subject to certain contractual limitations, holders of restricted shares
generally will be entitled to sell these shares in the public securities market
without registration either pursuant to Rule 144 or any other applicable
exemption under the Securities Act.
Within approximately 180 days after the date of this prospectus, we intend
to file one or more registration statements under the Securities Act to register
the shares of common stock subject to outstanding stock options or reserved for
issuance under our equity compensation plans. After this
15
<PAGE>
offering, options to purchase approximately 963,497 shares will be outstanding
under our equity compensation plans.
Our directors, officers and substantially all of our stockholders have
entered into lock-up agreements and have agreed that they will not sell,
directly or indirectly, any shares of common stock, other than those shares sold
in this offering, without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation for a period of 180 days from the date of this
prospectus, subject to certain exceptions. See "Underwriting."
In addition, after this offering, the holders of 13,038,184 shares of common
stock will have registration rights with respect to these shares. This will
allow these stockholders to sell these shares in the market simultaneously with
any further public offerings by us of our equity securities. Sales of a
substantial amount of common stock in the public market, or the perception that
these sales may occur, could adversely affect the market price of the common
stock prevailing from time to time in the public market and could impair our
ability to raise additional capital through the sale of our equity securities.
THERE MAY BE VOLATILITY IN OUR STOCK PRICE.
Prior to this offering, there has been no public market for our common
stock. We cannot predict the extent to which investor interest will lead to the
development of an active and liquid trading market. The initial public offering
price for the shares will be determined by negotiations between us and the
representatives of the underwriters and may not be indicative of the market
price of the common stock that will prevail in the trading market. The market
price of the common stock may decline below the initial public offering price.
The market prices of the securities of Internet-related companies have been
especially volatile. Some companies that have had volatile market prices for
their securities have been subject to securities class action suits filed
against them. If a suit were to be filed against us, regardless of the outcome,
it could result in substantial costs and a diversion of our management's
attention and resources. This could have a material adverse effect on our
business, results of operations and financial condition. See "Underwriting."
MANAGEMENT HAS BROAD DISCRETION AS TO THE USE OF PROCEEDS FROM THIS OFFERING.
Our management will have broad discretion with respect to the use of
proceeds from this offering. Most of the proceeds from this offering will be
used for expenses of the business and general working capital. You will be
relying on the judgment of our management about these uses. See "Use of
Proceeds."
THE TANGIBLE BOOK VALUE OF THE COMMON STOCK WILL BE SUBSTANTIALLY LOWER THAN THE
OFFERING PRICE.
The initial public offering price will be substantially higher than the pro
forma tangible book value per share of our outstanding common stock. If you
purchase our common stock in this offering, the shares you buy will experience
an immediate and substantial dilution in tangible book value per share. The
shares of common stock owned by the existing stockholders will receive a
material increase in the tangible book value per share. The dilution to
investors in this offering will be approximately $ per share. See
"Dilution."
EFFECTS OF ANTI-TAKEOVER PROVISIONS COULD INHIBIT THE ACQUISITION OF MEDIA
METRIX.
Some of the provisions of our certificate of incorporation, by-laws and
Delaware law could, together or separately:
- discourage potential acquisitions proposals;
- delay or prevent a change in control; and
16
<PAGE>
- limit the price that investors might be willing to pay in the future for
shares of our common stock.
In particular, our board of directors may issue up to 5,000,000 shares of
preferred stock with rights and privileges that might be senior to our common
stock, without the consent of the holders of the common stock. Our certificate
of incorporation and bylaws will provide, among other things, that our board of
directors will be divided into three classes which will serve staggered three
year terms, that stockholders may not take actions by written consent and that
special meetings of stockholders may only be called by our board of directors or
our Chairman. We are also subject to Section 203 of the Delaware General
Corporation Laws which generally prohibits a Delaware corporation from engaging
in any of a broad range of business combinations with any interested stockholder
for a period of three years following the date on which the stockholder became
an interested stockholder.
17
<PAGE>
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the shares of
common stock offered by us will be approximately $ , assuming an initial
public offering price of $ per share, and after deducting underwriting
discounts and commissions and other estimated offering expenses. If the
underwriters' over-allotment option is exercised in full, we estimate that such
net proceeds will be approximately $ million.
We will use approximately $ of the net proceeds from the offering
to redeem the 41,446 shares of our outstanding redeemable preferred stock held
by NPD. The redeemable preferred stock is redeemable at a price of $100 per
share plus accrued dividends at an annual rate of 7%, compounded quarterly. At
January 31, 1999, principal and accrued dividends equaled $4.7 million.
We expect to use the remaining amounts to fund our international expansion,
new product development and for general corporate purposes, including working
capital. We may also use a portion of the net proceeds, currently intended for
general corporate purposes, to acquire or to invest in complementary businesses,
technologies, products or services. We have no present plans or commitments and
we are not currently engaged in any negotiations with respect to such
transactions. Our management will retain broad discretion in the allocation of
the net proceeds of this offering.
Pending such uses, we intend to invest the net proceeds in short-term,
investment grade, interest-bearing securities.
DIVIDEND POLICY
We have never declared nor paid any cash dividends on our common stock. We
currently anticipate that we will retain any future earnings for the development
and operations of our business. Accordingly, we do not anticipate paying cash
dividends on our capital stock in the foreseeable future.
18
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of December 31, 1998
and as adjusted to reflect our sale of the shares of common stock in this
offering at an assumed initial public offering price of $ per
share and the application of the estimated net proceeds as described under the
section, "Use of Proceeds." You should read the following table with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and notes included elsewhere in this
prospectus.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
--------------------------
<S> <C> <C>
ACTUAL AS ADJUSTED
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
Long-term debt, including current portion......................... $ 353 $ 353
Redeemable preferred stock, $.01 par value; 41,446 shares
authorized, issued and outstanding, actual; no shares
authorized, issued and outstanding, as adjusted................. 4,680 --
Stockholders' equity:
Preferred stock, $.01 par value, 4,958,554 shares authorized;
none issued and outstanding, actual; 5,000,000 shares
authorized and none issued and outstanding, as adjusted....... -- --
Common stock, $.01 par value, 15,000,000 shares authorized (not
adjusted for stock split) and 13,093,514 shares issued and
outstanding, actual; shares issued and outstanding, as
adjusted...................................................... 131
Additional paid-in capital...................................... 16,940
Common stock issuable........................................... 2,000 --
Accumulated deficit............................................. (16,073) (16,073)
Deferred compensation........................................... (376) (376)
---------- --------------
Total stockholders' equity........................................ 2,622
---------- --------------
Total capitalization.......................................... $ 7,655 $
---------- --------------
---------- --------------
</TABLE>
The outstanding share information is based on our shares outstanding as of
December 31, 1998. This information excludes:
- 153,072 shares of common stock subject to options granted under our 1998
Equity Incentive Plan and outstanding as of December 31, 1998 at a
weighted average exercise price of $2.39 per share;
- 496,283 shares of common stock subject to options granted under our
earlier Stock Option Plan and outstanding as of December 31, 1998 at a
weighted average exercise price of $0.84 per share;
- 579,328 additional shares of common stock reserved for issuance under our
1998 Equity Incentive Plan;
- 903,314 shares of common stock reserved for outstanding warrants at a
weighted average exercise price of $2.31 per share; and
- 194,380 shares issued to an existing investor in January 1999, classified
as common stock issuable as of December 31, 1998.
19
<PAGE>
DILUTION
Our pro forma net tangible book value as of December 31, 1998, was
approximately $(3.1) million, or $(0.23) per share of common stock. The share
information in this section includes 194,380 shares of common stock issued to an
investor on January 4, 1999, for which we received payment of $2.0 million on
December 31, 1998. Pro forma net tangible book value per share is equal to our
tangible net assets, less total liabilities, divided by the pro forma number of
shares of common stock outstanding as of December 31, 1998. After giving effect
to the sale of shares at an assumed initial offering price of $
per share and the application of the net proceeds from this offering, our pro
forma net tangible adjusted book value at December 31, 1998 would have been
approximately $ , or $ per share of common stock. This amount
represents an immediate increase in pro forma net tangible book value of $
per share to existing stockholders and an immediate dilution in net tangible
book value of $ per share to new investors. The following table illustrates
this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share........................ $
Pro forma net tangible book value per share at December 31, 1998..... $ (0.23)
Increase per share attributable to new investors.....................
---------
Pro forma net tangible book value per share after the offering.........
---------
Dilution per share to new investors.................................... $
---------
---------
</TABLE>
The following table summarizes, on a pro forma basis as of December 31,
1998, the total number of shares of common stock purchased from us, the total
consideration paid to us, and the average price per share paid by our existing
stockholders and by new investors purchasing shares from us in the offering, at
an assumed initial public offering price of $ per share, before deducting
underwriting discounts and commissions and the estimated offering expenses
payable by us:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------------- -------------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
<S> <C> <C> <C> <C> <C>
Existing stockholders(1)............................... 13,287,894 % $ 18,706,185 % $ 1.41
New investors..........................................
------------ --- ------------- ---
Total.............................................. % $ %
------------ --- ------------- ---
------------ --- ------------- ---
</TABLE>
- -----------------------
(1) Includes $10,500,000 representing the value of the 3,885,531 shares of our
common stock we issued in connection with our merger with RelevantKnowledge
and $2.0 million paid by an existing investor for 194,380 shares of our
common stock issued on January 4, 1999.
If the underwriters exercise their over-allotment option in full, the number
of shares of common stock held by existing stockholders will be reduced to
or % of the total number of shares of common stock to be outstanding
after this offering. In addition, the number of shares of common stock held by
the new investors will be increased to , or % of the total number of
shares of common stock to be outstanding immediately after this offering.
The outstanding share information is based on our shares outstanding as of
December 31, 1998. This information excludes:
- 153,072 shares of common stock subject to options granted under our 1998
Equity Incentive Plan and outstanding as of December 31, 1998 at a
weighted average exercise price of $2.39 per share;
- 496,283 shares of common stock subject to options granted under our
earlier Stock Option Plan and outstanding as of December 31, 1998 at a
weighted average exercise price of $0.84 per share;
- 579,328 additional shares of common stock reserved for issuance under our
1998 Equity Incentive Plan; and
- 903,314 shares of common stock reserved for outstanding warrants at a
weighted average exercise price of $2.31 per share.
20
<PAGE>
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The selected financial data set forth below as of December 31, 1996, 1997
and 1998 have been derived from our financial statements, which have been
audited by Ernst & Young LLP, independent auditors, whose report for the three
years ended December 31, 1998 is included elsewhere in this prospectus. The
financial statements for the period ended December 31, 1995 are unaudited and in
our opinion, those financial statements include all adjustments, consisting of
only normal recurring adjustments, necessary for a fair presentation of the
information. The financial statements for the period from inception to December
31, 1995 are based on operations of PC Meter, our predecessor, while it was
still a division of NPD. The financial statements for the year ended December
31, 1996 are those of PC Meter and include three months of operations during
which PC Meter was a division of NPD. The financial statements for the year
ended December 31, 1998 include the results of operations of RelevantKnowledge
from the date of the merger on November 5, 1998. The pro froma financial
statements for the year ended December 31, 1998 give effect to the
RelevantKnowledge merger as if it had taken place on January 1, 1998. You should
read the selected financial data set forth below with the financial statements
and related notes and with "Management's Discussion and Analysis of Financial
Condition and Results of Operations," which are included elsewhere in this
prospectus.
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION YEAR ENDED PRO FORMA
THROUGH DECEMBER 31, YEAR ENDED
DECEMBER 31, ------------------------------- DECEMBER 31,
1995 1996 1997 1998 1998
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................................. $ -- $ 1,033 $ 3,188 $ 6,331 $ 8,145
Costs of revenues.................................... 140 1,744 3,463 4,121 7,000
------ --------- --------- --------- ------------
Gross profit (loss).................................. (140) (711) (275) 2,210 1,145
Operating expenses:
Research and development........................... 86 588 866 1,382 2,162
Sales and marketing................................ 45 929 2,022 2,888 4,512
General and administrative......................... 101 1,148 1,516 3,064 6,037
Amortization of intangibles........................ -- -- -- 479 2,872
Acquired in-process research and development....... -- -- -- 1,600 1,600
------ --------- --------- --------- ------------
Total operating expenses......................... 232 2,665 4,404 9,413 17,183
------ --------- --------- --------- ------------
Loss from operations................................. (372) (3,376) (4,679) (7,203) (16,038)
Interest income, net of interest expense............. -- -- 95 65 161
------ --------- --------- --------- ------------
Net loss............................................. (372) (3,376) (4,584) (7,138) (15,877)
Preferred stock dividends............................ -- -- (290) (314) (314)
------ --------- --------- --------- ------------
Net loss available to common stockholders............ $ (372) $ (3,376) $ (4,874) $ (7,452) $ (16,191)
------ --------- --------- --------- ------------
------ --------- --------- --------- ------------
Basic and diluted net loss per common share
applicable to common stockholders.................. $ (0.06) $ (0.52) $ (0.75) $ (0.98) $ (1.49)
------ --------- --------- --------- ------------
------ --------- --------- --------- ------------
Shares used in calculating basic and diluted net loss
per common share applicable to common
stockholders....................................... 6,523 6,523 6,523 7,618 10,856
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------------
1996 1997 1998
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........................................................... $ 583 $ 1,869 $ 8,012
Working capital (deficit)........................................................... (2,478) (47) 1,057
Total assets........................................................................ 1,213 2,787 16,060
Due to NPD.......................................................................... 2,782 1,284 4,706
Preferred stocks.................................................................... -- 8,366 4,680
Total stockholders' equity (deficit)................................................ (2,478) (8,274) 2,622
</TABLE>
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
YOU SHOULD READ THE FOLLOWING DISCUSSION OF OUR FINANCIAL CONDITION AND
RESULTS OF OPERATIONS WITH THE FINANCIAL STATEMENTS AND THE NOTES TO THE
FINANCIAL STATEMENTS INCLUDED ELSEWHERE IN THIS PROSPECTUS. THIS DISCUSSION
CONTAINS FORWARD-LOOKING STATEMENTS BASED ON OUR CURRENT EXPECTATIONS,
ASSUMPTIONS, ESTIMATES AND PROJECTIONS. THESE FORWARD-LOOKING STATEMENTS INVOLVE
RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
AS MORE FULLY DESCRIBED IN THE "RISK FACTORS" SECTION AND ELSEWHERE IN THIS
PROSPECTUS. WE UNDERTAKE NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING
STATEMENTS FOR ANY REASON, EVEN IF NEW INFORMATION BECOMES AVAILABLE OR OTHER
EVENTS OCCUR IN THE FUTURE.
OVERVIEW
We are the leading provider of Internet audience measurement products and
services. Our products and services are critical to the continued growth and
development of the Internet because they provide an effective, third-party
audience measurement standard. Our customers use our data as a basis for making
critical business decisions. We have been at the forefront of the development
and coordination of technology and standards needed to facilitate advertising
and transactions between companies doing business over the Internet. Our
customers include most of the leading Internet advertisers and advertising
agencies, the most heavily trafficked Internet properties, leading technology
companies and financial institutions. The quality and depth of our customer base
and our high customer retention rate reflect our position as the leading
Internet audience measurement service.
Our business was originally conducted as a division within NPD, a leading
marketing research firm. In March 1996, PC Meter, L.P., was formed to conduct
our business in an entity separate from NPD. In April 1997, PC Meter was merged
into Media Metrix. The assets and liabilities and related revenues and expenses
of PC Meter have been reflected in our financial statements at their historical
book values. See "Certain Transactions--Formation by NPD" financial statements
and related notes thereto.
In November 1998, we merged with RelevantKnowledge, our leading competitor.
After giving effect to the merger, the former stockholders of RelevantKnowledge
were issued 3,885,531 shares of Media Metrix common stock. See Note 4 of notes
to our financial statements. Following the merger, we increased our panel size
and began to integrate the best technological features from each company into
our systems and processes. Due to the combination, in the fourth quarter of 1998
we had considerable expenses due to costs incurred by operating two distinct
panels, production systems and administrative infrastructures. We anticipate
that these costs will decrease as we more fully integrate the businesses and
operations of the two companies. In connection with the merger, we acquired $6.2
million of intangibles, which will be amortized over a period varying from one
to three years.
Our revenues are derived from our measurement products and services. Our
product offerings include both syndicated products and customized products. We
sell our syndicated products on an annual subscription basis. We typically bill
our syndicated clients, in advance, for the next three months of products. Since
1997, syndicated products have accounted for approximately 90% of our revenues,
while customized products and services have accounted for approximately 10%. Our
combined customer base increased from approximately 100 customers at the end of
1997 to more than 300 as of December 31, 1998. Of the 75 customers subscribing
under annual contracts for our syndicated products and services at the end of
1997, over 95% remained customers at the end of 1998. With this high customer
retention rate, we have a growing base of recurring revenues from our syndicated
products and services.
We recognize revenues for the syndicated products and services over the term
of the related contract as services are provided. Revenues for customized
products and services are recognized in the period in which the product or
service is delivered.
22
<PAGE>
Our business model is based on creating multiple products and services from
our core panel-based market research, technologies and databases. The core panel
of 40,000 individuals under measurement has been established over the past three
years. We recruit individuals to become members of our panel through random
direct mail and telephone solicitations. We incur costs in connection with
recruiting and retaining members of our panel. These costs are expensed in the
year incurred. We plan to introduce a new version of our patented metering
technology in 1999, which is expected to reduce the use of mail in connection
with the panel and provide cost savings. Our rate of expense growth, other than
panel and production, is primarily driven by increases in headcount and sales
and marketing expenditures.
We have incurred significant losses from operations since our inception. We
incurred losses from operations of $3.4 million in 1996, $4.7 million in 1997
and $7.2 million in 1998. If the merger with RelevantKnowledge had taken place
on January 1, 1998, our pro forma loss from operations for 1998 would have been
$16.0 million. This pro forma loss from operations includes a full year of
amortization of $2.9 million of intangibles and a non-cash expense recorded for
the issuance of warrants of $971,000. As of December 31, 1998, we had an
accumulated deficit of $16.1 million, of which $1.6 million related to the
write-off of acquired in-process research and development in connection with the
RelevantKnowledge merger. As of December 31, 1998, we had an outstanding payable
to NPD for $4.7 million under the management services agreement, $4.1 million of
which was paid in January 1999. Charges from NPD are expected to decrease in
1999 as we take on the direct management of our own payroll and computer
systems.
We expect that we will incur significant expenses in the future associated
with our planned international expansion. In particular, we plan on hiring
senior personnel to manage the anticipated international operations and on
entering into joint ventures with local partners. This will probably involve the
recruitment of a panel and the expenditure of significant funds. In addition, we
intend to invest heavily in further development and improvement of our
technologies and development of additional products and services.
RESULTS OF OPERATIONS
The following table sets forth our results of operations expressed as a
percentage of revenues:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1996 1997 1998
Revenues........................................................................... 100.0% 100.0% 100.0%
Costs of revenues.................................................................. 168.9 108.6 65.1
--------- --------- ---------
Gross profit (loss)................................................................ (68.9) (8.6) 34.9
Operating expenses:
Research and development......................................................... 56.9 27.2 21.8
Sales and marketing.............................................................. 90.0 63.4 45.6
General and administrative....................................................... 111.1 47.6 48.4
Amortization of intangibles...................................................... -- -- 7.6
Acquired in-process research and development..................................... -- -- 25.3
--------- --------- ---------
Total operating expenses........................................................... 258.0 138.2 148.7
--------- --------- ---------
Loss from operations............................................................... (326.9) (146.8) (113.8)
Interest income, net............................................................... -- 3.0 1.0
--------- --------- ---------
Net loss........................................................................... (326.9)% (143.8)% (112.8)%
--------- --------- ---------
--------- --------- ---------
</TABLE>
23
<PAGE>
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1998
REVENUES. Revenues increased 98.6% from $3.2 million for the year ended
December 31, 1997 to $6.3 million for the year ended December 31, 1998. Sales of
syndicated audience measurement products and services accounted for
approximately 90% of revenues for the years ended December 31, 1997 and 1998,
respectively. Sales of customized products and services accounted for the
remaining revenues. The increase in revenues was due primarily to a substantial
increase in the number of our customers and an increase in the amount of
products and services sold to our customers on average, and, to a lesser extent,
the revenues associated with RelevantKnowledge's business for the period from
November 5, 1998 to the end of the year. No single customer accounted for more
than 10% of revenues during the year ended December 31, 1998. One customer
accounted for approximately 19% of revenues for the year ended December 31,
1997.
COSTS OF REVENUES. Costs of revenues consist primarily of costs associated
with the recruitment and maintenance of the panel, data collection and
production costs. Panel and data collection costs include costs associated with
mailing and printing, incentives, help desk and associated personnel. Production
costs include computer usage charges, printing, report distribution costs and
personnel costs. Gross loss was $275,000 for the year ended December 31, 1997,
or (8.6)% of revenues. Gross profit was $2.2 million for the year ended December
31, 1998, or 34.9% of revenues. The increase in gross profit for the year ended
December 31, 1998 over the prior period was due to an increase in sales,
including sales attributable to RelevantKnowledge's business for the period from
November 5, 1998 to the end of the year, without a commensurate increase in
costs. The increase in gross profit was partially offset by the costs associated
with operating two panels following the RelevantKnowledge merger.
RESEARCH AND DEVELOPMENT. Research and development costs consist primarily
of personnel and other related costs attributable to the development of new
products and services. All research and development costs have been expensed as
incurred. Research and development costs were $866,000 for the year ended
December 31, 1997, or 27.2% of revenues. Research and development costs were
$1.4 million for the year ended December 31, 1998, or 21.8% of revenues. The
increase in absolute dollars was due primarily to increases in research and
development personnel, including the addition of personnel in connection with
the RelevantKnowledge merger. The decrease in research and development costs as
a percentage of revenues was due to revenues increasing at a greater rate.
SALES AND MARKETING. Sales and marketing costs consist of personnel,
commissions, travel and entertainment expenses, public relations costs, trade
show expenses, seminars and marketing materials. Sales and marketing costs were
$2.0 million for the year ended December 31, 1997, or 63.4% of revenues. Sales
and marketing costs were $2.9 million for the year ended December 31, 1998, or
45.6% of revenues. The increase in absolute dollars was due primarily to the
increase in sales and marketing personnel, including personnel acquired in
connection with the RelevantKnowledge merger. The decrease in sales and
marketing costs as a percentage of revenues was due primarily to revenues
increasing at a greater rate.
GENERAL AND ADMINISTRATIVE. General and administrative costs consist
primarily of personnel, lease payments for our facilities, telephone and
utilities and professional services fees. General and administrative costs were
$1.5 million for the year ended December 31, 1997, or 47.6% of revenues. General
and administrative costs were $3.1 million for the year ended December 31, 1998,
or 48.4% of revenues. The increase in absolute dollars was due to the expenses
associated with increased personnel, expansion of our office facilities,
expenses incurred after the merger with RelevantKnowledge and a non-cash
compensation expense recorded in connection with stock options. The decrease in
general and administrative costs as a percentage of revenues was due primarily
to revenues increasing at a greater rate.
24
<PAGE>
AMORTIZATION OF INTANGIBLES. Amortization charges of $479,000 included two
months of the amortization of RelevantKnowledge's panel, which is being
amortized over 12 months and other intangibles acquired in our merger with
RelevantKnowledge which are being amortized over three years.
ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT. In connection with our merger
with RelevantKnowledge, we expensed $1.6 million of acquired in-process research
and development for the year ended December 31, 1998. Acquired in-process
research and development represents the value attributed to three technologies
in development at the time of the merger.
LOSS FROM OPERATIONS. Our loss from operations was $4.7 million for the
year ended December 31, 1997, or (146.8)% of revenues. Loss from operations was
$7.2 million for the year ended December 31, 1998, or (113.8)% of revenues. Loss
from operations was higher in 1998 due to the continued expansion of our
business, the inclusion of two months of RelevantKnowledge losses and
amortization of acquired intangibles. Loss from operations in 1998 included a
$1.6 million write-off of acquired in-process research and development. The
decrease in loss from operations as a percentage of revenues was due primarily
to an increase in sales relative to the increases in costs of revenues and
operating costs.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1997
REVENUES. Revenues increased 208.7% from $1.0 million for the year ended
December 31, 1996 to $3.2 million for the year ended December 31, 1997. Sales of
syndicated audience measurement products and services accounted for
approximately 90% of revenues for the years ended December 31, 1996 and 1997.
Sales of customized products and services accounted for most of the remaining
revenues. The increase in revenues was due primarily to a substantial increase
in the number of our customers and an increase in the amount of services sold to
our customers on average. No single customer accounted for more than 10% of
revenues during either of the years ended December 31, 1996 or 1997.
COSTS OF REVENUES. Gross loss was $711,000 for the year ended December 31,
1996, or (68.9)% of revenues. Gross loss was $275,000 for the year ended
December 31, 1997, or (8.6)% of revenues. Costs of revenues increased
substantially in 1997 due to costs associated with panel expansion. The decrease
in the costs of revenues as a percentage of revenues was due primarily to
revenues increasing at a greater rate.
RESEARCH AND DEVELOPMENT. Research and development costs were $588,000 for
the year ended December 31, 1996, or 56.9% of revenues. Research and development
costs were $866,000 for the year ended December 31, 1997, or 27.2% of revenues.
The decrease in research and development costs as a percentage of revenues was
due to revenues increasing at a greater rate.
SALES AND MARKETING. Sales and marketing costs were $929,000 for the year
ended December 31, 1996, or 90.0% of revenues. Sales and marketing costs were
$2.0 million for the year ended December 31, 1997, or 63.4% of revenues. The
increase in absolute dollars was due primarily to the increase in sales and
marketing personnel and expansion of marketing efforts. The decrease in sales
and marketing costs as a percentage of revenues was due primarily to revenues
increasing at a greater rate.
GENERAL AND ADMINISTRATIVE. General and administrative costs were $1.1
million for the year ended December 31, 1996, or 111.1% of revenues. General and
administrative costs were $1.5 million for the year ended December 31, 1997, or
47.6% of revenues. The increase in absolute dollars was due primarily to the
expenses associated with increased personnel and associated expansion of our
infrastructure. The decrease in general and administrative costs as a percentage
of revenues was due primarily to revenues increasing at a greater rate.
LOSS FROM OPERATIONS. Our loss from operations was $3.4 million for the
year ended December 31, 1996, or (326.9)% of revenues. Loss from operations was
$4.7 million for the year ended December 31,
25
<PAGE>
1997, or (146.8)% of revenues. The decrease in the loss from operations as a
percentage of revenues was due primarily to the large increase in revenues
relative to the increases in costs of revenues and operating costs.
QUARTERLY RESULTS OF OPERATIONS
The following is a table of unaudited quarterly statement of operations data
for each of the quarters in the year ended December 31, 1998. This information
is unaudited, but in our opinion, has been prepared substantially on the same
basis as our audited financial statements, which are included elsewhere in this
prospectus. All necessary adjustments, consisting only of normal recurring
adjustments, have been included in these amounts to present fairly the unaudited
quarterly results of operations. You should read these quarterly data in
conjunction with our audited financial statements. You should not view the
results of operations for any quarter as an indication of the results of
operations for any future period.
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------
<S> <C> <C> <C> <C>
MAR. 31, JUNE 30, SEPT. 30, DEC. 31,
1998 1998 1998 1998
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues................................................................. $ 1,160 $ 1,345 $ 1,493 $ 2,333
Costs of revenues........................................................ 800 801 885 1,635
----------- ----------- ----------- ---------
Gross profit............................................................. 360 544 608 698
Operating expenses:
Research and development............................................... 248 260 274 600
Sales and marketing.................................................... 575 711 664 938
General and administrative............................................. 434 412 633 1,585
Amortization of intangibles............................................ -- -- -- 479
Acquired in-process research and development........................... -- -- -- 1,600
----------- ----------- ----------- ---------
Total operating expenses................................................. 1,257 1,383 1,571 5,202
----------- ----------- ----------- ---------
Loss from operations..................................................... (897) (839) (963) (4,504)
Interest income, net of interest expense................................. 45 4 7 9
----------- ----------- ----------- ---------
Net loss................................................................. $ (852) $ (835) $ (956) $ (4,495)
----------- ----------- ----------- ---------
----------- ----------- ----------- ---------
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------
<S> <C> <C> <C> <C>
MAR. 31, JUNE 30, SEPT. 30, DEC. 31,
1998 1998 1998 1998
Revenues............................................................. 100.0% 100.0% 100.0% 100.0%
Costs of revenues.................................................... 69.0 59.6 59.3 70.1
----- ----- ----- -----------
Gross profit......................................................... 31.0 40.4 40.7 29.9
Operating expenses:
Research and development........................................... 21.4 19.3 18.3 25.7
Sales and client service........................................... 49.6 52.9 44.5 40.2
General and administrative......................................... 37.4 30.6 42.4 68.0
Amortization of intangibles........................................ -- -- -- 20.5
Acquired in-process research and development....................... -- -- -- 68.6
----- ----- ----- -----------
Total operating expenses............................................. 108.4 102.8 105.2 223.0
----- ----- ----- -----------
Loss from operations................................................. (77.4) (62.4) (64.5) (193.1)
Interest income, net of interest expense............................. 3.9 0.3 0.5 0.4
----- ----- ----- -----------
Net loss............................................................. (73.5)% (62.1)% (64.0)% (192.7)%
----- ----- ----- -----------
----- ----- ----- -----------
</TABLE>
26
<PAGE>
Our revenues have increased in all quarters presented as a result of the
continuous expansion of our customer base, the sale of additional products and
services to our existing customers and the release of new products and services.
Results for the quarter ended December 31, 1998 are not comparable to other
quarterly results due to the inclusion of RelevantKnowledge for the last two
months of the quarter, as well as amortization of intangibles and the write-off
of acquired in-process research and development in association with the merger,
and a non-cash compensation expense recorded in connection with stock options.
In addition, in the fourth quarter of 1998 we incurred considerable expenses due
to costs incurred by operating two distinct panels, production systems and
infrastructures.
Our results of operations may fluctuate significantly in the future as a
result of a variety of factors, many of which are beyond our control. See "Risk
Factors--Our Operating Results May Fluctuate From Quarter to Quarter."
LIQUIDITY AND CAPITAL RESOURCES
Since our inception, we have financed our operations primarily through an
initial investment and loan by NPD, the private placement of equity securities,
RelevantKnowledge's cash on hand at the time of the merger and cash from
operations. In April 1997, we completed a $4.0 million private placement of our
equity securities. On November 4, 1998, some of our warrant holders exercised
warrants and acquired common stock for an aggregate purchase price of $1.5
million. On January 4, 1999, we issued to an existing stockholder common stock
for an aggregate of $2.0 million, which had been received by December 31, 1998.
Net cash used in operating activities was $342,000 for the year ended
December 31, 1996, $4.8 million for the year ended December 31, 1997 and
$411,000 for the year ended December 31, 1998. For each year, net cash used in
operating activities was substantially impacted by the amount owed to NPD. In
the year ended December 31, 1998, the amounts owed to NPD increased by $3.4
million. We expect that net cash used in operating activities in the first
quarter of 1999 will substantially increase due to the repayment of amounts due
to NPD for 1998. After this offering, we expect to pay NPD on a current basis.
Net cash provided by (used in) investing activities was zero for the year
ended December 31, 1996, $(135,000) for the year ended December 31, 1997 and
$3.1 million for the year ended December 31, 1998. Cash provided by investing
activities for the year ended December 31, 1998 resulted primarily from the
acquisition of $3.2 million of cash in the RelevantKnowledge transaction.
Net cash provided by financing activities was $925,000 for the year ended
December 31, 1996, $6.2 million for the year ended December 31, 1997 and $3.5
million for the year ended December 31, 1998. Cash provided by financing
activities for the year ended December 31, 1998 resulted from the $1.5 million
proceeds from the exercise of warrants and the receipt of $2.0 million on
December 31, 1998 relating to the sale of common stock in January 1999.
As of December 31, 1998, we had $8.0 million of cash and cash equivalents.
As of December 31, 1998, our principal commitments consisted of accrued
obligations for 1998 under our agreements with NPD in the amount of $4.7
million, of which $4.1 million was paid in January 1999. In addition, as of
December 31, 1998, our redeemable preferred stock had an aggregate liquidation
value of $4.7 million. All of our redeemable preferred stock is held by NPD. We
intend to use a portion of the net proceeds from this offering to redeem all of
the outstanding redeemable preferred stock.
Although we have no material commitments for capital expenditures,
management anticipates that we will experience a substantial increase in our
capital expenditures and lease commitments consistent with our anticipated
growth in operations, infrastructure and personnel, including in connection with
the anticipated separation of our systems from those of NPD. We currently
anticipate that we will continue to experience growth in our operating expenses
for the foreseeable future and that operating
27
<PAGE>
expenses will be a material use of our cash resources. We believe that the net
proceeds of this offering, together with our existing cash and cash equivalents
and short-term investments, will be sufficient to meet our anticipated cash
needs for working capital and capital expenditures for at least the next 18
months.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded to
accept only two-digit entries in the date code field and cannot reliably
distinguish dates beginning on January 1, 2000 from dates prior to the year
2000. Many companies' software and computer systems may need to be upgraded or
replaced in order to correctly process dates beginning in 2000.
STATE OF READINESS
We rely on NPD's computer and communications networks for collecting and
processing much of our data. NPD has advised us that it has substantially
completed a comprehensive review of its products, information systems and
critical suppliers for year 2000 compliance and has reported that its computer
and communications networks are year 2000 compliant. At this time, we have
contracted with NPD under the management services agreement to undertake a full
review of RelevantKnowledge's products, information systems and critical
suppliers. An initial report has indicated that there are no major issues. A
review will be completed in March 1999.
We have reviewed our meter, as well as our internal programs, and have
preliminarily determined that there are no significant year 2000 issues within
the meter or our systems or services. We are currently in the process of
correcting deficiencies which were identified in the course of our review of our
systems and expect to conduct a test of the updated software by the end of the
first quarter of 1999. We are currently installing new billing, accounting and
administrative systems which are scheduled to be fully operational during 1999
and which have been represented will be fully year 2000 compliant when fully
operational.
Our assessment plan consists of:
- quality assurance testing of our proprietary software, including our
metering technology;
- contacting third-party vendors and licensors of material hardware,
software and services that are both directly and indirectly related to the
collection and processing of the data received from panelists;
- contacting vendors of material non-IT systems;
- assessment of repair or replacement requirements;
- repair or replacement;
- implementation; and
- creation of contingency plans in the event of year 2000 failures.
COSTS
To date, we have not incurred any material expenditures in connection with
identifying or evaluating year 2000 compliance issues. Most of our expenses have
related to, and are expected to continue to relate to, the operating costs
associated with time spent by employees in the evaluation process and year 2000
compliance matters generally. At this time, we do not anticipate that we will
incur significant operating expenses or be required to invest heavily in
computer systems improvements to be year 2000 compliant. However, significant
uncertainty exists concerning the potential costs and effects associated
28
<PAGE>
with year 2000 compliance. If expenses relating to year 2000 compliance are
higher than anticipated, it could have a material adverse effect on our
business, results of operations and financial condition.
RISKS
We are not currently aware of any year 2000 compliance problems relating to
our meter or our data collection and retrieval systems that would have a
material adverse effect on our business, results of operations and financial
condition, other than those that are currently being corrected. However, we
cannot assure you that we will not discover year 2000 compliance problems in the
meter or the data retrieval and collection systems that will require substantial
expenditures to correct. In addition, there can be no assurance that third-party
software, hardware or services incorporated into our systems will not need to be
revised or replaced, all of which could be time consuming and expensive. Our
failure to fix the meter or to fix or replace third-party software, hardware or
services on a timely basis could result in lost revenues, increased operating
costs, the loss of customers and other business interruptions, any of which
could have a material adverse effect on our business, results of operations and
financial condition. Moreover, the failure to adequately address year 2000
compliance issues in our meter and our operating systems could result in claims
of mismanagement, misrepresentation or breach of contract and related
litigation, which could be costly and time-consuming to defend.
In addition, we can not assure you that governmental agencies, utility
companies, Internet access companies, third-party service providers and others
outside of our control will be year 2000 compliant. The failure by such entities
to be year 2000 compliant could result in a systemic failure beyond our control,
such as a prolonged Internet, telecommunications or electrical failure, which
could also prevent us from receiving data from our panelists, processing the
data and providing reports to our clients, which would have a material adverse
effect on our business, results of operations and financial condition.
CONTINGENCY PLAN
As discussed above, we are engaged in an ongoing year 2000 assessment and
have not yet developed any contingency plans. The results of our year 2000
testing to take place in the first quarter of 1999 and the responses received
from third-party vendors and service providers will be taken into account in
determining the nature and extent of any contingency plans.
29
<PAGE>
BUSINESS
INTRODUCTION
We are the leading provider of Internet audience measurement products and
services. We measure usage of the entire Internet, including the Web and
proprietary on-line services like America Online. Our products and services
enable the continued growth and development of the Internet by providing
reliable, third-party audience measurement data that our customers use as a
basis for making critical business decisions. We collect these data by measuring
Internet usage from a representative sample, or panel, of personal computer
users with our proprietary tracking technology. We maintain the largest panel of
Internet users under continuous measurement in the world. We have the only panel
currently reporting Internet usage both at work and at home, as well as the
usage of proprietary on-line services. We are the authoritative source for
Internet audience measurement data. In January 1999, our data were cited in more
than 400 print and on-line articles.
We have been at the forefront of the development and coordination of
technology and standards needed to facilitate advertising and transactions
between companies doing business over the Internet. Our customers include most
of the leading Internet advertisers and advertising agencies, the most heavily
trafficked Internet properties, leading technology companies and financial
institutions. The quality and depth of our customer base and our high customer
retention rate reflect our position as the leading Internet audience measurement
service.
INDUSTRY BACKGROUND
GROWTH OF THE INTERNET
The Internet has emerged as a global medium that allows millions of people
worldwide to obtain information, communicate and conduct business
electronically. The largest segments of the Internet are the World Wide Web and
proprietary on-line services, like America Online. International Data
Corporation, or IDC, estimates that the number of Web users worldwide will grow
from approximately 68.7 million in 1997 to approximately 319.8 million by the
end of 2002. Additionally, America Online, the largest on-line service provider,
had approximately 16 million service subscribers at the end of 1998. The
continued growth in Internet usage will be driven by:
- the large and growing number of personal computers installed in homes and
offices;
- easier, faster, more reliable and less expensive access to the Internet;
- the availability of more and better content on the Internet;
- the increased use of the Internet to buy and sell products and services;
- improvements in network infrastructure;
- the increasing ability to access the Internet with devices like
televisions and telephones; and
- the increasing familiarity and acceptance of the Internet by businesses
and consumers.
GROWTH OF INTERNET ADVERTISING AND ELECTRONIC COMMERCE
The unique interactive nature of the Internet has led to its rapid emergence
as a compelling vehicle for advertisers. The Internet offers advertisers the
ability to target:
- people with specific sets of interests;
- users with desirable demographic characteristics; and
- populations within specific regions, localities or countries.
30
<PAGE>
The Internet also gives marketers the potential to:
- establish dialogues and individual relationships with customers;
- receive direct feedback on their advertising;
- quickly and cost-effectively adapt their advertising to respond to
customer feedback; and
- reach broad, global audiences.
According to Forrester Research, Internet advertising spending worldwide is
expected to increase dramatically over the next five years, as illustrated by
the following chart:
WORLDWIDE INTERNET ADVERTISING SPENDING
($ IN MILLIONS)
<TABLE>
<CAPTION>
1998 1999 2000 2001 2002 2003
<S> <C> <C> <C> <C> <C> <C>
North America................ $ 1,300 $ 2,335 $ 3,995 $ 5,365 $ 7,775 $ 10,500
Europe....................... 105 235 525 1,050 1,840 2,765
Asia/Pacific................. 80 130 250 475 815 1,245
Latin America................ 20 45 110 230 420 645
--------- --------- --------- --------- --------- ---------
Total........................ $ 1,505 $ 2,745 $ 4,880 $ 7,120 $ 10,850 $ 15,155
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
The growing adoption of the Internet also represents an enormous opportunity
for marketers to conduct commerce over the Internet. This is commonly referred
to as e-commerce. E-commerce can be fast, inexpensive and convenient. A growing
number of users have transacted business over the Internet, including trading
securities, buying goods, purchasing airline tickets and paying bills. As
business and consumer acceptance of e-commerce grows, advertisers and direct
marketers are increasingly using the Internet to locate customers, advertise and
facilitate transactions. According to IDC, e-commerce is expected to increase
dramatically over the next five years, as illustrated by the following chart:
WORLDWIDE E-COMMERCE REVENUES (WEB ONLY)
($ IN MILLIONS)
<TABLE>
<CAPTION>
1997 1998 1999 2000 2001 2002
<S> <C> <C> <C> <C> <C> <C>
E-commerce revenues........... $ 12,403 $ 32,383 $ 67,113 $ 132,966 $ 237,233 $ 425,730
</TABLE>
The growth in Internet advertising spending will ultimately depend on the
ability of advertisers to plan their advertising expenditures by using reliable
data that demonstrate audience size and the value of Internet advertisement
placement. Timely audience measurement data have emerged as "must have"
information. This information enables the buying and selling of advertising and
sponsorship support. Additionally, reliable Internet audience measurement data
are key drivers of the e-commerce industry because they enable Internet
marketers to analyze consumer behavior and focus their Internet investments.
THE NEED FOR A MEASUREMENT STANDARD
Traditional media - including television, radio and print - are largely
supported by advertising spending. One of the principal elements that drives the
growth of advertising in all media is the availability of audience measurement
data, or ratings. In each medium, a single standard of audience
31
<PAGE>
measurement has emerged. For over 40 years, Nielsen's estimates of televison
audience size and composition have served as the standard for audience
measurement of national and local television advertising. Arbitron serves as the
radio audience measurement standard, and MRI serves as the magazine readership
measurement standard. These third-party standards provide a uniform basis of
measurement which advertisers, media companies, ad agencies and the financial
community rely on to make critical business decisions.
Given the widespread availability of essentially free information on the
Internet, it has been difficult for Web sites and proprietary on-line services
to induce people to pay for on-line content. Advertising is a critical revenue
stream for providers of on-line content and services. As Web sites and on-line
content providers seek to increase advertising revenues, and as on-line
advertisers seek to determine where they should spend their advertisement
dollars, demand is growing for reliable statistics and standardized methods to
evaluate Internet usage. As a result, a standard for Internet audience
measurement must emerge, which will:
- measure a large and representative sample of Internet users;
- track activity on the entire Internet, not just the Web, so that key
properties like America Online and other proprietary on-line services and
technologies are included;
- measure the Internet audience both at work and at home, because Internet
usage differs in these two environments; and
- be unbiased and independent from advertisers and content providers.
As in traditional media, an independent standard of audience measurement
must be adopted by advertisers and marketers on the Internet. A significant
business opportunity exists for the company that provides this standard.
THE MEDIA METRIX SOLUTION - SETTING THE STANDARD
We are the leading provider of Internet audience measurement products and
services. Our products and services are critical to the continued growth and
development of the Internet because they provide a reliable, third-party
audience measurement standard. Our customers use our data as a basis for making
effective business decisions. We are the authoritative source for Internet
audience measurement data. In January 1999, our data were cited in more than 400
print and on-line articles. We have been at the forefront of the development and
coordination of technology and standards needed to facilitate advertising and
transactions between companies doing business over the Internet. Our customers
include most of the leading Internet advertisers and advertising agencies, the
most heavily trafficked Internet properties, leading technology companies and
financial institutions.
We have become the leading provider of Internet audience measurement
products and services because of the following:
WE PROVIDE COMPREHENSIVE AUDIENCE MEASUREMENT. Our leading position is
based on our unique ability to measure the entire Internet audience, including
people who use the Web and proprietary on-line services. We have the largest
panel of Internet users under continuous measurement, and the only panel
measuring at-work usage. Furthermore, we believe that we are the only third
party that currently provides reliable audience measurement data of the America
Online proprietary on-line service.
WE DELIVER ACKNOWLEDGED EXPERTISE IN MARKETING AND MEDIA RESEARCH. The
members of our management team are leaders in the field of Internet audience
measurement and share a vast repository of knowledge in panel-based research,
media research, media research technology, television and print media and in
various fields of marketing research. As a result, we have extensive expertise
in the development and management of representative consumer and business panels
to collect data. This is a
32
<PAGE>
complicated process that is performed effectively by only a limited number of
marketing research companies. Panel recruitment must be managed carefully in
order to construct a panel broad enough to provide sufficient sample size and
varied enough to provide meaningful data on different population segments. Our
management team's experience in the art of managing panels results largely from
its experience at NPD, one of the ten largest U.S.-based marketing research
firms and a leading provider of panel-based marketing information. Because of
this expertise, we have successfully built and maintained a high quality
Internet panel.
WE MEET THE NEEDS OF AN INFLUENTIAL CUSTOMER BASE. Our success is due in
part to our large base of established client companies, including leading new
and traditional media companies, advertising agencies, technology companies,
e-commerce marketers and financial institutions. These customers are responsible
for a significant percentage of total Internet advertising revenues. As a
result, they are influential in determining the standard for Internet audience
measurement. These customers rely on our data to make effective business
decisions. We work with our customers and key trade associations to gain
critical insights into evolving markets and to remain at the forefront of
ongoing changes in the industry. This allows us to continue to effectively meet
our customers' needs.
WE DEMONSTRATE TECHNOLOGICAL LEADERSHIP. We collect data through our
patented metering method, which measures activity at the operating system level
of a panelist's personal computer. By measuring activity at the operating system
level, we believe we are well positioned to measure any new digital media that
may emerge. Our metering technology produces data on Internet usage, on-line
service usage and hardware and software applications usage. Once data are
collected, we construct dynamic databases from which we produce our reports
quickly and cost-effectively.
WE PROVIDE BROAD PRODUCT OFFERINGS AND DELIVERY OPTIONS. We offer a broad
range of comprehensive, reliable and timely audience measurement products and
services. Our product offerings include both syndicated products and customized
products. Syndicated products are standardized products that appeal to a broad
range of customers. Customized products are tailored to meet individual customer
needs. We continually expand our services in anticipation of our customers'
needs and the changes and growth of the industry we serve. We offer our
customers a variety of options for delivery of our reports, including via the
Web, e-mail, computer disk and hard copy reports.
STRATEGY
Our goal is to capitalize on our current leadership position in order to
become the accepted standard for Internet audience measurement. We intend to
achieve this goal through the following strategies:
CONTINUE OUR INDUSTRY LEADERSHIP. We expect to continue our history of
innovation as the pioneer of Internet audience measurement. We plan to continue
to develop our market-leading technology and leverage our panel and databases to
develop broader and more in-depth products and services. We maintain the largest
panel of Internet users under continuous measurement in the world. We are the
only company that reports at-work Internet usage, and the only third party that
reports usage of proprietary on-line services like America Online. We plan to
remain at the forefront of change in the industry by continuing to work closely
with our customers and by actively working with key trade associations and
non-profit organizations to establish standards for Internet audience
measurement.
DEVELOP PRODUCTS TO ACCELERATE E-COMMERCE GROWTH. We believe that the
success and growth of e-commerce, like Internet advertising, will be driven
largely by the availability of comprehensive and reliable quantitative and
qualitative data. These data must provide key statistics for the evaluation of
e-commerce businesses and business strategies. We are working with our clients
to develop products that will enable our clients to target Internet users most
likely to engage in e-commerce by providing
33
<PAGE>
behavioral and demographic data on people who purchase products, actively shop,
or merely click on to a particular e-commerce site.
EXPAND AND INCREASE PENETRATION OF OUR CLIENT BASE. We will continue to add
new customers, build on our successful client retention strategy and further
expand our existing customer relationships by offering products and services
that are valuable to our customers. We believe that our success in becoming the
leading Internet audience measurement service has been validated by our
historical ability to retain substantially our entire client base from year to
year. Of our customers under contract at the end of 1997, over 95% remained
customers at the end of 1998. We anticipate expanding our client base as
Internet advertising spending and e-commerce transactions increase and as more
Internet related businesses and advertisers require audience measurement data.
EXPAND INTERNATIONALLY. Unlike most media, which are delivered to a
national or local market, the Internet is the first medium that is regularly
delivered to a worldwide audience. For this reason, integrated, worldwide
audience measurement will be critical for advertisers to understand whom they
are reaching and for media properties to be able to effectively sell their
available advertising inventory. Additionally, over the next five years,
Internet advertising spending growth rates worldwide are projected to exceed
spending growth rates in the United States alone. We are responding to the
demands of our customers to obtain reliable Internet audience measurement data
in key non-U.S. markets. To capitalize on this trend, we intend to leverage our
proprietary panel, technology and brand recognition to become a worldwide
provider of Internet audience measurement services. We intend to rapidly expand
our presence in the international marketplace by developing additional products
in conjunction with local strategic partners who are leaders in panel-based
marketing and media research.
DEVELOP NEW PRODUCTS AND SERVICES. In addition to e-commerce related
products, we intend to continue to develop new products and services to meet the
growing needs of our customer base. As of December 31, 1998, we employed 14
people in new product development. We intend to expend significant additional
resources, including a portion of the proceeds from this offering, to expand our
new product development efforts. We are developing products that will offer
qualitative data measurement and expanded local market coverage. We are also
developing additional products and services based on our ability to gather
real-time data. We also intend to increase sales of customized products and
services to present and future clients. In addition, we intend to leverage the
capabilities of our patented metering method by creating and developing new
products based on a database that contains information on each panelist's
system's hardware configuration and software usage.
PRODUCTS AND SERVICES
Our principal products and services are derived from data collected from our
panel and stored in our core databases, which we use to produce the following:
- syndicated Internet audience measurement reports and services;
- customized Internet audience measurement reports and services; and
- hardware and software technology usage measurement reports and services.
34
<PAGE>
SYNDICATED PRODUCTS. We provide syndicated Internet audience measurement
products and services as our core business. Our key syndicated products consist
of:
<TABLE>
<CAPTION>
PRODUCT DESCRIPTION
<S> <C>
THE WEB REPORT...................... Our flagship syndicated audience measurement product contains the following
two components:
- THE KEY MEASURES REPORT: provides measures for all reportable Web sites,
categorized within major sectors. Key measures include:
- unique visitors;
- the percentage of the total Web audience in a month that could be reached
via each reported Web site, commonly referred to as reach;
- average usage days per user;
- average unique Web pages visited per day and per month;
- age and gender composition; and
- demographic composition.
- THE TREND REPORT: provides information on trends within the sectors in
the Key Measures Report for a six-month period. One section of the Trend
Report includes trends over a three-month period for key measures. Another
section provides an alphabetical listing of over 10,000 measured Web sites
and properties and the reach trends for each during the relevant six-month
period.
THE DIGITAL MEDIA REPORT............ Provides measurement of audience usage of proprietary on-line services like
America Online, push technology like PointCast, other proprietary services
like Juno, as well as all information collected in the Web Report. Allows
for the comparison of all digital media. Measures reported include:
- unique visitors;
- reach;
- usage days per person;
- minutes per usage day and per month; and
- age and gender composition.
THE LOCAL MARKET REPORT............. Tracks national and local market reach, demonstrating how national and
local Web sites perform within each of 14 top local markets. Data are
compiled on a monthly basis. We intend to expand our coverage to 25 local
markets in 1999.
THE AD NETWORK REPORT............... Details reach, frequency and demographic information across ad sales
networks and other ad-supported networks like DoubleClick, 24/7 Media,
Flycast, LinkExchange and AdSmart. The measures reported include the full
network reach and reach of those Web pages where ads have been served.
LIFEGRAPHICS........................ Provides behavioral data for lifestyles and purchase tendencies of Web
users.
</TABLE>
Currently, we also capture certain information about ad banners and use it
as input to our Ad Network Reports and to custom analyses. Ad banners are the
primary format for delivering advertisements over the Internet. In the future,
we may provide a report on ad banner usage.
35
<PAGE>
CUSTOMIZED SERVICES, REPORTS AND ANALYSES. We leverage our vast database of
information on Internet usage and technology usage to provide clients with a
broad range of special services, reports and analyses, including the following:
<TABLE>
<CAPTION>
PRODUCT DESCRIPTION
<S> <C>
INDUSTRY SECTOR/VERTICAL MARKET
REPORTS........................... Reports in-depth information on Web site performance within a specific
industry sector or vertical market.
RETENTION ANALYSES.................. Reports the percentage of audience that visits a Web site during a
particular month and returns during following months.
USAGE REPORTS....................... Segments Web and Web site traffic into heavy, medium and light usage groups
and compares behavior, usage pattern and demographics.
SITE CONTENT REPORTS................ Analyzes specific user-defined content areas, or channels, within a Web
site and reports on all items in the Key Measures Report.
PERSONAL CLICKSTREAM REPORTS........ Reports actual click-by-click, page level behavior of a sample of users
within a particular Web site as well as their behavior across the entire
Web.
TRAFFIC REFERRAL REPORTS............ Reports a summary of Web sites that users visit just prior to visiting a
particular Web site and indicates where they go after exiting the site.
SITE INTERACTION REPORTS............ Quantifies the degree to which a Web site shares audience with other Web
sites and properties, detailing exclusive and duplicated audience share.
</TABLE>
TECHNOLOGY USAGE MEASUREMENT REPORTS. Our meter captures data on all
software applications used each time a panelist logs onto his or her computer.
The meter also captures data on all hardware configurations and software
availability on the user's computer. We use these data to compile reports on
technology usage for companies that develop and market hardware and software
applications and for Web sites that seek to understand the technical
specifications of their visitors' computer systems.
<TABLE>
<CAPTION>
PRODUCT DESCRIPTION
<S> <C>
HARDSCAN REPORT HardScan, SoftScan and SoftUsage Reports provide details on hardware
SOFTSCAN REPORT ownership, peripheral ownership, branding information, installed
SOFTUSAGE REPORT applications and system software, including Internet browsers, and use of
LINKAGE REPORTS software applications categorized by Software Publishers' Association
US CONSUMER PC REPORT segments. The analyses in the Linkage Reports and the US Consumer PC Report
provide a unique look at the relationships between hardware, software,
media, ownership and usage.
</TABLE>
36
<PAGE>
CUSTOMERS
We have over 300 customers who use our data for many purposes like planning,
buying and selling advertising; developing e-commerce strategies; understanding
consumer behavior; gaining competitive market intelligence; and analyzing
investment decisions. Our customers are typically leaders in their respective
fields, and include the following:
<TABLE>
<CAPTION>
CLIENT SECTOR TYPICAL CLIENTS
<S> <C>
Media Organizations................. All of the top 20 Internet properties, including America Online, Buena
Vista/Disney, Excite, GeoCities, Infoseek, Lycos, Netscape, Time Warner and
Yahoo!
Advertising Agencies................ Interpublic Group, J. Walter Thompson, Modem Media.Poppe Tyson, Omnicom and
Young & Rubicam
Advertisers and Marketers........... Amazon.com, CDNow, eBay and General Motors
Technology Companies................ AT&T, Compaq, GTE, Hewlett-Packard, IBM and Microsoft
Financial Community................. E*Trade, Fidelity, Goldman Sachs and Morgan Stanley Dean Witter
</TABLE>
We typically enter into 12-month or longer subscription contracts with our
customers, some of whom are covered by multi-client master contracts with parent
corporations, like Time Warner and Buena Vista/Disney, to provide standard,
syndicated products and services or customized reports and analyses. It is
typical for our customers initially to purchase one of our standard products and
to upgrade over time. Of our customers under contract at the end of 1997, over
95% remained customers at the end of 1998.
MARKETING AND SALES
A critical element of all of our marketing efforts is to build awareness of
the Media Metrix brand. Our Internet audience measurement data receive extensive
publicity due to press reporting of Internet activity which either references or
is based on our data. During the month of January 1999, for example, our data
were cited in more than 400 print and on-line articles. Other publicity is
generated through public relations activity and public speaking engagements by
our executive officers.
We sell and market our products through our direct sales force, which was
comprised of 19 sales representatives as of December 31, 1998. A portion of our
sales force is dedicated to servicing and maintaining current clients. The
remainder is dedicated to developing new clients. Our sales force operates out
of our New York, San Francisco and Atlanta offices. Sales representatives
receive a base salary and are eligible for commissions based on revenues and
sales goals.
AUDIENCE MEASUREMENT METHODOLOGY
Our methodology has been developed from our background in panel recruitment
and management and includes our proprietary measurement technology. Key elements
of our methodology include:
PANELS AND DATA COLLECTION. Our panel is a representative sample of
personal computer users, including at-home and at-work users. We recruit panels
by random direct mail and telephone solicitation, both of which are standard
recruitment methods in marketing research. Our panel currently consists of over
40,000 individuals under measurement. In connection with our panel recruitment
process, each panelist is required to fill out a detailed questionnaire to
provide background demographic information. The questionnaire provides
information such as age, gender, household income, geographic region, level of
education, size of household and job classification of the panelists.
37
<PAGE>
Our proprietary metering system, or meter, is a software application
installed on a panelist's personal computer. It monitors activity of the
personal computer's operating system and browser. The meter passively records
what users do on their personal computers on a second-by-second basis,
including:
- the start and stop time of each activity;
- which application is being used;
- detailed usage activity for proprietary on-line services; and
- page-by-page viewing on the Internet.
Once the meter has collected the data from the panelist's personal computer,
data are transmitted to our offices for processing either via disk or via
automatic transfer over the Web. We plan to introduce a new version of our
metering system in 1999. The new meter will capture additional details of
Internet usage to accurately report audience behavior of emerging media such as
streaming audio and video. This version will also provide real time transmission
of data on usage. We also collect data via questionnaires distributed through
direct mail and over the Web. We utilize our own software to collect information
on hardware configurations and software installations of our panelists.
The statistical quality of the information that we collect is a function of
minimizing both sampling error and measurement error. Sampling error is a
function of the size and quality of the sample. Measurement error is a function
of the scope of the universe under measurement. We minimize sampling error by
maintaining a large, high quality panel. We minimize measurement error by
measuring all Internet usage, including the Web, proprietary on-line services
like America Online and all other activity on our panelists' personal computers.
We believe that we are the only company in the marketplace concentrating on
minimizing both sources of error for the measurement of the Internet market.
DATA ANALYSIS AND REPORT GENERATION AND DELIVERY. Data retrieved from the
meter are transmitted or downloaded to file servers and then combined with those
of all the other panelists. The data are then used to construct several
databases, which we use to provide our reports. We deliver our reports in one or
more of the following formats: via proprietary Web-based delivery systems;
e-mail; computer disk or hard copy.
OPERATIONS AND TECHNOLOGY
We have built our primary data collection, retrieval and processing system
based on systems and software developed by NPD. Our system has been designed
around industry standard data architectures. Backup procedures are built into
the processing environment in order to reduce downtime in the event of outages
or catastrophic occurrences. Our hardware systems are hosted at NPD's Uniondale,
New York facility, our Atlanta, Georgia facility, NPD's Port Washington, New
York facility, and at two offsite professionally-managed computer centers in
Atlanta, Georgia and Santa Clara, California. We outsource the operation of much
of our technical infrastructure to NPD.
As of December 31, 1998, we had 19 employees dedicated to research and
development. We incurred research and development expenses of $588,000 in 1996,
$865,000 in 1997 and $1.4 million in 1998. We anticipate that we will continue
to devote significant resources to product development and the development of
delivery technology in the future as we add new reports and databases.
INTELLECTUAL PROPERTY
We regard the protection of our patents, copyrights, service marks,
trademarks and trade secrets as important to our future success and rely on a
combination of patent, copyright, trademark, service mark and trade secret laws
and contractual restrictions to establish and protect our proprietary rights.
38
<PAGE>
We require all employees and contractors to enter into confidentiality and
invention assignment agreements, and we enter into nondisclosure agreements with
third-parties with whom we do business in order to limit access to and
disclosure of our proprietary information. We cannot assure you that these
contractual arrangements or the other steps we have taken or will take in the
future will be sufficient to protect our technology from infringement or
misappropriation or to deter independent development of similar or superior
technologies by others.
We seek to obtain the issuance of patents registration and the trademarks
and service marks in the United States and selected other countries. Effective
patent, trademark, service mark, copyright and trade secret protection may not
be available in every country in which our products and services are or will be
made available. We also expect to license certain proprietary rights such as
patents, trademarks or copyrighted material to strategic partners in the course
of our planned international expansion. While we will attempt to ensure that the
quality of our service is maintained by such licensees, we cannot assure you
that such licensees will not take actions that might materially adversely affect
the value of our proprietary rights or reputation, which could have a material
adverse effect on our business, results of operations and financial condition.
We also rely on certain technologies that we license from third parties,
like NPD, which licenses to us key software products and database technology. We
cannot assure you that these third-party technology licenses will not infringe
the proprietary rights of others or will continue to be available to us on
commercially reasonable terms, if at all. The loss of such technology could
require us to obtain substitute technology of lower quality or performance
standards or at greater cost, which could materially adversely affect our
business, results of operations and financial condition.
We have been issued a patent in the United States with regard to our meter
methodology. We also have patent applications pending in the European Patent
office and in Australia, Brazil, Canada, Japan, Mexico, Norway and the United
States.
We have also applied for a patent in the United States and other foreign
jurisdictions on the methodology for monitoring of remote data access on a
public computer network which comprises the former RelevantKnowledge meter. This
application is currently pending.
In connection with our federal trademark application for the name "Media
Metrix," a third party has filed an opposition to our application.
To date, we have not been notified that our technologies infringe the
proprietary rights of third parties. We cannot assure you that others will not
claim that we have infringed proprietary rights with respect to past, current or
future technologies. We expect that the number of infringement claims in our
market will increase as the number of services and competitors in our industry
grows. Any of those claims, whether meritorious or not, could be time-consuming,
result in costly litigation or require us to enter into royalty or licensing
agreements. Royalty or licensing agreements might not be available on terms we
find acceptable or at all. As a result, any such claim could have a material
adverse effect upon our business, results of operations and financial condition.
COMPETITION
The market for measurement services for Internet technologies is new,
rapidly evolving and competitive. We expect that competition will intensify in
the future. We compete with other providers of Internet audience measurement
services, which are considered either consumer-centric measurement services or
site-centric measurement services. Consumer-centric services track usage among a
sample of users to provide an account of overall Internet usage behavior.
Site-centric services measure activity at a single web site and provide
measurement of activity at a particular Web site. We are a consumer-centric
service and compete directly with other consumer-centric measurement services
and indirectly with operators of site-centric measurement systems.
39
<PAGE>
Currently, we compete directly with NetRatings. Nielsen Media Research, the
leading provider of television audience measurement services, has announced
plans to introduce a product to compete with ours. Nielsen has significantly
more financial and other resources than we do. If Nielsen does in fact launch a
product, it could prove to be a significant competitor. Nielsen has also
announced that it intends to make an investment in NetRatings in order to
utilize the NetRatings tracking software. Other potential competitors include PC
Data, a marketing research firm that provides research on personal computer
software and hardware sales, and @Plan, a consumer-centric, qualitative
measurement service.
In addition, we may face competition from individual Web sites that may
develop new and independent methods of measuring their own audience. We also
face competition from other companies that develop alternative audience
measurement technologies to those already provided by us or our current
competitors. Competitive pressures created by any one of these companies, or by
our competitors collectively, could have a material adverse effect on our
business, results of operations and financial condition.
We believe that the principal competitive factors in our market are the
ability to:
- create high-quality, timely and reliable consumer and business panels of a
sufficient size and representative nature to provide the necessary data;
- provide measurement services of proprietary on-line services and
Internet-related activity as well as measuring Web activity; and
- establish credibility and provide a trusted independent source of data.
Some of our competitors and potential competitors have longer operating
histories, larger customer bases and greater brand recognition in other
businesses and significantly greater financial, marketing, technical and other
resources than we do. We also face competition in the area of development of
representative consumer and business panels to provide data. In addition, other
measurement services may be acquired by, receive investments from or enter into
other commercial relationships with larger, well-established and well-financed
companies as use of the Internet increases. Therefore, certain of our
competitors with other revenue sources may be able to devote greater resources
to marketing and promotional campaigns, adopt more aggressive pricing policies
and devote substantially more resources to technology and systems development
than we can. Increased competition may result in reduced operating margins, loss
of market share and diminished value in our services. We cannot assure you that
we will be able to compete successfully against current and future competitors.
Further, as a strategic response to changes in the competitive environment, we
may, from time to time, make certain pricing, service or marketing decisions or
acquisitions that could have a material adverse effect on our business, results
of operations and financial condition. New technologies and the expansion of
existing technologies may also increase the competitive pressures on us by
enabling our competitors to offer a lower-cost service.
EMPLOYEES
As of December 31, 1998, we had 88 full-time employees, with:
- 19 in research and development;
- 21 in operations;
- 34 in sales, marketing and client service; and
- 14 in management, administration and finance.
Our employees are not covered by a collective bargaining agreement. We have
never experienced an employment-related work stoppage and consider our employee
relations to be good.
40
<PAGE>
PROPERTIES
Currently, our operations and research and development facilities are
located in Port Washington and Uniondale, New York, which are leased to us by
NPD under the terms of a management services agreement. See "Certain
Transactions--Management Services Agreement." In addition, we lease office space
in Atlanta, Georgia, San Francisco, California, and New York, New York. We also
sublease additional office space at another location in New York, New York. We
are in the process of looking for additional leaseable space in New York, New
York.
The property we currently utilize in Port Washington is leased by NPD from
NPD Realty Group, LLC, a limited liability company which is owned by Tod
Johnson, The 1995 Scott Johnson Trust and The 1995 Stacey Johnson Trust. See
"Certain Transactions--Transactions with Directors and Executive
Officers--Management Services Agreement."
LEGAL PROCEEDINGS
We are not a party to any material legal proceedings.
41
<PAGE>
MANAGEMENT
OUR EXECUTIVE OFFICERS, KEY EMPLOYEES AND DIRECTORS
The executive officers, key employees and directors of Media Metrix, and
their ages and positions, are:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Tod Johnson............................ 54 Chairman of the Board, Chief Executive Officer and Director
Mary Ann Packo......................... 44 President and Chief Operating Officer
Steve Coffey........................... 43 Executive Vice President
Thomas A. Lynch........................ 38 Chief Financial Officer, Secretary and Treasurer
Doug McFarland......................... 49 Senior Vice President, Sales
Jeffrey C. Levy(1)..................... 36 Director and Vice Chairman
Michael C. Brooks(2)................... 54 Director
Stig Kry(2)............................ 70 Director
William W. Helman(1)................... 40 Director
James Mortensen(1)(2).................. 73 Director
Timothy F. S. Cobb..................... 34 Executive Consultant
</TABLE>
- -----------------------
(1) Compensation committee member.
(2) Audit committee member.
TOD JOHNSON has been our Chairman of the Board and Chief Executive Officer
since March 1997 and has been involved in managing our business since our
inception as a division of NPD and then as PC Meter. He has served as the
Chairman and Chief Executive Officer of NPD since 1971. He has also served as
Chairman of the Advertising Research Foundation and was the Founding Co-Chairman
of the Council for Marketing and Opinion Research. Mr. Johnson earned a B.S. and
an M.S. from Carnegie Mellon University.
MARY ANN PACKO has been our President and Chief Operating Officer since
March 1997. She has been involved in managing our business since July 1996. She
served as Executive Director of IPSOS-NFO Europe, Paris, from July 1995 to July
1996 and as Vice President of New Ventures with NFO Worldwide from July 1994 to
July 1995. Prior to July 1994, Ms. Packo was the President of the Custom
Services Division of NPD Canada. Ms. Packo co-founded and was President of
National Yellow Pages Monitor and has served on the Board of Directors of the
Internet Advertising Bureau. Ms. Packo received her B.S. from Miami University,
Oxford, Ohio.
STEVE COFFEY has been our Executive Vice President since 1997 and has been
involved in managing our business since our inception as a division of NPD and
then as PC Meter. Mr. Coffey also headed the Advanced Research and Development
team at NPD from October 1994 to January 1996, where he founded and launched PC
Meter. Mr. Coffey received an M.S. from Columbia Business School.
THOMAS A. LYNCH has been our Chief Financial Officer since March 1997 and
has been involved in managing our business since our inception as a division of
NPD and then as PC Meter. He also served as Senior Vice President and Chief
Financial Officer of NPD from May 1995 to November 1998. Prior to joining NPD,
Mr. Lynch was a partner at KPMG Corporate Finance in Tokyo, Japan. Mr. Lynch
earned a Bachelors of Commerce degree from University College Dublin, Ireland
and an M.B.A. from the London Business School, England.
42
<PAGE>
DOUG MCFARLAND has been our Senior Vice President, Sales since February
1997. From July 1994 until joining us, Mr. McFarland was an executive vice
president with FreeMark Communications. From February 1992 until July 1994, Mr.
McFarland was a senior vice president of Next Century Media. Prior to that time,
he held various positions at Arbitron, including vice president-sales and
marketing. Mr. McFarland received his B.A. from Emory and Henry College and an
M.A. from Virginia Tech.
JEFFREY C. LEVY has been a director and Vice Chairman since November 1998.
Mr. Levy co-founded RelevantKnowledge with Timothy F.S. Cobb and served as its
Chief Executive Officer from November 1996 to November 1998. He served as legal
counsel at Turner Broadcasting System, Inc. from January 1995 to November 1996.
Prior to January 1995, he was an associate at the law firm of Dow, Lohnes &
Albertson. Mr. Levy holds an A.B. from Harvard College and a J.D. from Harvard
Law School.
MICHAEL C. BROOKS has been a director since November 1998. He was a director
of RelevantKnowledge prior to the merger. He has been a general partner of J.H.
Whitney & Co., a venture capital fund, since 1984. He is also a director of
SunGard Data Systems, Inc., Pegasus Communications, Inc., NMT Medical,
USinternetworking, Inc. and several other private companies. Mr. Brooks holds a
B.A. from Yale College and an M.B.A. from Harvard Business School.
WILLIAM W. HELMAN has been a director since April 1997. He has been a
general partner of Greylock IX Limited Partnership, a venture capital fund,
since 1984. He is also a director of Millennium Pharmaceuticals, Inc., Vertex
Pharmaceuticals, Inc. and various privately held companies. Mr. Helman holds an
A.B. from Dartmouth College and an M.B.A. from Harvard Business School.
STIG KRY has been a director since March 1997. He has been employed by Kurt
Salmon Associates, Inc., a management consulting firm, since 1958, holding
various positions, including Chief Executive from 1975 to 1987 and his current
position as Chairman Emeritus since 1993. He is a director of Guilford Mills,
Inc. and Osh Kosh B'Gosh, Inc. as well as several private companies. Mr. Kry
holds a degree in textile engineering from NKI, Skolan, Stockholm, Sweden.
JAMES MORTENSEN has been a director since March 1997. Mr. Mortensen is a
private consultant. He was employed by Young & Rubicam Inc. from 1957 to 1982
where he held various positions, including Chief Financial Officer, Vice
Chairman and Chair of the Executive Committee. Mr. Mortensen attended Denver
University.
TIMOTHY F. S. COBB is an executive consultant and former director. He was a
director from November 1998 through February 1999. He co-founded
RelevantKnowledge with Jeffrey C. Levy and served as its President from November
1996 to November 1998. Prior to founding RelevantKnowledge, Mr. Cobb held
various positions at Turner Broadcasting System, Inc., including Vice
President--Business Ventures and legal counsel. Mr. Cobb holds a B.S. from the
University of North Carolina at Chapel Hill and a J.D. from the University of
Pennsylvania Law School.
After the closing of this offering, our board will be divided into three
classes, denominated Class I, Class II and Class III. Members of each class hold
office for three-year terms which are staggered. At each annual meeting of our
stockholders starting with the meeting in 2000, the successors to the directors
whose terms expire at that meeting will be elected to serve for a three-year
period following their election or until a successor has been duly elected and
qualified. Messrs. Levy and Mortensen are Class I directors whose terms expire
at the 2000 annual meeting of stockholders. Messrs. Brooks and Kry are Class II
directors whose terms expire at the 2001 annual meeting of stockholders. Messrs.
Johnson and Helman are Class III directors whose terms expire at the 2002 annual
meeting. The expiration of a director's term is subject in all cases to the
election and qualification of his successor or his earlier death, removal or
resignation. All of our directors were elected to the board pursuant to a
43
<PAGE>
stockholders' agreement, which will terminate at the closing of the offering.
Our officers are appointed to serve at the discretion of the board.
The board has established an audit committee and a compensation committee.
The audit committee reviews our annual audit and meets with our independent
auditors to review our internal controls and financial management practices. The
compensation committee recommends to the board the compensation for our key
employees.
DIRECTOR COMPENSATION
In the past, non-employee, non-stockholder directors have received cash
compensation of $6,000 per year and options to purchase our common stock
received from both NPD and Media Metrix. See "Principal Stockholders." We intend
to institute a policy of compensation for non-employee directors prior to the
offering.
EXECUTIVE COMPENSATION
The following table sets forth information concerning all cash and non-cash
compensation awarded to, earned by or paid to our Chief Executive Officer and
our next four most highly compensated executive officers for services rendered
to us during the fiscal year ended December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION --------------------------
------------------------------------ SECURITIES
OTHER UNDERLYING ALL
NAME AND PRINCIPAL ANNUAL OPTIONS/ OTHER
POSITION YEAR SALARY BONUS COMPENSATION SARS COMPENSATION
<S> <C> <C> <C> <C> <C> <C>
Tod Johnson.................................... 1998 -- -- -- -- --
Chief Executive Officer and 1997 -- -- -- -- --
Chairman of the Board (1) 1996 -- -- -- -- --
Mary Ann Packo................................. 1998 $ 157,500 $ 59,000 -- 43,715 --
President and Chief 1997 153,000 35,000 -- 25,170 --
Operating Officer 1996(2) 150,000 51,000 -- 66,534 --
Steve Coffey................................... 1998 $ 145,000 $ 54,500 -- 43,715 --
Executive Vice President 1997 130,000 35,000 -- 25,170 --
1996 120,000 47,000 -- 66,534 --
Thomas A. Lynch................................ 1998 -- -- -- 39,367 --
Chief Financial Officer(1) 1997 -- -- -- 2,175 --
1996 -- -- -- -- --
Doug McFarland................................. 1998 $ 154,500 $ 42,000 -- 24,345 --
Senior Vice President, Sales 1997 150,000 30,000 -- 36,964 --
1996 -- -- -- -- --
</TABLE>
- -----------------------
(1) Compensation for Mr. Johnson's services as Chief Executive Officer and Mr.
Lynch's services as Chief Financial Officer in 1998 was paid under our
management services agreement with NPD. We will continue to pay for Mr.
Johnson's services pursuant to this agreement at the rate of $15,000 per
month. See "Certain Transactions--Transactions with Officers and
Directors--Management Services Agreement." Mr. Lynch's salary was paid by
NPD through November 1998. For December 1998 and for 1999, Mr. Lynch's is
being paid at the rate of $165,000 per annum.
(2) Ms. Packo joined us in July 1996.
44
<PAGE>
STOCK OPTIONS
The following table sets forth summary information concerning individual
grants of stock options made during the year ended December 31, 1998 to each of
our executive officers named in the Summary Compensation Table.
OPTION GRANTS IN YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE
AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES
------------------------------------------------------------ OF STOCK
NUMBER OF % OF TOTAL PRICE
SHARES OPTIONS EXERCISE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION
OPTIONS EMPLOYEES IN PRICE PER TERM (1)
NAME GRANTED 1998 SHARE EXPIRATION DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Tod Johnson.................... -- -- -- -- -- --
Mary Ann Packo................. 21,743 11.7% $ 2.30 July 22, 2008 $ 31,460 $ 79,725
21,972 $ 2.39 December 3, 2008 33,017 83,671
Steve Coffey................... 21,743 11.7 $ 2.30 July 22, 2008 31,460 79,725
21,972 $ 2.39 December 3, 2008 33,017 83,671
Thomas A. Lynch................ 17,395 10.5 $ 2.30 July 22, 2008 25,168 63,780
21,743 $ 2.39 December 3, 2008 33,017 83,671
Doug McFarland................. 19,570 8.2 $ 2.30 July 22, 2008 28,315 71,755
10,986 $ 2.39 December 3, 2008 16,508 41,836
</TABLE>
- -----------------------
(1) These amounts represent assumed rates of appreciation in the price of our
common stock during the terms of the options in accordance with rates
specified in applicable federal securities regulations. Actual gains, if
any, on stock option exercises will depend on the future price of the common
stock. There is no representation that the rates of appreciation reflected
in this table will be achieved.
The following table sets forth at December 31, 1998 the number of options
and the value of unexercised options held by each of the executive officers
named in the Summary Compensation Table:
AGGREGATED YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
SUBJECT TO UNEXERCISED IN-THE-MONEY
OPTIONS AT YEAR END OPTIONS AT YEAR END (1)
------------------------------ ----------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Tod Johnson............................................... -- -- -- --
Mary Ann Packo............................................ 0 136,341 $ 0
Steve Coffey.............................................. 0 136,341 $ 0
Thomas A. Lynch........................................... 0 88,670(2) $ 0
Doug McFarland............................................ 0 67,517 $ 0
</TABLE>
- -----------------------
(1) The dollar values have been calculated by determining the difference between
the fair market value of the securities underlying the options at December
31, 1998 and the exercise prices of the options. Solely for purposes of
determining the value of options at December 31, 1998, we have assumed that
the fair market value of shares of common stock issuable upon exercise of
options was $ per share, the assumed initial public offering price,
since the common stock was not traded in an established market prior to the
offering.
(2) Includes 47,130 shares of our common stock issuable upon the exercise of
options granted pursuant to an NPD plan that gives Mr. Lynch an option to
purchase shares of Media Metrix common stock held by NPD.
45
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
We have established a compensation committee consisting of William W.
Helman, Jeffrey C. Levy and James Mortensen. Until February 1999, matters
concerning executive officer compensation were addressed by the entire board
because we did not have a compensation committee.
EQUITY INCENTIVE PLANS
We adopted our 1998 Equity Incentive Plan in November 1998. Under the 1998
Plan, we may award incentive and non-statutory stock options, stock appreciation
rights, restricted stock, performance stock units and other stock units which
are valued by reference to the value of our common stock. We also maintain the
Media Metrix Stock Option Plan which provides for the award of up to 519,222
shares of our common stock in the form of incentive stock options and
non-statutory stock options. The 1998 Plan and the Media Metrix Plan are
hereinafter referred to collectively as the equity plans.
In February 1999, the board adopted an amendment to the 1998 Plan to
increase the number of shares of our common stock available for awards under the
1998 Plan from 732,400 to 1,318,320.
As of February 15, 1999, options to purchase an aggregate of 963,497 shares
of common stock were outstanding under the equity plans, and an aggregate of
874,045 shares of common stock are authorized but have not yet granted as awards
under the equity plans. We do not intend to issue any more options under the
Media Metrix Plan.
Our officers, employees, non-employee directors and consultants are eligible
to participate in the equity plans. The compensation committee administers the
equity plans and determines, subject to the provisions of the equity plans, who
shall receive awards, the types of awards to be made, and the terms and
conditions of each award. Options that are intended to qualify as incentive
stock options under the equity plans may not be exercisable for more than 10
years after the date the option is granted and may not be granted at an exercise
price less than the fair market value of our common stock at the time the option
is granted. In the case of incentive stock options granted to holders of more
than 10% of our common stock, the options may not be granted at an exercise
price less than 110% of the fair market value of our common stock at the time
the options are granted.
The 1998 Plan provides that all outstanding awards shall become immediately
exercisable on the day prior to the consummation of any merger or consolidation
in which we are not the surviving corporation or which results in the
acquisition of substantially all our outstanding shares by a single person or
entity or by a group of persons and/or entities acting in concert, or in the
event of the sale or transfer of substantially all of our assets. The number of
shares subject to each award shall be adjusted upon the occurrence of a stock
split or recapitalization of our common stock.
The board may amend, modify or terminate any outstanding award under the
equity plans with the participant's consent, except consent shall not be
required if the board determines that such action will not materially and
adversely affect the participant. The board may amend, suspend or terminate
either of the equity plans, or any part of such plans, at any time.
46
<PAGE>
CERTAIN TRANSACTIONS
FORMATION BY NPD
Prior to April 14, 1997, the business currently conducted by Media Metrix
was operated as PC Meter. NPD originally held 100,000 Class A Limited
Partnership Units and 79,000 Class B Limited Partnership Units of PC Meter. The
1995 Scott Johnson Trust and The 1995 Stacey Johnson Trust each held 19,323.5
Class B Limited Partnership Units of PC Meter. In addition, PC Meter was
indebted to NPD in the amount of approximately $4.0 million which PC Meter used
for working capital purposes. On April 14, 1997, PC Meter was merged with and
into Media Metrix. Immediately prior to the merger, NPD purchased an additional
338,767.7324 Class A Limited Partnership Units for a purchase price of $3.2
million. Under the terms of the merger between Media Metrix and PC Meter, each
Class A Limited Partnership Unit was exchanged for 0.09446 shares of our
redeemable preferred stock for a total of 41,446 shares. Each Class B Limited
Partnership Unit was exchanged for 12.75 shares of our common stock. NPD
currently hold 41,446 shares of our redeemable preferred stock and 4,380,559
shares of common stock. Tod Johnson, our Chairman and Chief Executive Officer,
is the controlling stockholder of NPD. After the merger, we repaid the
indebtedness owed to NPD by PC Meter.
PRIVATE PLACEMENTS OF SECURITIES
On April 14, 1997 we issued:
- warrants to purchase 377,642 shares of common stock at an exercise price
of $2.88 per share to Veronis Suhler & Associates;
- 495,603 shares of Series A Preferred Stock convertible into 2,155,176
shares of common stock, at an effective purchase price per share of common
stock of $1.86; and
- warrants to purchase 159,640 shares of Series B Preferred Stock at an
exercise price of $12.53 per share.
Of the securities issued, and after giving effect to the conversion of our
convertible preferred stock on November 4, 1998, Greylock IX Limited Partnership
purchased 1,030,743 shares of our common stock for an aggregate of $1,331,997.
Warrants to purchase 119,713 shares of Series B Preferred Stock were exercised
on November 4, 1998 and such shares of Series B Preferred Stock were converted
into 520,590 shares of common stock on the same date. Warrants to purchase
39,926 shares of Series B Preferred Stock were converted into warrants to
purchase 173,629 shares of common stock at an exercise price of $2.88 per share.
Greylock received warrants to purchase 104,175 shares of our common stock.
On November 5, 1998, RelevantKnowledge merged into Media Metrix. We issued
an aggregate of 3,885,531 shares of common stock, or 0.3111 shares of common
stock for each outstanding share of common stock and preferred stock of
RelevantKnowledge. We also replaced 1,160,290 warrants to purchase shares of
RelevantKnowledge common stock with a weighted average exercise price of $2.31
with warrants to purchase 360,930 shares of our common stock with a weighted
average exercise price of $1.38. We also issued 46,775 options to purchase our
common stock to the employees of RelevantKnowledge who became our employees
after the merger. Messrs. Levy and Cobb and Whitney Equity Partners, L.P. all
received shares of our common stock in the merger.
TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
MANAGEMENT SERVICES AGREEMENT
With the formation of PC Meter on March 31, 1996, PC Meter entered into a
management services agreement with NPD and Tod Johnson. NPD and Mr. Johnson
agreed to provide services related to PC Meter's business to the extent PC Meter
wished to use such services. We succeeded to
47
<PAGE>
that agreement when we merged with PC Meter. The agreement was amended and
restated on April 14, 1997 in connection with the private placement of our
Series A Preferred Stock and warrants to purchase Series B Preferred Stock. We
entered into a new management services agreement with NPD and Mr. Johnson on
September 30, 1998, in anticipation of our merger with RelevantKnowledge, on
substantially the same terms as the prior management services agreement.
Services which NPD agreed to provide, if needed, include:
- the support of the operation and administration of our panel, including
recruitment, operation and compensation of the panel;
- access to panelists in NPD's panels;
- data capture and editing of data;
- data base structuring and storage of data;
- processing of reports and client support;
- provision of systems support and development as necessary;
- provision of computer time, storage and printing as reasonably necessary
in connection with the provision of the services specified in the
preceding items, support in connection with client service and sales;
- office space and facilities within NPD leased facilities; and
- the provision of NPD's hardware ownership survey.
In addition to the specific services outlined above, NPD also agreed to
provide administrative and office logistical support, including payroll
management. At this time, NPD no longer provides payroll and panel support
services.
The management services agreement may be terminated by either party with 90
days' prior written notice, except that NPD may not terminate the management
services agreement prior to March 31, 2002. When the management services
agreement is terminated, NPD will provide us with a perpetual, royalty free,
non-forfeitable license of all data and documentation in its possession and
developed during the performance of the services relating to our business. We
have also agreed to provide NPD with a reciprocal license relating to certain
information.
NPD and Mr. Johnson have also agreed that during the term of the management
services agreement and for a period of two years after its termination, neither
NPD nor Mr. Johnson will enter into the field of audience measurement for
digital on-line media and measurement of usage of computer software and personal
computers, except for investments in publicly traded companies not to exceed 10%
of any company's outstanding capital stock.
As compensation for the services provided by NPD, we pay NPD on a monthly
basis an amount equal to all expenses reasonably incurred by NPD in the
performance of its duties under the management services agreement, plus 105% of
the sum of (1) the amount of NPD's overhead allocable to us and (2) service
charges like computer rent, mail handling and printing and postage. NPD charged
us $6.0 million under the management services agreement in 1998. Salary for Tod
Johnson is reimbursed as part of overhead charges. NPD was reimbursed $62,000
for Mr. Johnson's services and $36,000 for Mr. Lynch's services in 1998. The
amounts charged by NPD for Mr. Johnson and Mr. Lynch's services were below the
amounts provided for under the management services agreement. NPD has waived any
additional amounts to which it is entitled under the agreement. See
"Management--Executive Compensation."
48
<PAGE>
The building in Port Washington, New York where we lease space from NPD
under the management services agreement is owned by NPD Realty Company, LLC,
which is owned 50% by Tod Johnson, 25% by The Scott Johnson Trust and 25% by The
Stacey Johnson Trust. The management services agreement provides that rent
allocable to us by NPD may not exceed fair market value of the space.
SERVICES AGREEMENT
We have entered into a services agreement with NPD dated as of September 30,
1998. We have granted NPD and its affiliates access to our databases for any
business purpose of NPD and its affiliates which is not in direct competition
with our business. We have also granted NPD a non-exclusive licence to use
certain computer software owned by us which is used for Internet audience
measurement. In addition, we have also agreed that we will not license our
software to any one else who will use the software to compete with NPD. Under
the terms of the services agreement, we receive a monthly fee of $2,500 plus
expenses. The services agreement is terminable by mutual consent of the parties
or on 120 days' prior written notice by either party.
LICENSE AGREEMENT
We have a license agreement dated as of November 5, 1998 with NPD. NPD has
granted to us an exclusive, non-transferable, perpetual, worldwide license to
use the NPD PowerView-Registered Trademark- computer software and standard set
ups, Flexsys-TM- and NPD SofTrends-TM- dictionary solely in connection with the
operation of the our metering system. This software enables us to construct our
databases from the data we collect from our panelists. We pay NPD licensing fees
of $11,000 per month payable quarterly. The license is terminable by NPD on our
breach of the terms of the agreement like failure to pay the license fees, or
bankruptcy.
EMPLOYMENT AND CONSULTING AGREEMENTS
We have entered into an employee agreement with Jeffrey C. Levy, a director
and a Vice Chairman, in connection with our merger with RelevantKnowledge. The
term of his agreement is the shorter of (1) fifteen months from November 5, 1998
and (2) six months after this offering. Mr. Levy receives an annual base salary
of $165,000 and is entitled to a bonus for 1998 and 1999 in accordance with our
bonus structure generally available for senior executives, to be determined by
the Chief Executive Officer and the non-employee director nominated by the
former stockholders of RelevantKnowledge. The agreement may be terminated with
or without cause by either party. After this offering, Mr. Levy will become a
non-executive vice chairman.
At the time of our merger with RelevantKnowledge, we also entered into an
employment agreement with Timothy F. S. Cobb, the co-founder of
RelevantKnowledge, under which he acted as a Vice Chairman and a director of
Media Metrix. The agreement provides for an annual base salary of $165,000 and a
bonus for 1998 calculated in a manner similar to Mr. Levy's bonus. Following the
termination of Mr. Cobb's employment on January 31, 1999, we agreed with Mr.
Cobb that he would continue as an executive consultant.
49
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of our common stock as of February 15, 1999, after giving effect to
the offering, by: (1) each person known to beneficially own more than 5% of our
common stock; (2) each of our directors; (3) each executive officer named in the
summary compensation table; and (4) all executive officers and directors as a
group. All persons listed have sole voting and investment power with respect to
their shares unless otherwise indicated. Unless indicated otherwise, the address
of the beneficial owners is: c/o Media Metrix, Inc., 35 East 21(st) Street, New
York, New York 10010.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of common stock issuable pursuant to
options, to the extent those options are currently exercisable or convertible
within 60 days of February 15, 1999, are treated as outstanding for computing
the percentage of the person holding those securities but are not treated as
outstanding for computing the percentage of any other person. Unless otherwise
noted, each person or group identified possesses sole voting and investment
power with respect to shares, subject to applicable community property laws.
Beneficial ownership percentage is based on 13,294,431 shares of common stock
outstanding as of February 15, 1999 and shares of common stock outstanding
after completion of this offering and in each case after giving effect to the
1.4648-for-1 split of the common stock.
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
BENEFICIALLY OWNED
-------------------------
<S> <C> <C> <C>
SHARES
BENEFICIALLY BEFORE AFTER
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OFFERING OFFERING
The NPD Group, Inc.(1)....................................................... 4,380,559 33.0%
Greylock IX Limited Partnership (2).......................................... 1,134,918 8.5
The 1995 Scott Johnson Trust (3)............................................. 1,071,385 8.1
The 1995 Stacey Johnson Trust (4)............................................ 1,071,385 8.1
Whitney Equity Partners, L.P. (5)............................................ 937,402 7.0
Oak Investment Partners VI, Limited Partnership (6).......................... 857,235 6.4
Oak VI Affiliates Fund, Limited Partnership (6).............................. 857,235 6.4
Venrock Associates II, L.P. (7).............................................. 857,235 6.4
Venrock Associates (7)....................................................... 857,235 6.4
Tod Johnson (8).............................................................. 4,380,559 33.0
Mary Ann Packo (9)........................................................... 71,753 *
Steve Coffey (10)............................................................ 71,753 *
Thomas A. Lynch (11)......................................................... 47,566 *
Doug McFarland (12).......................................................... 7,393 *
Jeffrey C. Levy (13)......................................................... 503,204 3.8
Michael Brooks (14).......................................................... 937,402 7.0
Stig Kry (15)................................................................ 10,138 *
William W. Helman (16)....................................................... 1,134,918 8.5
James Mortensen (17)......................................................... 10,138 *
Timothy F. S. Cobb (18)...................................................... 503,065 3.8
All directors and executive officers as a group (10 persons)................. 7,174,825 52.4%
</TABLE>
- -----------------------
* Less than 1.0%
50
<PAGE>
(1) Of the 4,380,559 shares of common stock owned by NPD, 601,838 shares of
common stock are required to be sold to certain officers of NPD upon the
exercise of options granted by NPD on these shares pursuant to an NPD
employee plan. These options vest and become fully exercisable upon the
consummation of this offering.
(2) Consists of 1,030,743 shares of common stock and warrants to purchase
104,175 shares of common stock. The partnership's address is One Federal
Street, Boston, Massachusetts 02110.
(3) The address of The 1995 Scott Johnson Trust is c/o Franklin Green, Esq.,
Trustee, Fried, Frank, Harris Shriver & Jacobson, One New York Plaza, New
York, New York 10004-1980.
(4) The address of The 1995 Stacey Johnson Trust is c/o Franklin Green, Esq.,
Trustee, Fried, Frank, Harris Shriver & Jacobson, One New York Plaza, New
York, New York 10004-1980.
(5) Consists of 796,208 shares of common stock and warrants to purchase 141,194
shares of common stock. The partnership's address is c/o J. H. Whitney &
Co., 177 Broad Street, Stamford, Connecticut 06901.
(6) Consists of 803,525 shares of common stock owned by Oak Investment Partners
VI, Limited Partnership and 34,164 shares of common stock issuable upon the
exercise of a warrant held by Oak and 18,985 shares of common stock owned by
Oak VI Affiliates Fund, Limited Partnership and 561 shares of common stock
issuable upon the exercise of a warrant held by Oak Affiliates. Each
partnership may be deemed to beneficially own each other's shares because
the general partners of each partnership are affiliated. Each partnership
disclaims beneficial ownership of the other's shares. The partnerships'
addresses are One Gorham Island, Westport, Connecticut 06880.
(7) Consists of 468,831 shares of common stock owned by Venrock Associates II,
L.P. and 19,795 shares of common stock issuable upon the exercise of a
warrant held by Venrock II and 353,674 shares of common stock owned by
Venrock Associates and 14,934 shares of common stock issuable upon the
exercise of a warrant held by Venrock. Each partnership may be deemed to
beneficially own each other's shares because the general partners of each
partnership are affiliated. Each partnership disclaims beneficial ownership
of the other's shares. The partnerships' addresses are 30 Rockefeller Plaza,
Room 5508, New York, New York 10112.
(8) Consists of 4,380,559 shares of common stock owned by NPD of which Mr.
Johnson is the principal stockholder and Chief Executive Officer. As such,
Mr. Johnson may be deemed to be the beneficial owner of such shares. Of the
4,380,559 shares of common stock owned by NPD, 601,838 shares of common
stock are issuable to certain officers of NPD upon the exercise of options
granted on such shares pursuant to an NPD employee plan. Such options vest
and become fully exercisable upon the consummation of this offering. In
addition, The 1995 Scott Johnson Trust and The 1995 Stacey Johnson Trust are
trusts for the benefit of family members of Mr. Johnson. Mr. Johnson does
not exercise either voting or dispositive power over the securities held by
either trust and disclaims beneficial ownership of the shares held by the
trusts.
(9) Consists of 71,753 shares of common stock issuable upon the exercise of
options. Does not include 86,560 shares of common stock issuable upon the
exercise of options not currently exercisable within 60 days of February 15,
1999. See "Management--Stock Options."
(10) Consists of 71,753 shares of common stock issuable upon the exercise of
options. Does not include 86,560 shares of common stock issuable upon the
exercise of options not currently exercisable within 60 days of February 15,
1999. See "Management--Stock Options."
(11) Consists of 47,566 shares of common stock issuable upon the exercise of
options, 47,130 of which were granted pursuant to an NPD benefit plan and
which give Mr. Lynch the right to purchase shares of our common stock held
by NPD. Does not include 77,724 shares of common stock issuable upon the
exercise of options not currently exercisable within 60 days of February 15,
1999. See "Management--Stock Options."
(12) Consists of 7,393 shares of common stock issuable upon the exercise of
options. Does not include 82,096 shares of common stock issuable upon the
exercise of options not currently exercisable within 60 days of February 15,
1999. See "Management--Stock Options."
(13) Consists of 394,315 shares of common stock owned by Mr. Levy and 108,889
shares of common stock owned by the Jeffrey C. Levy 1996 Children's Trust.
Mr. Levy may be deemed the beneficial owner of the shares held by the Levy
Trust. Mr. Levy disclaims beneficial ownership of the shares held by the
Levy Trust. Mr. Levy has
51
<PAGE>
granted the underwriters an option to purchase up to shares to cover
over-allotments. If this option is exercised in full, Mr. Levy will
beneficially own shares, or % of our common stock after this
offering.
(14) Consists of 796,208 shares of common stock and warrants to purchase 141,194
shares of common stock issuable upon the exercise of a warrant. Mr. Brooks
is a general partner of Whitney Equity Partners, L.P. who possesses
investment and voting power with respect to all such shares. Mr. Brooks
disclaims beneficial ownership of the shares of common stock owned by
Whitney Equity Partners other than the shares attributable to his general
and limited partnership interests in that fund. See footnote (7) above. Mr.
Brooks' address is c/o J. H. Whitney & Co., 177 Broad Street, Stamford,
Connecticut 06901.
(15) Consists of 10,138 shares issuable upon the exercise of options, 9,703 of
which were granted pursuant to an NPD employee plan and which give Mr. Kry
the right to purchase shares of our common stock held by NPD. Does not
include 15,631 shares of common stock issuable upon the exercise of options
not currently exercisable within 60 days of February 15, 1999.
(16) Consists of 1,030,743 shares of common stock owned by Greylock IX Limited
Partnership and 104,175 shares of common stock issuable upon exercise of a
warrant held by Greylock. Mr. Helman is a general partner of Greylock and
possess investment and voting power with respect to all such shares. Mr.
Helman disclaims beneficial ownership of the shares of common stock owned by
Greylock other than the shares attributable to his proportionate partnership
interest in that fund. See footnote (4) above. Mr. Helman's address is c/o
Greylock IX Limited Partnership, One Federal Street, Boston, Massachusetts
02110.
(17) Consists of 10,138 shares exercisable upon the exercise of options, 9,703
of which were granted pursuant to an NPD benefit plan and which give Mr.
Mortensen the right to purchase shares of our common stock held by NPD. Does
not include 15,631 shares of common stock issuable upon the exercise of
options not currently exercisable within 60 days of February 15, 1999.
(18) Consists of 350,620 shares of common stock, owned by Mr. Cobb, 43,556
shares of common stock owned by Mr. Cobb's wife, Madelyn Adams Cobb, and
108,889 shares of common stock owned by The Timothy Fitzgerald Stephenson
Cobb 1996 Children's Trust. Mr. Cobb may be deemed the beneficial owner of
the shares held by Madelyn Adams Cobb and the Cobb Trust. Mr. Cobb disclaims
beneficial ownership of the shares held by Madelyn Adams Cobb and the Cobb
Trust. Mr. Cobb has granted the underwriters an option to purchase up to
shares to cover over-allotments. If this option is exercised in full,
Mr. Cobb will beneficially own shares, or , or % of our common
stock after this offering.
52
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Upon the closing of the offering and the filing of the amendment to our
certificate of incorporation referred to below, our authorized capital stock
will consist of shares of common stock, $.01 par value, and 5,000,000
shares of preferred stock, $.01 par value.
As of December 31, 1998, we had 13,093,514 shares of common stock
outstanding held by stockholders of record, and 41,446 shares of redeemable
preferred stock outstanding held by one stockholder of record. Upon the closing
of this offering, and after giving effect to the issuance of shares
of common stock in this offering, there will be shares of common
stock and no shares of preferred stock issued and outstanding. See "--Preferred
Stock."
COMMON STOCK
Subject to preferences that may be applicable to any preferred stock
outstanding at the time, holders of our common stock are entitled to receive
dividends at times and in amounts as the board may determine. The holders of our
common stock have one vote for each share they hold on all matters submitted to
a vote of the stockholders. The holders of a majority of the shares of common
stock voted can elect all of the directors nominated for election. The holders
of our common stock are not entitled to preemptive rights and our common stock
is not subject to conversion or redemption. Upon a liquidation, dissolution or
winding-up, we will distribute pro rata to the holders of our common stock our
remaining assets, after payment of liquidation preferences, if any, on any
outstanding shares of preferred stock and payment of claims of creditors. Each
outstanding share of our common stock is, and all shares of our common stock
being purchased in this offering will be, duly and validly issued, fully paid
and nonassessable.
There is currently no active trading market for our common stock.
Application will be made to have our common stock approved for quotation on the
Nasdaq National Market under the symbol "MMXI." See "Risk Factors--There May Be
Volatility In Our Stock Price."
PREFERRED STOCK
Upon the closing of this offering, we will not have any shares of our
preferred stock outstanding. The 5,000,000 authorized shares of preferred stock
may by issued in one or more series without further stockholder action. The
board is authorized to determine the terms, limitations and relative rights and
preferences of the preferred stock, to establish series of preferred stock and
to determine the variations among series. If we issue preferred stock, it would
have priority over our common stock with respect to dividends and to other
distributions, including the distribution of assets upon liquidation. In
addition, we may be obligated to repurchase or redeem it. The board can issue
preferred stock without the approval of the holders of our common stock. The
holders of preferred stock may have voting and conversion rights, including
multiple voting rights, which could adversely affect the rights of the holders
of our common stock. We do not have any present plans to issue any shares of
preferred stock.
REDEEMABLE PREFERRED STOCK
As of the date of this prospectus, there are 41,446 shares of our redeemable
preferred stock issued and outstanding and held of record and beneficially by
NPD.
The shares of redeemable preferred stock are entitled to accrued cumulative
dividends at a rate of 7% yearly, compounded quarterly, and payable when and as
declared by the board. If there is a liquidation, dissolution or winding up, the
holders of our redeemable preferred stock are entitled to be paid $100.00 per
share plus any accrued and unpaid dividends on our redeemable preferred stock
out of our available assets, before any payment may be made to the holders of
our common stock.
53
<PAGE>
Each holder of a share of redeemable preferred stock is entitled to 100
votes for each share held at each meeting of our stockholders with respect to
any and all matters presented to our stockholders for their consideration. The
holders of the redeemable preferred stock and the holders of the common stock
vote together as a single class, except as provided by law.
We are required to redeem all outstanding shares of redeemable preferred
stock at a price equal to $100 per share plus all accrued and unpaid dividends
on each share if we close a public offering of at least $15 million.
WARRANTS
As of February 15, 1999, we had outstanding warrants to purchase an
aggregate of 897,538 shares of common stock at a weighted average exercise price
of $2.32. Of these, warrants to purchase 360,934 shares of our common stock will
expire upon this offering, unless exercised earlier. In addition, warrants to
purchase 551,270 shares of our common stock contain restrictions on transfer.
These warrants and any shares issued on their exercise may not be sold or
transferred unless the holder of the warrant first gives us and NPD the
opportunity to purchase the warrants or the underlying shares. Also, these
warrants or the underlying shares may not be transferred to any of our
competitors. These warrants contain anti-dilution provisions for stock splits
and other recapitalizations.
REGISTRATION RIGHTS
Under an agreement between us and certain of our securities holders,
13,038,186 shares of common stock, referred to as registrable securities, are
entitled to rights with respect to the registration of the registrable
securities under the Securities Act commencing 180 days after this offering. If
we receive from the holders of more than 25% of the registrable securities a
written request to effect a registration with respect to all or a part of the
registrable securities, we must use our best efforts to effect such a
registration. We are only obligated to effect one of these registrations. The
holders of the registrable securities may choose to sell their securities
through an underwriter. However, any underwriter may limit the number of
registrable securities proposed to be included in that registration.
When we are eligible to use a registration statement on Form S-3 to register
an offering of our securities, holders of more than 10% of the registrable
securities may request that we file a registration statement on Form S-3
covering all or a portion of the registrable securities held by them, provided
that the proceeds from that offering are at least $2.0 million.
In addition, the holders of registrable securities have piggyback
registration rights. If we propose to register any of our common stock under the
Securities Act, other than pursuant to the registration rights noted above, the
holders of registrable securities may require us to include all or a portion of
their securities in each registration. However, the managing underwriter, if
any, of that offering has the right to limit the number of registrable
securities proposed to be included in that registration.
We will bear all registration expenses incurred in connection with these
registrations. Each of the holders of registrable securities participating in
any registration would pay their own underwriting discounts, selling commissions
and stock transfer taxes applicable to the sale of their securities.
STOCKHOLDERS' AGREEMENT
We and some of our stockholders entered into a stockholders' agreement. The
stockholders agreed to vote their shares of our voting capital stock so as to
cause the board to consist of eight persons. They also agreed to vote for the
election of five directors designated by our stockholders who held our
securities immediately prior to the closing of our merger with RelevantKnowledge
and the election of three directors designated by our stockholders who held
securities of RelevantKnowledge immediately prior to the closing of that merger.
In addition, the stockholders' agreement provides that we cannot
54
<PAGE>
issue shares of any class of our capital stock or rights to acquire any shares
of our capital stock which issuance would decrease any party's outstanding
interest in the common stock, on a fully diluted basis, by greater than 5%,
without the approval of 75% of the board. The stockholders' agreement will
terminate upon the closing of this offering.
CO-SALE AGREEMENT
Media Metrix, NPD, The 1995 Scott Johnson Trust, The 1995 Stacey Johnson
Trust and some of our other stockholders have entered into a co-sale agreement
restricting their transfer of our common stock. If NPD, The 1995 Scott Johnson
Trust or The 1995 Stacey Johnson Trust, collectively, the founders, want to sell
any of their shares of common stock, the other founders and the stockholders
party to the co-sale agreement have the right to include their shares of common
stock in that sale. The restrictions on transfer do not apply to transfers to
any other founder, to Tod Johnson or to a charity or charitable organization.
The co-sale agreement terminates upon the closing of this offering.
DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS
Under Section 203 of the Delaware General Corporation Law, certain "business
combinations" between a Delaware corporation, whose stock generally is publicly
traded or held of record by more than 2,000 stockholders, and an "interested
stockholder" are prohibited for a three-year period following the date that such
stockholder became an interested stockholder, unless:
- the corporation has elected in its certificate of incorporation or bylaws
not to be governed by the Delaware anti-takeover law (we have not made
such an election);
- the business combination was approved by the board of the corporation
before the other party to the business combination became an interested
stockholder;
- upon consummation of the transaction that made it an interested
stockholder, the interested stockholder owned at least 85% of the voting
stock of the corporation outstanding at the commencement of the
transaction (excluding voting stock owned by directors who are also
officers or held in employee stock plans in which the employees do not
have a right to determine confidentially whether to tender or vote stock
held by the plan); or
- the business combination was approved by the board and ratified by 66 2/3%
of the voting stock which the interested stockholder did not own.
The three-year prohibition does not apply to certain business combinations
proposed by an interested stockholder following the announcement or notification
of certain extraordinary transactions involving the corporation and a person who
had not been an interested stockholder during the previous three years or who
became an interested stockholder with the approval of a majority of the
corporation's directors. The term "business combination" is defined generally to
include mergers or consolidations between a Delaware corporation and an
interested stockholder, transactions with an interested stockholder involving
the assets or stock of the corporation or its majority-owned subsidiaries and
transactions which increase an interested stockholder's percentage ownership of
stock. The term "interested stockholder" is defined generally as a stockholder
who becomes beneficial owner of 15% or more of a Delaware corporation's voting
stock. Section 203 could have the effect of delaying, deferring or preventing a
change in control of Media Metrix.
In addition, provisions of our certificate of incorporation and bylaws which
will take effect upon the closing of this offering may have an anti-takeover
effect. They may delay, defer or prevent a tender offer or takeover attempt that
a stockholder might consider in its best interest, including those attempts that
might result in a premium over the market price for the shares held by our
stockholders. The following summarizes these provisions.
55
<PAGE>
CLASSIFIED BOARD OF DIRECTORS
Our board is divided into three classes of directors serving staggered
three-year terms. As a result, approximately one-third of our board will be
elected each year. These provisions, when coupled with the provision of our
certificate of incorporation authorizing the board to fill vacant directorships
or increase the size of the board, may deter a stockholder from removing
incumbent directors and simultaneously gaining control of the board.
STOCKHOLDER ACTION; SPECIAL MEETING OF STOCKHOLDERS
Our bylaws provide that our stockholders may not take action by written
consent, but only at an annual or special meeting of stockholders. Our bylaws
further provide that special meetings of our stockholders may be called only by
the chairman of the board or a majority of the board.
SUPERMAJORITY VOTING PROVISIONS
Our certificate of incorporation provides that the affirmative vote of at
least 66 2/3% of our stockholders is required to amend the provisions of our
certificate and bylaws relating to the classification of the board, stockholder
action by written consent and the calling of special meetings.
AUTHORIZED BUT UNISSUED SHARES
The authorized but unissued shares of common stock and preferred stock are
available for future issuance without stockholder approval. We may use these
shares for a variety of corporate purposes, including future public offerings to
raise additional capital, corporate acquisitions and employee benefit plans.
This could make it more difficult or discourage an attempt to obtain control of
us by means of a proxy contest, tender offer, merger or otherwise.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
We will enter into indemnification agreements with our current directors and
executive officers. These agreements and provisions of our certificate of
incorporation and bylaws may have the practical effect in some cases of
eliminating our stockholders' ability to collect monetary damages from our
directors. We believe that these contractual agreements and the provisions in
our certificate of incorporation and bylaws are necessary to attract and retain
qualified persons as directors and officers.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is .
56
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
If our stockholders sell substantial amounts of our common stock, including
shares issued upon the exercise of outstanding options, in the public market
following this offering, the market price of our common stock could fall. These
sales also might make it more difficult for us to sell equity or equity-related
securities in the future and at a time and price that we deem appropriate.
Upon completion of this offering, we will have outstanding an aggregate of
shares of our common stock, assuming no exercise of the underwriters'
over-allotment option and no exercise of outstanding options. Of these shares,
all of the shares sold in this offering will be freely tradeable without
restriction or further registration under the Securities Act, unless such shares
are purchased by "affiliates" as that term is defined in Rule 144 under the
Securities Act. This leaves shares eligible for sale in the public market
as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES DATE
- ----------------------------------- ------------------------------------------------
<S> <C>
After the date of this prospectus.
After 180 days from the date of this prospectus
(subject, in some cases, to volume limitations).
At various times after 180 days from the date of
this prospectus.
</TABLE>
LOCK-UP AGREEMENTS
All of our officers and directors and substantially all of our stockholders
have signed lock-up agreements under which they agreed not to transfer or
dispose of, directly or indirectly, any shares of our common stock or any
securities convertible into or exercisable or exchangeable for shares of our
common stock, for a period of 180 days after the date of this prospectus.
Transfers or dispositions can be made sooner:
- with the prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation;
- in the case of gifts or estate planning transfers where the donee signs a
lock-up agreement; or
- in the case of distributions to stockholders or affiliates of the
stockholders where the recipient signs a lock-up agreement.
RULE 144
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of:
- 1% of the number of shares of our common stock then outstanding, which
will equal approximately shares immediately after this offering; or
- the average weekly trading volume of our common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to that sale.
Sales under Rule 144 are also subject to manner of sale provisions and
notice requirements and to the availability of current public information about
us.
57
<PAGE>
RULE 144(K)
Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an affiliate, is
entitled to sell those shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144. Therefore,
unless otherwise restricted, Rule 144(k) shares may be sold immediately upon the
completion of this offering.
RULE 701
In general, under Rule 701 of the Securities Act as currently in effect, any
of our employees, consultants or advisors who purchases shares of our common
stock from us in connection with a compensatory stock or option plan or other
written agreement is eligible to resell those shares 90 days after the effective
date of this offering in reliance on Rule 144, but without compliance with some
of the restrictions, including the holding period, contained in Rule 144.
REGISTRATION RIGHTS
After this offering, the holders of 13,038,186 shares of our common stock,
or their transferees, will be entitled to certain rights with respect to the
registration of those shares under the Securities Act. See "Description of
Capital Stock--Registration Rights." After this registration, these shares of
our common stock become freely tradeable without restriction under the
Securities Act. These sales could have a material adverse effect on the trading
price of our common stock.
STOCK OPTIONS
Immediately after this offering, we intend to file a registration statement
under the Securities Act covering 1,837,542 shares of common stock reserved for
issuance under our 1998 Equity Incentive Plan and our earlier Stock Option Plan
and the shares reserved for issuance upon exercise of outstanding non-plan
options. As of February 15, 1999, options to purchase 1,028,476 shares of common
stock were issued and outstanding. Upon the expiration of the lock-up agreements
describe above, at least shares of common stock will be subject to vested
options, based on the number of options outstanding as of February 15, 1999.
This registration statement is expected to be filed and become effective as soon
as practicable after the effective date of this offering. Accordingly, shares of
our common stock registered under this registration statement will, subject to
vesting provisions and Rule 144 volume limitations applicable to our affiliates,
be available for sale in the open market immediately after the 180-day lock-up
agreements expire.
58
<PAGE>
UNDERWRITING
Subject to the terms and conditions contained in an underwriting agreement
dated , 1999 the underwriters named below, who are represented by
Donaldson, Lufkin & Jenrette Securities Corporation and BancBoston Robertson
Stephens Inc., have severally agreed to purchase from us the number of shares
opposite their names below.
<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation................................
BancBoston Robertson Stephens Inc..................................................
Total Underwriters.............................................................
-----
-----
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase and accept delivery of the shares included in this
offering are subject to approval of certain legal matters and to certain other
conditions. The underwriters are obligated to purchase and accept delivery of
all the shares, other than those shares covered by the over-allotment option
described below, if they purchase any of the shares.
The underwriters propose to initially offer some of the shares directly to
the public at the initial public offering price on the cover page of this
prospectus and some of the shares to certain dealers at the initial public
offering price less a concession not in excess of $ per share. The
underwriters may allow, and such dealers may re-allow, a concession not in
excess of $ per share on sales to other dealers. After the initial
offering, the representatives may change the public offering price and these
concessions. The underwriters do not intend to confirm sales to any accounts
over which they exercise discretionary authority.
The following table shows the underwriting fees to be paid to the
underwriters by us and the selling stockholders in connection with this
offering. These amounts are shown assuming both no exercise and full exercise of
the underwriters' option to purchase additional shares of our common stock.
<TABLE>
<CAPTION>
PAID BY SELLING
PAID BY US STOCKHOLDERS
-------------------------- --------------------------
NO EXERCISE FULL EXERCISE NO EXERCISE FULL EXERCISE
<S> <C> <C> <C> <C>
Per share..................................................
Total......................................................
</TABLE>
We will pay the offering expenses, estimated to be $ .
We and the selling stockholders have granted to the underwriters an option,
exercisable for 30 days after the date of this prospectus, to purchase up to
additional shares at the initial public offering price minus the
underwriting fees. The underwriters may exercise this option solely to cover
over-allotments, if any, made in connection with this offering. To the extent
that the underwriters exercise this option, each underwriter will become
obligated, subject to certain conditions, to purchase a number of additional
shares approximately proportionate to that underwriter's initial purchase
committment.
We and the selling stockholders have agreed to indemnify the underwriters
against certain civil liabilities, including liabilities under the Securities
Act, or to contribute to payments that the underwriters may be required to make
in respect any of those liabilities.
59
<PAGE>
We, the executive officers and directors, and substantially all of our
stockholders have agreed that, for a period of 180 days from the date of this
prospectus, they will not, without the prior written consent of Donaldson,
Lufkin & Jenrette: (1) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of, directly or
indirectly, any shares of our common stock or any securities convertible into or
exercisable or exchangeable for our common stock; or (2) enter into any swap or
other arrangement that transfer all or a portion of the economic consequences
associated with the ownership of any common stock, regardless of whether any of
the transactions described in clause (1) or (2) is to be settled by the delivery
of common stock, or such other securities, in cash or otherwise. Our
stockholders may, however, gift or transfer shares so long as the donee or
transferee agrees to be bound by these restrictions. In addition, during this
period, we have agreed not to file any registration statement with respect to,
and each of our executive officers and directors and a significant majority of
our stockholders have agreed not to make any demand for, or exercise any right
with respect to, the registration of any shares of common stock or any
securities convertible into or exercisable or exchangeable for common stock
without the prior written consent of Donaldson, Lufkin & Jenrette.
Prior to this offering, there was no established trading market for our
common stock. The initial public offering price for the common stock in this
offering will be determined by negotiation among us and the representatives of
the underwriters. The factors to be considered in determining the initial public
offering price include the history of and the prospects for the industry in
which we compete, the ability of our management, our past and present
operations, our prospects for future earnings, the general condition of the
securities markets at the time of this offering and the recent market prices of
securities of generally comparable companies.
The Company has applied for quotation of our common stock on the Nasdaq
National Market under the symbol "MMXI."
Other than in the United States, no action has been taken by us, the selling
stockholders or the underwriters that would permit a public offering of the
shares of our common stock included in this offering in any jurisdiction where
action for that purpose is required. The shares included in this offering may no
be offered or sold, directly or indirectly, nor may this prospectus or any other
offering material or advertisement in connection with the offer and sale of any
these shares be distributed or published in any jurisdiction, except under
circumstances that will result in compliance with the applicable rules and
regulations of that jurisdiction. Persons who receive this prospectus are
advised to inform themselves about and to observe any restrictions relating to
the offering of our common stock and the distribution of this prospectus. This
prospectus is not an offer to sell or a solicitation of an offer to buy any
shares of our common stock included in this offering in any jurisdiction where
that would not be permitted or legal.
In connection with this offering, certain underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of our
common stock. Specifically, the underwriters may overallot this offering,
creating a syndicate short position. In addition, the underwriters may bid for
and purchase shares of our common stock in the open market to cover syndicate
short positions or to stabilize the price of our common stock. These activities
may stabilize or maintain the market price of our common stock above independent
market levels. The underwriters are not required to engage in these activities
and may end any of these activities at any time.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for Media Metrix by Fulbright & Jaworski L.L.P., New York, New York.
Certain legal matters in connection with the
60
<PAGE>
offering will be passed upon for the underwriters by Brobeck, Phleger & Harrison
LLP, New York, New York.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements at December 31, 1998 and 1997, and for each of the three years in the
period ended December 31, 1998, as set forth in their report. We have included
our financial statements in the prospectus and elsewhere in the registration
statement in reliance on Ernst & Young LLP's report, given on their authority as
experts in accounting and auditing.
The balance sheets as of October 31, 1998 and December 31, 1997 and the
statements of operations, shareholders' equity and cash flows for the ten months
ended October 31, 1998 and for the year ended December 31, 1997, of
RelevantKnowledge Inc. included in this prospectus, have been included herein in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of that firm as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the commission a registration statement on Form S-1 with
respect to the common stock being sold in this offering. This prospectus
constitutes a part of that registration statement. This prospectus does not
contain all of the information set forth in the registration statement and the
exhibits and schedules to the registration statement, because some parts have
been omitted in accordance with rules and regulations of the commission. For
further information about us and our common stock being sold in this offering,
please refer to the registration statement and the exhibits and schedules filed
as a part of the registration statement. Statements contained in this prospectus
as to the contents of any contract, agreement or any other document referred to
are not necessarily complete; reference is made in each case to the copy of the
contract or document filed as an exhibit to the registration statement. Each
statement is qualified in all respects by reference to the exhibit. A copy of
the registration statement, including exhibits and schedules thereto, may be
inspected without charge and obtained at prescribed rates at the public
reference section of the commission at its principal offices, located at 450
Fifth Street, N.W., Washington, D.C. 20549, and may be inspected without charge
at the regional offices of the commission located at Seven World Trade Center,
13th Floor, New York, New York 10048, and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. The registration statement,
including the exhibits and schedules thereto, is also available at the
commission's site on the Web at http://www.sec.gov.
We intend to furnish our stockholders annual reports containing financial
statements audited by our independent auditors and quarterly reports containing
unaudited financial information.
61
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
MEDIA METRIX, INC.
Report of Independent Auditors............................................................................. F-2
Balance Sheets at December 31, 1997 and 1998............................................................... F-3
Statements of Operations for the years ended December 31, 1996, 1997 and 1998.............................. F-4
Statements of Stockholders' (Deficit) Equity for the years ended December 31, 1996, 1997 and 1998.......... F-5
Statements of Cash Flows for the years ended December 31, 1996, 1997 and 1998.............................. F-6
Notes to Financial Statements.............................................................................. F-7
RELEVANTKNOWLEDGE, INC.
Report of Independent Accountants.......................................................................... F-17
Balance Sheets at December 31, 1997 and October 31, 1998................................................... F-18
Statements of Operations for the year ended December 31, 1997 and the ten months ended October 31, 1998.... F-19
Statements of Shareholders' Equity for the year ended December 31, 1997 and the ten months ended October
31, 1998................................................................................................. F-20
Statements of Cash Flows for the period from the year ended December 31, 1997 and the ten months ended
October 31, 1998......................................................................................... F-21
Notes to Financial Statements.............................................................................. F-22
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
Statement of Operations for the year ended December 31, 1998............................................... F-29
Notes to Unaudited Pro Forma Statement of Operations....................................................... F-30
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Media Metrix, Inc.
We have audited the accompanying balance sheets of Media Metrix, Inc. as of
December 31, 1998 and 1997, and the related statements of operations,
stockholders' (deficit) equity, and cash flows for each of the three years in
the period ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Media Metrix, Inc. at
December 31, 1998 and 1997, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1998, in conformity
with generally accepted accounting principles.
Ernst & Young LLP
New York, New York
February 22, 1999, except
for the first paragraph of
Note 1--Organization
as to which the
date is , 1999
------------------------
The foregoing report is in the form that will be signed upon the completion
of the restatement of capital accounts described in the first paragraph of Note
1--Organization to the financial statements.
/s/ Ernst & Young LLP
New York, New York
February 24, 1999
F-2
<PAGE>
MEDIA METRIX, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------
<S> <C> <C>
1997 1998
ASSETS
Current assets:
Cash and cash equivalents........................................................ $ 1,869,013 $ 8,012,020
Receivables:
Trade, less allowance for doubtful accounts of $100,000 in 1997 and $220,000 in
1998......................................................................... 520,886 1,119,905
Expenditures billable to clients............................................... 219,877 250,432
------------- --------------
Total receivables................................................................ 740,763 1,370,337
Prepaid expenses and other current assets........................................ 38,063 207,333
------------- --------------
Total current assets............................................................... 2,647,839 9,589,690
Property and equipment, at cost, net of accumulated depreciation and amortization
of $17,991 in 1997 and $75,930 in 1998........................................... 116,834 649,790
Intangibles acquired, net of accumulated amortization of $479,000 in 1998.......... -- 5,736,766
Other assets....................................................................... 22,280 83,774
------------- --------------
Total assets....................................................................... $ 2,786,953 $ 16,060,020
------------- --------------
------------- --------------
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable and accrued liabilities......................................... $ 881,322 $ 2,308,323
Due to The NPD Group, Inc........................................................ 1,284,315 4,705,825
Advance billings to clients...................................................... 529,220 1,391,275
Current portion of long-term debt................................................ -- 127,179
------------- --------------
Total current liabilities.......................................................... 2,694,857 8,532,602
Long-term debt..................................................................... -- 225,353
Redeemable Preferred Stock--$1 par value; 41,446 shares authorized, issued and
outstanding; liquidation and redemption value--$4,679,760 in 1998................ 4,366,022 4,679,760
Series A Convertible Preferred Stock--$1 par value; 495,603 shares authorized,
issued and outstanding in 1997................................................... 3,999,991 --
Commitments and contingencies
Stockholders' (deficit) equity:
Preferred stock, $.01 par value--shares authorized: 4,462,951 in 1997 and
4,958,554 in 1998, none issued and outstanding................................. -- --
Common stock, $.01 par value--15,000,000 shares authorized; shares issued and
outstanding--6,523,330 in 1997 and 13,093,514 in 1998.......................... 65,233 130,935
Additional paid-in capital....................................................... 281,656 16,940,256
Common stock issuable............................................................ -- 1,999,831
Accumulated deficit.............................................................. (8,620,806) (16,073,092)
Deferred compensation............................................................ -- (375,625)
------------- --------------
Total stockholders' (deficit) equity............................................... (8,273,917) 2,622,305
------------- --------------
Total liabilities and stockholders' (deficit) equity............................... $ 2,786,953 $ 16,060,020
------------- --------------
------------- --------------
</TABLE>
See accompanying notes.
F-3
<PAGE>
MEDIA METRIX, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
<S> <C> <C> <C>
1996 1997 1998
Revenues............................................................. $ 1,032,629 $ 3,187,653 $ 6,330,485
Costs of revenues.................................................... 1,743,831 3,463,058 4,120,569
------------- ------------- -------------
Gross profit (loss).................................................. (711,202) (275,405) 2,209,916
Operating expenses:
Research and development........................................... 587,731 865,498 1,382,375
Sales and marketing................................................ 928,993 2,021,409 2,888,195
General and administrative......................................... 1,147,768 1,516,396 3,064,105
Amortization of intangibles........................................ -- -- 479,000
Acquired in-process research and development....................... -- -- 1,600,000
------------- ------------- -------------
Total operating expenses............................................. 2,664,492 4,403,303 9,413,675
------------- ------------- -------------
Loss from operations................................................. (3,375,694) (4,678,708) (7,203,759)
Interest income, net of interest expense of $11,374 in 1998.......... -- 94,760 65,211
------------- ------------- -------------
Net loss............................................................. (3,375,694) (4,583,948) (7,138,548)
Preferred stock dividends............................................ -- (289,564) (313,738)
------------- ------------- -------------
Net loss applicable to common stockholders........................... $ (3,375,694) $ (4,873,512) $ (7,452,286)
------------- ------------- -------------
------------- ------------- -------------
Basic and diluted net loss per share applicable to common
stockholders....................................................... $ (.52) $ (.75) $ (.98)
------------- ------------- -------------
------------- ------------- -------------
Shares used in the calculation of basic and diluted net loss per
share applicable to common stockholders............................ 6,523,330 6,523,330 7,617,621
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See accompanying notes.
F-4
<PAGE>
MEDIA METRIX, INC.
STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
<TABLE>
<CAPTION>
OWNER'S/ COMMON STOCK ADDITIONAL COMMON
PARTNERS' --------------------- PAID-IN STOCK ACCUMULATED DEFERRED
CAPITAL SHARES AMOUNT CAPITAL ISSUABLE DEFICIT COMPENSATION
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996,
representing accumulated
development costs
contributed.................. $ 371,600 -- $ -- $ -- $ -- $ (371,600) $ --
Additional contributions by
partners, including $573,000
of accumulated development
costs contributed............ 898,000 -- -- -- -- -- --
Net loss....................... -- -- -- -- -- (3,375,694) --
----------- ---------- --------- ----------- ---------- ------------ -------------
Balance at December 31, 1996... 1,269,600 -- -- -- -- (3,747,294) --
Purchase of partnership
interest..................... 3,200,000 -- -- -- -- -- --
Exchange of partners' interest
for 6,522,893 shares of
common stock and 9,446 shares
of Redeemable Preferred
Stock........................ (4,469,600) 6,522,893 65,229 259,771 -- -- --
Contribution of amounts owed to
The NPD Group, Inc........... -- -- -- 380,977 -- -- --
Sale of common stock........... -- 437 4 96 -- -- --
Costs incurred in connection
with issuance of Series A
Convertible Preferred Stock.. -- -- -- (359,188) -- -- --
Payment of Redeemable Preferred
Stock dividends.............. -- -- -- -- -- (68,142) --
Accrual of Redeemable Preferred
Stock dividends.............. -- -- -- -- -- (221,422) --
Net loss....................... -- -- -- -- -- (4,583,948) --
----------- ---------- --------- ----------- ---------- ------------ -------------
Balance at December 31, 1997... 6,523,330 65,233 281,656 -- (8,620,806) --
Conversion of Series A
Convertible Preferred Stock.. -- 2,155,176 21,552 3,978,439 -- -- --
Conversion of Series B
Convertible Preferred Stock.. -- 520,590 5,206 1,494,794 -- -- --
Issuance of common stock in
connection with
acquisition.................. -- 3,885,531 38,855 10,461,145 -- -- --
Exercise of warrants........... -- 8,887 89 197 -- -- --
Sale of common stock--194,380
shares issuable.............. -- -- -- -- 1,999,831 -- --
Employee stock options......... -- -- -- 724,025 -- -- (724,025)
Amortization of deferred
compensation................. -- -- -- -- -- -- 348,400
Accrual of Redeemable Preferred
Stock dividends.............. -- -- -- -- -- (313,738) --
Net loss....................... -- -- -- -- -- (7,138,548) --
----------- ---------- --------- ----------- ---------- ------------ -------------
Balance at December 31, 1998... $ -- 13,093,514 $ 130,935 $16,940,256 $1,999,831 $(16,073,092) $ (375,625)
----------- ---------- --------- ----------- ---------- ------------ -------------
----------- ---------- --------- ----------- ---------- ------------ -------------
<CAPTION>
TOTAL
(DEFICIT)
EQUITY
<S> <C>
Balance at January 1, 1996,
representing accumulated
development costs
contributed.................. $ --
Additional contributions by
partners, including $573,000
of accumulated development
costs contributed............ 898,000
Net loss....................... (3,375,694)
--------------
Balance at December 31, 1996... (2,477,694)
Purchase of partnership
interest..................... 3,200,000
Exchange of partners' interest
for 6,522,893 shares of
common stock and 9,446 shares
of Redeemable Preferred
Stock........................ (4,144,600)
Contribution of amounts owed to
The NPD Group, Inc........... 380,977
Sale of common stock........... 100
Costs incurred in connection
with issuance of Series A
Convertible Preferred Stock.. (359,188)
Payment of Redeemable Preferred
Stock dividends.............. (68,142)
Accrual of Redeemable Preferred
Stock dividends.............. (221,422)
Net loss....................... (4,583,948)
--------------
Balance at December 31, 1997... (8,273,917)
Conversion of Series A
Convertible Preferred Stock.. 3,999,991
Conversion of Series B
Convertible Preferred Stock.. 1,500,000
Issuance of common stock in
connection with
acquisition.................. 10,500,000
Exercise of warrants........... 286
Sale of common stock--194,380
shares issuable.............. 1,999,831
Employee stock options......... --
Amortization of deferred
compensation................. 348,400
Accrual of Redeemable Preferred
Stock dividends.............. (313,738)
Net loss....................... (7,138,548)
--------------
Balance at December 31, 1998... $ 2,622,305
--------------
--------------
</TABLE>
See accompanying notes.
F-5
<PAGE>
MEDIA METRIX, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
<S> <C> <C> <C>
1996 1997 1998
OPERATING ACTIVITIES
Net loss............................................................. $ (3,375,694) $ (4,583,948) $ (7,138,548)
Adjustments to reconcile net loss to net cash used in operating
activities:
Contributed development costs...................................... 573,000 -- --
Charge for acquired in-process research and development............ -- -- 1,600,000
Loss on disposal of equipment...................................... -- -- 13,174
Provision for bad debts............................................ -- 100,000 160,600
Depreciation and amortization of property and equipment............ -- 17,991 65,969
Amortization of intangibles........................................ -- -- 479,000
Amortization of deferred compensation.............................. -- -- 348,400
Changes in operating assets and liabilities:
Receivables...................................................... (629,704) (211,059) (427,652)
Prepaid expenses and other current assets........................ -- (38,063) (13,625)
Other assets..................................................... -- (22,280) 28,976
Accounts payable and accrued liabilities......................... 88,182 793,140 657,737
Advance billings to clients...................................... 220,020 309,200 393,581
Due to The NPD Group, Inc........................................ 2,782,351 (1,117,059) 3,421,510
------------- ------------- -------------
Net cash used in operating activities................................ (341,845) (4,752,078) (410,878)
INVESTING ACTIVITIES
Cash acquired........................................................ -- -- 3,185,112
Additions to property and equipment.................................. -- (134,825) (117,489)
Proceeds from the sale of fixed assets............................... -- -- 5,300
------------- ------------- -------------
Net cash (used in) provided by investing activities.................. -- (134,825) 3,072,923
------------- ------------- -------------
FINANCING ACTIVITIES
Proceeds from the exercise of warrants to purchase Series B
Convertible Preferred Stock........................................ -- -- 1,500,000
Repayments on long-term debt......................................... -- -- (19,155)
Proceeds from sale of Series A Convertible Preferred Stock........... -- 3,999,991 --
Payment of costs related to sale of Series A Convertible Preferred
Stock.............................................................. -- (359,188) --
Partner contributions................................................ 325,000 3,200,000 --
Proceeds from (repayment of) loan payable to affiliates.............. 600,000 (600,000) --
Proceeds from exercise of warrants................................... -- -- 286
Payment of dividend.................................................. -- (68,142) --
Sale of common stock................................................. -- 100 1,999,831
------------- ------------- -------------
Net cash provided by financing activities............................ 925,000 6,172,761 3,480,962
------------- ------------- -------------
Net increase in cash and cash equivalents............................ 583,155 1,285,858 6,143,007
Cash and cash equivalents at beginning of year....................... -- 583,155 1,869,013
------------- ------------- -------------
Cash and cash equivalents at end of year............................. $ 583,155 $ 1,869,013 $ 8,012,020
------------- ------------- -------------
------------- ------------- -------------
SUPPLEMENTAL INFORMATION
Interest paid........................................................ $ -- $ -- $ 11,374
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See accompanying notes.
F-6
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. DESCRIPTION OF BUSINESS AND ORGANIZATION
DESCRIPTION OF BUSINESS
Media Metrix, Inc., a Delaware Corporation ("Media Metrix"), provides
Internet audience measurement products and services to customers including media
companies, Internet advertisers and advertising agencies, technology companies
and financial institutions.
ORGANIZATION
On October 15, 1998, Media Metrix stockholders approved a 2.96873-for-one
split of the outstanding shares of common stock which was effectuated as a stock
dividend, and on November 2, 1998, Media Metrix filed an amended and restated
certificate of incorporation increasing the number of authorized shares of
common stock from 10,000,000 to 15,000,000. In addition, on , 1999, the
stockholders approved a 1.4648-for-one split of the outstanding shares of common
stock. Retroactive effect has been given to these stock splits. All common
share, option and warrant data has been restated to reflect the stock splits.
Media Metrix's business was originally conducted as a division within The
NPD Group, Inc. ("NPD") until March 1996, when PC Meter, L.P., a Delaware
limited partnership, ("PC Meter") (Media Metrix's predecessor) was formed to
conduct Media Metrix's business.
On April 14, 1997, PC Meter was merged into Media Metrix. NPD originally
held 100,000 Class A Limited Partnership Units and 79,000 Class B Limited
Partnership Units of PC Meter. Two family trusts previously established for the
benefit of heirs to the sole shareholder of NPD (the "Family Trusts") each held
19,323.5 Class B Limited Partnership Units. In addition, PC Meter was indebted
to NPD in the amount of $3,951,029. On April 14, 1997, PC Meter was merged with
and into Media Metrix. Immediately prior to the merger, NPD purchased additional
Class A Limited Partnership Units for a purchase price of $3,200,000. Pursuant
to the terms of the Agreement and Plan of Merger between Media Metrix and PC
Meter, the Class A Limited Partnership Units were exchanged for a total of
41,446 shares of Media Metrix Redeemable Preferred Stock. The Class B Limited
Partnership Units were exchanged for a total of 6,522,893 shares of Media Metrix
common stock. Post-merger, Media Metrix repaid the amounts owed to NPD by PC
Meter. Of the amounts owed NPD, $3,570,052 was paid in cash and $380,977 was
forgiven.
The above transactions were accounted for in a manner similar to that of a
"pooling of interests" in that the assets and liabilities and related revenues
and expenses of PC Meter have been reflected in the accompanying financial
statements at their historical book values.
2. SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
Cash equivalents consist of highly liquid investments with a maturity date
of three months or less when purchased. Substantially all cash and cash
equivalents are held in one financial institution at December 31, 1998 and 1997.
Media Metrix's cash is exposed to risk to the extent the balance of the cash
accounts exceeds federally insured limits.
F-7
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the financial statements and accompanying notes. Actual
results could differ from those estimates.
REVENUE RECOGNITION
Revenues for recurring services are recognized over the term of the related
contract as services are provided. Revenues for nonrecurring services are
recognized in the period in which the product is delivered. Billings rendered in
advance of services being performed are recorded as "Advance billings to
clients" in the accompanying balance sheet.
PANEL COSTS
Costs of establishing and maintaining a panel (a group of consumers who
furnish marketing data) are expensed in the year incurred and are included in
costs of revenues.
RESEARCH AND DEVELOPMENT COSTS
Research and development costs primarily consist of costs attributable to
the development of new products and are expensed as incurred.
STOCK-BASED COMPENSATION
Media Metrix accounts for its stock-based employee compensation agreements
in accordance with the provisions of Accounting Principles Board Opinion No. 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and complies with the disclosure
provisions of Statement of Financial Accounting Standards No. 123, ACCOUNTING
FOR STOCK BASED COMPENSATION ("SFAS 123").
CONCENTRATIONS OF CREDIT RISK
Media Metrix's policy is to review a customer's financial condition prior to
extending credit and, generally, collateral is not required. Credit losses are
provided for in the financial statements and have been within management's
expectations. Under the terms of certain contracts with its customers, Media
Metrix receives partial payments as the services are provided. One customer
accounted for approximately 19% of revenues for the year ended December 31,
1997.
DEPRECIATION AND AMORTIZATION
Depreciation is provided over the estimated useful lives (3 to 7 years) of
the assets under the straight-line method. Leasehold improvements are amortized
on a straight-line basis over the shorter of the lease term or the estimated
useful life of the asset.
Intangibles acquired are being amortized by the straight-line method over
one to three years from the date of acquisition (see Note 4).
F-8
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
LONG-LIVED ASSETS
Media Metrix periodically reviews the carrying value of its long-lived
assets in determining the ultimate recoverability of their unamortized values
using future undiscounted cash flow analyses. Such a review has been performed
by management and does not indicate an impairment of such assets.
3. BASIC AND DILUTED NET LOSS PER SHARE
Media Metrix computes net loss per share in accordance with the provisions
of Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE
("SFAS 128"), and SEC Staff Accounting Bulletin No. 98 ("SAB 98"). Under the
provisions of SFAS 128 and SAB 98, basic and diluted net loss per share
applicable to common stockholders is computed by dividing the net loss
applicable to common stockholders for the period by the weighted average number
of common shares outstanding for the period. The calculation of diluted net loss
per share excludes shares of common stock issuable upon exercise of employee
stock options and warrants (see Note 10), and the conversion of preferred stock
(see Note 8) as the effect of such exercises would be antidilutive.
The following sets forth the computation of basic and diluted net loss per
share:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
<S> <C> <C> <C>
1996 1997 1998
Numerator:
Net loss....................................... $ (3,375,694) $ (4,583,948) $ (7,138,548)
Preferred stock dividends...................... -- (289,564) (313,738)
------------- ------------- -------------
Net loss applicable to common stockholders..... $ (3,375,694) $ (4,873,512) $ (7,452,886)
------------- ------------- -------------
------------- ------------- -------------
Denominator for basic and diluted loss per
share--weighted average shares................. 6,523,330 6,523,330 7,617,621
------------- ------------- -------------
------------- ------------- -------------
Basic and diluted loss per share applicable to
common stockholders............................ $ (.52) $ (.75) $ (.98)
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
4. ACQUISITION
On November 5, 1998, Media Metrix and an unrelated entity,
RelevantKnowledge, Inc. ("RKI") entered into an agreement and plan of
reorganization whereby RKI was merged into Media Metrix. The stockholders of RKI
exchanged all outstanding preferred and common stock of RKI for 3,885,531 newly
issued shares of common stock in Media Metrix. The fair value of the Media
Metrix common stock issued to the previous stockholders and option and warrant
holders of RKI is approximately $10,500,000. The purchase price was allocated as
follows: (i) net operating assets acquired--$3,382,000, including cash of
$3,185,000, (ii) acquired in-process research and development--$1,600,000, (iii)
debt--$372,000, and (iv) intangibles--$6,216,000, including related costs and
expenses of approximately $326,000.
RKI had issued warrants to acquire shares of its common stock in connection
with prior sales of preferred and common stock and convertible secured
promissory notes. Such warrants were exchanged for warrants to purchase 360,930
shares of Media Metrix stock and are immediately exercisable as
F-9
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. ACQUISITION (CONTINUED)
follows: 266,658 at $0.03 per share (8,887 of which have been exercised), 67,097
at $6.43 per share, 12,055 at $0.19 per share, 7,778 at $2.57 per share and
7,342 at $5.14 per share. The warrants expire between April 2002 and May 2008.
In addition, RKI had issued options to purchase shares of its common stock to
its employees pursuant to a stock option plan. Such options were exchanged for
options to purchase 46,775 shares of Media Metrix common stock at an exercise
price of $2.39 per share. All options are immediately exercisable and expire
from 2006 to 2008.
Acquired in-process research and development represents the value attributed
to three technologies in development using the discounted value (using a 40%
discount rate) of the expected cash flow streams attributed to those items.
Adjustments, were made to the expected cash flow streams to incorporate
obsolescence of the technologies, the risk of similar technologies emerging in
the marketplace, and other factors that may reduce the value realized from the
in-process technologies. The three technologies relate to a data warehousing
application (valued at $800,000), a panel management tool (valued at $770,000),
and an automated tracking system (valued at $30,000). As of the acquisition
date, the aforementioned technologies are 25% to 50% complete and are expected
to be completed in 1999.
The estimates used by Media Metrix in valuing in-process research and
development were based on assumptions management believes to be reasonable but
which are inherently uncertain and unpredictable. Media Metrix's assumptions may
be incomplete or inaccurate, and no assurance can be given that unanticipated
events and circumstances will not occur. Accordingly, actual results may vary
from projected results.
The above acquisition has been accounted for using the purchase method of
accounting and the operations of RKI have been included in the accompanying
financial statements from the date of acquisition.
The following table reflects unaudited pro forma results of operations of
Media Metrix and RKI on the basis that the acquisition had taken place at the
beginning of the year for each of the periods presented:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------
<S> <C> <C>
1997 1998
Revenues...................................................... $ 3,883,000 $ 8,145,000
-------------- --------------
-------------- --------------
Net loss...................................................... $ (14,397,000) $ (15,877,000)
-------------- --------------
-------------- --------------
Net loss applicable to common stockholders.................... $ (14,686,000) $ (16,191,000)
-------------- --------------
-------------- --------------
Basic and diluted net loss per share applicable to common
stockholders................................................ $ (1.41) $ (1.49)
-------------- --------------
-------------- --------------
Shares used in the calculation of basic and diluted net loss
per share applicable to common stockholders................. 10,408,861 10,855,564
-------------- --------------
-------------- --------------
</TABLE>
In management's opinion, the unaudited pro forma results of operations are
not indicative of the actual results that would have occurred had the
acquisition been consummated on January 1, 1997 or on January 1, 1998 or of
future operations of the combined companies under the management of Media
Metrix.
F-10
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. RELATED PARTY TRANSACTIONS
Effective April 1, 1996 and as amended on September 30, 1998, NPD and Media
Metrix entered into a Management Services Agreement whereby NPD, among other
services, provides Media Metrix with computer processing capacity and certain
administrative functions. As compensation for the services, Media Metrix pays
NPD, on a monthly basis, an amount equal to (a) all expenses reasonably incurred
by NPD in performance of its duties under this agreement and (b) 105% of NPD's
overhead allocable to Media Metrix, as defined. The agreement may be terminated
by either party upon 90 days notice, provided NPD may not terminate prior to
March 31, 2002. Such charges pursuant to this agreement during the years ended
December 31, 1996, 1997 and 1998 amounted to approximately $3,568,000,
$5,831,000 and $6,023,000, respectively. At December 31, 1997 and 1998, Media
Metrix owed approximately $1,284,000 and $4,706,000, respectively, to NPD for
such services. During the years ended December 31, 1996, 1997 and 1998, weighted
average amounts owed by Media Metrix to NPD were approximately $1,546,000,
$1,492,000 and $2,565,000, respectively. Such amounts are non-interest bearing.
Media Metrix has entered into a Services Agreement with NPD as of September
30, 1998. Media Metrix has granted NPD access to its databases for any business
purpose of NPD which is not in direct competition with that of Media Metrix.
Media Metrix has also granted NPD a non-exclusive license to use certain
computer software owned by Media Metrix. Under the terms of the Services
Agreement, Media Metrix will receive a monthly fee of $2,500 plus expenses. The
Services Agreement is terminable by either party with 120 days notice.
Media Metrix has entered into a License Agreement with NPD dated as of
November 5, 1998. NPD has granted to Media Metrix an exclusive, non-transferable
worldwide license to use certain NPD software. The fee is $11,000 per month
payable quarterly.
In December 1996, Media Metrix entered into a short-term loan agreement with
NPD to borrow $600,000 to fund operations. In January 1997, Media Metrix repaid
the entire loan.
6. LONG-TERM DEBT
In connection with the RKI acquisition (see Note 4), Media Metrix assumed
bank borrowings of approximately $372,000. The credit agreement provides for
borrowings up to $1,000,000. The balance outstanding at December 31, 1998 was
$352,532. The note bears interest at a rate of 20.27% per annum and is payable
in monthly principal and interest payments of $15,191.
F-11
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. LONG-TERM DEBT (CONTINUED)
Annual maturities of long-term debt are as follows:
<TABLE>
<S> <C>
1999.............................................................. $ 127,179
2000.............................................................. 152,955
2001.............................................................. 72,398
---------
$ 352,532
---------
---------
</TABLE>
7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities at December 31, 1997 and 1998
consist of:
<TABLE>
<CAPTION>
1997 1998
<S> <C> <C>
Trade accounts payable.............................................. $ 359,000 $ 1,079,000
Commissions and bonuses............................................. 113,000 660,000
Panel costs......................................................... 128,000 57,000
Other............................................................... 281,000 512,000
---------- ------------
$ 881,000 $ 2,308,000
---------- ------------
---------- ------------
</TABLE>
F-12
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
8. PREFERRED STOCKS
On April 14, 1997, Media Metrix issued: (i) 495,603 shares of its Series A
Convertible Preferred Stock ("Series A") and (ii) warrants to purchase 159,640
shares of its Series B Convertible Preferred Stock ("Series B") at an exercise
price of $12.53 per share through October 14, 1999 for proceeds of $3,999,991
pursuant to a private placement to three investors. Media Metrix incurred
approximately $359,000 of costs related to this private placement and issued an
investment advisor warrants to purchase 377,642 shares of Media Metrix's common
stock at an exercise price of $2.88 per share through October 14, 1999. The
value of such warrants was nominal.
Immediately prior to the RKI acquisition (see Note 4), the holders of the
Series A converted all issued and outstanding shares into 2,155,176 shares of
Media Metrix common stock. In addition, the holders of warrants to purchase
119,714 shares of Series B, exercised such warrants and immediately converted
the underlying Series B into 520,590 shares of Media Metrix common stock. The
remaining 39,926 warrants to purchase Series B were canceled and exchanged for
warrants to purchase 173,629 shares of Media Metrix common stock at an exercise
price of $2.88 per share. Media Metrix amended and restated its certificate of
incorporation to cancel the Series A and Series B. Accordingly, at December 31,
1998, Media Metrix has 5,000,000 of authorized shares of undesignated preferred
stock of which 41,446 has been designated to the Redeemable Preferred Stock.
NPD owns 41,446 shares or 100% of the authorized, issued and outstanding
shares of Media Metrix's Redeemable Preferred Stock.
The principal terms of the Redeemable Preferred Stock are as follows:
- DIVIDENDS
The holder of the Redeemable Preferred Stock is entitled to receive
dividends at 7% per annum and shall accrue from the date of issuance
whether or not declared. During April 1997, Media Metrix paid the holder
of the Redeemable Preferred Stock dividends of approximately $68,000
representing amounts accrued through April 1997. Cumulative but unpaid
dividends on Redeemable Preferred Stock through December 31, 1998 are
approximately $535,000.
- LIQUIDATION PREFERENCE
In the event of liquidation of Media Metrix, the holder of the Redeemable
Preferred Stock is entitled to receive an amount equal to $100 per share
($4,144,600) plus any accrued but unpaid dividends.
- REDEMPTION
Upon the completion of a public offering of Media Metrix's common stock at
a price per share of at least $3.45 and gross proceeds of at least
$15,000,000 or certain other specified events as defined, Media Metrix is
required to purchase the outstanding shares of Redeemable Preferred Stock
at a price of $100 per share plus all accrued and unpaid dividends.
- VOTING RIGHTS
The holder of the Redeemable Preferred Stock is entitled to 100 votes for
each share held at any meeting of the stockholders of Media Metrix.
F-13
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
9. INCOME TAXES
Since PC Meter was a limited partnership, no provision or benefit for
Federal or state income taxes was provided in the financial statements but the
income or loss was allocated directly to its partners. Beginning on April 14,
1997 when PC Meter was merged into Media Metrix, Media Metrix adopted the
provisions of Statement of Financial Accounting Standards No. 109, ACCOUNTING
FOR INCOME TAXES, in accounting for its income taxes. Accordingly, deferred tax
assets and liabilities are recognized for future tax consequences attributable
to differences between financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted rates expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered
or settled. Significant components of Media Metrix's deferred tax assets are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
<S> <C> <C>
1997 1998
Deferred tax assets:
Net operating loss carryforwards.............................. $ 900,000 $ 6,400,000
Amounts payable to related party.............................. 437,000 1,882,000
Accounts receivable reserves.................................. 34,000 88,000
------------- -------------
Total deferred tax assets....................................... 1,371,000 8,370,000
Valuation allowance for deferred tax assets..................... (1,371,000) (8,370,000)
------------- -------------
Net deferred taxes.............................................. $ -- $ --
------------- -------------
------------- -------------
</TABLE>
At April 14, 1997, Media Metrix did not have any deferred tax assets or
liabilities and, accordingly, a valuation allowance for deferred tax assets was
not required. At the time of the RKI acquisition, RKI had deferred tax assets of
approximately $4,329,000 with an equal valuation allowance.
As a result of losses from April 14, 1997 through December 31, 1998, Media
Metrix has available net operating loss carryforwards ("NOLs") of approximately
$16,000,000 for Federal income tax purposes that expire in 2012 and 2013.
Included in such amount are RKI pre-acquisition NOLs of approximately
$11,129,000 which expire through 2013. As a result of the RKI acquisition, under
Section 382 of the Internal Revenue Code, utilization of such NOLs will be
limited to approximately $600,000 per year over the next fifteen years. Future
benefits, if any, from the RKI NOLs would first reduce the intangibles acquired
and then income tax expense.
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the period in
which the NOLs can be utilized and the temporary differences become deductible.
Since Media Metrix has incurred losses since inception, Media Metrix has
established a valuation allowance for deferred tax assets at December 31, 1998.
10. STOCK OPTIONS
In November 1998, Media Metrix adopted the 1998 Equity Incentive Plan (the
"1998 Plan"). Under the 1998 Plan, Media Metrix may award incentive and other
non-statutory stock options, stock appreciation rights, restricted stock and
performance stock units and other stock units which are valued by reference to
the value of the common stock. Media Metrix also maintains the Media Metrix
Stock
F-14
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. STOCK OPTIONS (CONTINUED)
Option Plan ("Media Metrix Plan") which provides for the award of up to 519,222
shares of common stock in the form of incentive stock options and non-statutory
stock options. In February 1999, the Board of Directors, subject to stockholder
approval, adopted an amendment to increase the number of shares under the 1998
Plan from 732,400 to 1,318,320.
In October 1998, Media Metrix changed the provisions of certain of its
outstanding stock options which resulted in a new measurement date. Accordingly,
Media Metrix established deferred compensation of approximately $724,000 as a
separate component of stockholders' equity and recorded compensation expense of
approximately $348,000 during the year ended December 31, 1998.
The following table summarizes activity in stock options:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1996 1997 1998
-------------------------- -------------------------- --------------------------
<CAPTION>
SHARES WEIGHTED- SHARES WEIGHTED- SHARES WEIGHTED-
UNDER AVERAGE UNDER AVERAGE UNDER AVERAGE
OPTION EXERCISE PRICE OPTION EXERCISE PRICE OPTION EXERCISE PRICE
<S> <C> <C> <C> <C> <C> <C>
Balance, beginning of year.................. -- $ -- 133,067 $ 0.23 283,093 $ 0.23
Grants...................................... 133,067 0.23 150,026 0.23 373,219 1.97
Forfeitures................................. -- -- -- -- (6,957) 2.30
Options issued in connection with
acquisition............................... -- -- -- -- 46,775 2.39
--------- --------- ---------
Balance, end of year........................ 133,067 0.23 283,093 0.23 696,130 1.28
--------- --------- ---------
--------- --------- ---------
Weighted-average fair value of options
issued during the period.................. $ 0.07 $ 0.06 $ 0.48
</TABLE>
The following tables summarize information about stock options outstanding at
December 31, 1998:
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE
EXERCISE OPTIONS OPTIONS REMAINING
PRICE OUTSTANDING EXERCISABLE CONTRACTUAL LIFE
<S> <C> <C> <C>
$0.23............................................ 283,093 83,231 2.6 years
0.35............................................ 70,665 -- 4.2
2.30............................................ 142,525 -- 4.5
2.39............................................ 199,847 46,775 9.7
----------- -----------
696,130 130,006 5.2
----------- -----------
----------- -----------
</TABLE>
Media Metrix has reserved 2,201,711 shares of common stock for issuance of
all outstanding options and warrants at December 31, 1998.
FAIR VALUE DISCLOSURES
Pro forma information regarding net loss and net loss per share is required
by SFAS 123, which also requires that the information be determined as if Media
Metrix has accounted for its stock options under the fair value method of that
statement. The fair value for these options was estimated using the minimum
value method with the following assumptions: no dividend yield, weighted-average
expected life of the option of 5 years, and risk-free interest rates of 6.6%,
6.0% and 5.7% for the years ended December 31, 1996, 1997 and 1998,
respectively.
F-15
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. STOCK OPTIONS (CONTINUED)
Because the determination of fair value of all options granted after such
time as Media Metrix becomes a public entity will include an expected volatility
factor in addition to the factors described above, the results presented below
may not be indicative of future periods.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. Media Metrix's
pro forma financial information is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
<S> <C> <C> <C>
1996 1997 1998
Net loss applicable to common stockholders:
As reported.................................... $ (3,375,694) $ (4,873,512) $ (7,452,286)
------------- ------------- -------------
------------- ------------- -------------
Pro forma...................................... $ (3,376,754) $ (4,875,943) $ (7,467,824)
------------- ------------- -------------
------------- ------------- -------------
Net loss applicable to common stockholders per
share:
As reported.................................... $ (.52) $ (.75) $ (.98)
------------- ------------- -------------
------------- ------------- -------------
Pro forma...................................... $ (.52) $ (.75) $ (.98)
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
11. LEASE COMMITMENTS
Media Metrix leases office space in New York, California and Georgia. At
December 31, 1998, the future minimum lease payments under noncancellable
operating leases with initial or remaining lease terms in excess of one year are
as follows:
<TABLE>
<S> <C>
Year ending December 31:
1999.............................................................. $ 391,000
2000.............................................................. 223,000
2001.............................................................. 81,000
2002.............................................................. 58,000
2003.............................................................. 5,000
---------
$ 758,000
---------
---------
</TABLE>
Rent expense approximated $39,000, $207,000 and $356,000 for the years ended
December 31, 1996, 1997 and 1998, respectively.
12. SUBSEQUENT EVENT
On January 4, 1999, Media Metrix issued to a foreign investor 194,380 shares
of common stock at a purchase price per share of $10.29, for an aggregate
purchase price of approximately $2,000,000, pursuant to a stock purchase
agreement. Media Metrix had received the proceeds from this transaction on
December 31, 1998 and has recorded "common stock issuable" in the accompanying
balance sheet.
F-16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
January 11, 1999
To the Board of Directors and Shareholders of
RelevantKnowledge, Inc.
In our opinion, the accompanying balance sheets and the related statements
of operations of shareholders' equity and of cash flows present fairly, in all
material respects, the financial position of RelevantKnowledge, Inc. at October
31, 1998 and December 31, 1997, and the results of its operations and its cash
flows for the ten month period ended October 31, 1998 and for the year ended
December 31, 1997, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCoopers LLP
Atlanta, Georgia
F-17
<PAGE>
RELEVANTKNOWLEDGE, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, OCTOBER 31,
1997 1998
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents........................................................ $ 998,827 $ 2,963,218
Accounts receivable.............................................................. 213,575 292,038
Unbilled work in progress........................................................ -- 70,484
Other current assets............................................................. 114,009 76,745
------------- --------------
Total current assets....................................................... 1,326,411 3,402,485
Fixed assets, net.................................................................. 749,761 780,884
Other assets....................................................................... 4,983 98,803
------------- --------------
Total assets............................................................... $ 2,081,155 $ 4,282,172
------------- --------------
------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses............................................ $ 619,552 $ 402,950
Commissions payable.............................................................. -- 292,515
Deferred revenue................................................................. 160,887 468,474
Current portion of long-term debt................................................ -- 123,326
------------- --------------
Total current liabilities.................................................. 780,439 1,287,265
Long-term debt..................................................................... -- 248,361
------------- --------------
Total liabilities.......................................................... 780,439 1,535,626
------------- --------------
Commitments and contingencies
Shareholders' equity
Common stock, no par value; 15,500,000 and 15,000,000 shares authorized at
October 31, 1998 and December 31, 1997, respectively; 3,849,458 and 3,603,570
shares issued and outstanding at October 31, 1998 and December 31, 1997,
respectively................................................................... 210,183 1,317,471
Series A-1 convertible preferred stock; 1,500,000 shares authorized; 1,456,949
issued and outstanding at October 31, 1998 and December 31, 1997,
respectively................................................................... 881,885 881,885
Series B-1 convertible preferred stock; 3,000,000 shares authorized; 2,754,587
shares issued and outstanding at October 31, 1998 and December 31, 1997,
respectively................................................................... 4,223,575 4,221,619
Series B-2 convertible preferred stock; 1,000,000 shares authorized; 858,420
shares issued and outstanding at October 31, 1998 and December 31, 1997,
respectively................................................................... 1,469,497 1,469,497
Series C-1 convertible preferred stock; 3,500,000 shares authorized; 2,713,321
and 0 shares issued and outstanding at October 31, 1998 and December 31 1997,
respectively................................................................... -- 6,686,403
Series C-2 convertible preferred stock; 1,000,000 shares authorized; no shares
issued or outstanding at October 31, 1998 and December 31, 1997,
respectively................................................................... -- --
Accumulated deficit.............................................................. (5,484,424) (11,830,329)
------------- --------------
Total shareholders' equity................................................. 1,300,716 2,746,546
------------- --------------
Total liabilities and shareholders' equity................................. $ 2,081,155 $ 4,282,172
------------- --------------
------------- --------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-18
<PAGE>
RELEVANTKNOWLEDGE, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
TEN MONTHS
YEAR ENDED ENDED
DECEMBER 31, OCTOBER 31,
1997 1998
<S> <C> <C>
Revenues
Information services.............................................................. $ 157,032 $ 1,730,744
Technology licensing and support.................................................. 537,879 83,486
Other income...................................................................... -- 95,909
------------- -------------
Total revenues................................................................ 694,911 1,910,139
Costs of sales...................................................................... 2,510,621 2,879,037
Sales and marketing................................................................. 1,433,173 1,623,500
General and administrative.......................................................... 1,440,551 2,973,230
Research and development............................................................ 651,421 780,277
------------- -------------
Total costs and expenses...................................................... 6,035,766 8,256,044
------------- -------------
Net loss............................................................................ $ (5,340,855) $ (6,345,905)
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-19
<PAGE>
RELEVANTKNOWLEDGE, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK TOTAL
------------------------ ------------------------- ACCUMULATED SHAREHOLDERS'
SHARES AMOUNT SHARES AMOUNT DEFICIT EQUITY
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996.......... 3,500,000 $ 3,500 1,319,130 $ 750,000 $ (143,569) $ 609,931
Issuance of preferred stock, net
of offering costs............... 3,750,826 5,824,957 5,824,957
Exercise of common stock
warrants........................ 103,570 169,998 169,998
Issuance of employee stock
options......................... 36,685 36,685
Net loss.......................... (5,340,855) (5,340,855)
---------- ------------ ---------- ------------- -------------- -------------
Balance, December 31, 1997.......... 3,603,570 210,183 5,069,956 6,574,957 (5,484,424) 1,300,716
Issuance of preferred stock, net
of offering costs............... 2,713,321 6,684,447 6,684,447
Issuance of common stock
warrants........................ 970,740 970,740
Exercise of employee stock
options......................... 245,888 136,548 136,548
Net loss.......................... (6,345,905) (6,345,905)
---------- ------------ ---------- ------------- -------------- -------------
Balance, October 31, 1998........... 3,849,458 $ 1,317,471 7,783,277 $ 13,259,404 $ (11,830,329) $ 2,746,546
---------- ------------ ---------- ------------- -------------- -------------
---------- ------------ ---------- ------------- -------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-20
<PAGE>
RELEVANTKNOWLEDGE, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
TEN MONTHS
YEAR ENDED ENDED
DECEMBER 31, OCTOBER 31,
1997 1998
<S> <C> <C>
Cash flows from operating activities
Net loss.......................................................................... $ (5,340,855) $ (6,345,905)
Adjustments to reconcile net loss to cash used in operating activities
Depreciation and amortization................................................. 103,173 143,589
Expense recorded for issuance of warrants..................................... -- 970,740
Expense recorded for issuance of employee stock options....................... 36,685 --
Noncash interest expense...................................................... -- 33,350
Loss on disposal of fixed assets.............................................. -- 35,048
Change in operating assets and liabilities:
Accounts receivable......................................................... (213,575) (78,463)
Unbilled work in progress................................................... -- (70,484)
Other current assets........................................................ (112,977) 4,418
Other assets................................................................ -- (60,974)
Accounts payable and accrued expenses....................................... 522,752 (216,602)
Commissions payable......................................................... -- 292,515
Deferred revenue............................................................ 160,887 307,587
------------- -------------
Net cash used in operating activities..................................... (4,843,910) (4,985,181)
------------- -------------
Cash flows from investing activities
Proceeds from the sale of fixed assets.......................................... -- 6,500
Purchases of fixed assets....................................................... (826,507) (216,260)
------------- -------------
Net cash used in investing activities..................................... (826,507) (209,760)
------------- -------------
Cash flows from financing activities
Proceeds from issuance of common and preferred stock, net of offering costs..... 5,994,955 3,787,645
Proceeds from issuance of convertible secured promissory notes and attached
warrants...................................................................... -- 3,000,000
Proceeds from long-term debt.................................................... -- 480,722
Payments on long-term debt...................................................... -- (109,035)
------------- -------------
Net cash provided by financing activities................................. 5,994,955 7,159,332
------------- -------------
Net increase in cash and cash equivalents......................................... 324,538 1,964,391
Cash and cash equivalents at beginning of period.................................. 674,289 998,827
------------- -------------
Cash and cash equivalents at end of period........................................ $ 998,827 $ 2,963,218
------------- -------------
------------- -------------
Supplemental cash flow disclosures
Cash paid for interest............................................................ $ -- $ 58,064
------------- -------------
------------- -------------
Conversion of convertible secured promissory notes to Series C-1 preferred
stock........................................................................... $ -- $ 3,000,000
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-21
<PAGE>
RELEVANTKNOWLEDGE, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
RelevantKnowledge, Inc. (the "Company") provides internet demographics, site
visit statistics, and additional usage-related information. The Company operates
in a single business segment.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
FIXED ASSETS
Fixed assets are recorded at cost less accumulated depreciation, which is
computed using the straight-line method over the estimated useful lives of the
related assets; generally five to seven years. Upon sale, retirement or other
disposition of these assets, the cost and the related accumulated depreciation
are removed from the respective accounts and any gain or loss on the disposition
is included in operations.
Leasehold improvements are amortized over the lesser of the useful life of
the improvement or the remaining lease term.
INCOME TAXES
The Company accounts for income taxes using the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes."
Under SFAS 109, deferred tax assets and liabilities are determined based on
differences between the financial reporting and tax basis of assets and
liabilities. Differences between the financial reporting and tax basis of assets
and liabilities at October 31, 1998 and December 31, 1997 are not significant.
The Company has net operating loss carryforwards for Federal income tax
purposes of approximately $11,129,000 and $5,450,000 at October 31, 1998 and
December 31, 1997, respectively, that expire between 2011 and 2013. Such net
operating losses give rise to deferred tax assets of approximately $4,329,000
and $2,100,000 at October 31, 1998 and December 31, 1997, respectively. The
Company has recorded a valuation allowance equal to the amount of the deferred
tax assets at both October 31, 1998 and December 31, 1997, because it is deemed
more likely than not that such assets will not be realized.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
SOFTWARE DEVELOPMENT COSTS
The Company capitalizes costs related to the development of certain software
products in accordance with SFAS 86 "Accounting For the Costs of Computer
Software to be Sold, Leased, or Otherwise Marketed" which requires
capitalization to begin when technological feasibility has been established
F-22
<PAGE>
RELEVANTKNOWLEDGE, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
and ends when the product is available for general release to customers.
Software development costs incurred prior to technological feasibility are
considered research and development costs and are expensed as incurred.
During 1998 and 1997, the period between established technological
feasibility and general release has been less than three months, and software
development costs qualifying for capitalization have been insignificant.
Accordingly, the Company has not capitalized any software development costs
during 1998 and 1997.
REVENUE RECOGNITION
Information services revenues are recognized upon delivery of data and
reports ordered by the customer. Revenue arising from agreements which require
monthly reports are recognized over the period for which data are provided.
Technology licensing revenues consist of technology licensing fees and
royalties. Technology licensing fees are recognized upon delivery of the
software and equipment, receipt of a signed agreement, determination that
collectibility is probable and expiration of rights of refund or return. Royalty
revenues are recognized when earned.
The Company enters into certain nonmonetary transactions, in which the
Company provides services to another entity and in return receives services, or
a combination of cash and services, from the other entity. The Company
recognizes revenue and an equal amount of expense based upon the fair value of
the service provided or the service (or combination of service and cash)
received, whichever was more clearly evident.
ADVERTISING EXPENSES
All advertising costs are expensed when incurred. Advertising expenses were
approximately $171,000 and $491,000 for the ten months ended October 31, 1998
and the year ended December 31, 1997, respectively.
STOCK-BASED COMPENSATION
The Company follows Accounting Principles Board Opinion No. 25, ACCOUNTING
FOR STOCK ISSUED TO EMPLOYEES ("APB 25") and related interpretations in
accounting for its employee stock options. In accordance with the provisions of
APB 25, compensation expense is recorded upon issuance of employee stock options
in an amount equal to the excess of the fair value of the Company's stock over
the option price. The Company has adopted the disclosure-only provisions of
Statement of Financial Accounting Standards No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION.
F-23
<PAGE>
RELEVANTKNOWLEDGE, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. FIXED ASSETS
Fixed assets are comprised of the following as of October 31, 1998 and
December 31, 1997:
<TABLE>
<CAPTION>
DECEMBER 31, OCTOBER 31,
1997 1998
<S> <C> <C>
Furniture and fixtures........................................... $ 51,297 $ 57,815
Computer equipment and software.................................. 708,673 874,320
Leasehold improvements........................................... 87,579 84,604
------------ ------------
847,549 1,016,739
Less: accumulated depreciation and amortization.................. 97,788 235,855
------------ ------------
$ 749,761 $ 780,884
------------ ------------
------------ ------------
</TABLE>
3. COMMITMENTS AND CONTINGENCIES
The Company leases office space and equipment under noncancelable operating
lease agreements expiring through 2003. Future minimum lease payments under
operating leases as of October 31, 1998, are as follows:
<TABLE>
<S> <C>
1999.............................................................. $ 309,139
2000.............................................................. 245,205
2001.............................................................. 97,613
2002.............................................................. 66,000
2003.............................................................. 16,500
---------
$ 734,457
---------
---------
</TABLE>
Rental expense was approximately $299,000 and $136,000 for the ten months
ended October 31, 1998 and the year ended December 31, 1997, respectively.
Various legal proceedings may arise in the normal course of business.
Management does not believe that there are currently any asserted or unasserted
claims that will have a material adverse effect on the financial position,
results of operations or cash flows of the Company.
4. CONCENTRATION OF CREDIT RISKS
The Company's sales to its largest customer represented approximately 77% of
total revenues for the year ended December 31, 1997.
5. CAPITAL STRUCTURE
COMMON AND PREFERRED STOCK
The Company's Restated Articles of Incorporation authorize the issuance of
up to 25,500,000 shares of $0.001 par value capital stock as of October 31,
1998. Fifteen million five hundred thousand (15,500,000) and fifteen million
(15,000,000) shares have been designated as Common Stock as of October 31, 1998
and December 31, 1997, respectively and ten million (10,000,000) and five
million five
F-24
<PAGE>
RELEVANTKNOWLEDGE, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. CAPITAL STRUCTURE (CONTINUED)
hundred thousand (5,500,000) shares have been designated as Convertible
Preferred Stock as of October 31, 1998 and December 31, 1997, respectively. The
Convertible Preferred Stock is further designated in five series as follows (as
of October 31, 1998): 1,500,000 shares are Series A-1 Preferred Stock, 3,000,000
shares are Series B-1 Preferred Stock, 1,000,000 shares are Series B-2 Preferred
Stock, 3,500,000 shares are Series C-1 Preferred Stock and 1,000,000 shares are
Series C-2 Preferred Stock. Upon the occurrence of certain events, the holders
of Convertible Preferred Stock are entitled to convert shares of A-1, B-1, B-2,
C-1 and C-2 Preferred Stock to Common Stock on a one-for-one basis.
VOTING RIGHTS
The holders of Preferred Stock are entitled to vote with the holders of
Common Stock as a single class and shall be entitled to one vote for each share
of Common Stock into which the Preferred Stock would be convertible on the
record date set for such vote of stockholders.
DIVIDENDS
Upon the occurrance of certain events, holders of Series B-1, B-2, C-1 and
C-2 Preferred Stock are entitled to receive cumulative dividends. Such dividends
would be recorded based on the original issue price at a rate of 8% per annum
computed on a quarterly basis. Series B-1, B-2, C-1 and C-2 Preferred Stock have
preference over Series A-1 Preferred Stock and Common Stock in the payment of
dividends or the event of liquidation.
After payment of the Series B-1, B-2, C-1 and C-2 Preferred dividends, the
holders of Series A-1 Preferred are entitled to receive noncumulative dividends
at the rate of 10% per annum of the original issuance price when and if declared
by the Board of Directors.
CONVERSION
The Preferred Stock is convertible to Common Stock under a stated formula,
generally one share of common for one share of preferred, at the option of the
stockholder or upon the occurrence of certain events.
CONVERTIBLE SECURED PROMISSORY NOTES
On March 15, 1998, the Company sold Convertible Secured Promissory Notes
("the Notes") in the aggregate principal amount of $3,000,000 to certain holders
of the Company's Common and Convertible Preferred Stock. The notes bore interest
at a rate of 10% per annum. Upon issuance of the Series C-1 Convertible
Preferred Stock in July 1998, the holders of the notes converted all outstanding
principal and accrued interest to Series C-1 Convertible Preferred Stock at the
same price and with the same rights and privileges as the other shares of Series
C-1 Convertible Preferred Stock. The Company issued 1,213,335 Series C-1 shares
upon conversion of the Notes.
In conjunction with the sale of the Notes, the Company issued 857,122
warrants to purchase common stock to the holders of the Notes. Each warrant
entities the warrant holder to purchase one share of the Company's common stock
for $0.01. The warrants may not be exercised until the earlier of January 1,
1999 or the occurrence of certain events, including a consolidation or merger of
the Company. The warrants expire between March 2003 and May 2003.
F-25
<PAGE>
RELEVANTKNOWLEDGE, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. CAPITAL STRUCTURE (CONTINUED)
In connection with the issuance of these warrants, the Company recognized
interest expense of $677,126, which represents the implicit value of the
warrants (fair value less exercise price).
WARRANTS
The Company has issued warrants to acquire shares of the Company's common
stock in conjunction with sales of Common Stock, Convertible Preferred Stock,
and Convertible Secured Promissory Notes and in exchange for services provided.
At October 31, 1998, 1,160,290 warrants were outstanding. These warrants are
exercisable at the following prices: 857,122 at $0.01 per share, 215,668 at
$2.00 per share, 38,750 at $0.06 per share, 25,000 at $0.80 per share, and
23,750 at $1.60 per share. 303,168 of the warrants were exercisable at October
31, 1998. The remaining 857,122 are not exercisable until the earlier of January
1, 1999 or the occurrence of certain events, including a consolidation or merger
of the Company. The warrants expire between April 2002 and May 2008.
6. STOCK OPTION PLAN
The Company has issued options to its employees under the terms of The 1996
Stock Option Plan ("the Plan"). The Plan permits management to grant either
incentive stock options or nonstatutory stock options to purchase shares of the
Company's Common Stock to officers, directors, key employees, and consultants
responsible for the direction and management of the Company. The Plan authorizes
the issuance of options to purchase up to an aggregate of 1,250,000 shares of
Common Stock. Options issued under the Plan vest at rates determined by the
Board of Directors. Vesting rates can not be less than 20% per year under the
terms of the Plan. The maximum term for options issued under the Plan is ten
years. The following table summarizes the transactions of the Plan for the year
ended December 31, 1997 and the ten months ended October 31, 1998:
<TABLE>
<CAPTION>
1997WEIGHTED 1998WEIGHTED
AVERAGE AVERAGE
EXERCISE EXERCISE
SHARES PRICE SHARES PRICE
<S> <C> <C> <C> <C>
Outstanding at beginning of year................ 0 -- 727,950 $ .442
Granted....................................... 775,950 .446 520,038 .885
Exercised..................................... 0 -- (245,888) .555
Forfeited..................................... (48,000) .060 (353,655) .484
---------- ----------
Outstanding at end of year...................... 727,950 .442 648,445 .653
---------- ----------
---------- ----------
Options exercisable at year-end................. 0 0
---------- ----------
---------- ----------
Weighted average fair value of options granted
during the year at the share's fair value..... $ 438,444 $ 109,208
Weighted average fair value of options granted
during the year at above the share's fair
value......................................... 0 0
</TABLE>
F-26
<PAGE>
RELEVANTKNOWLEDGE, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. STOCK OPTION PLAN (CONTINUED)
The following table summarizes information regarding stock options
outstanding at October 31, 1998:
<TABLE>
<CAPTION>
NUMBER OF OPTIONS WEIGHTED AVERAGE
EXERCISE OUTSTANDING AT REMAINING
PRICE OCTOBER 31, 1998 CONTRACTUAL LIFE
<S> <C> <C>
$0.06................................................... 145,031 8.31 years
0.16.................................................... 50,583 8.63 years
0.80.................................................... 354,831 9.33 years
1.25.................................................... 98,000 9.84 years
</TABLE>
The Company accounts for employee stock options in accordance with the
provisions of APB Opinion 25 and related interpretations.
Had compensation cost for the Company's stock-based compensation plans been
determined on a fair value basis in accordance with the provisions of FASB
Statement 123, the Company's net loss for the year ended December 31, 1997, and
ten months ended October 31, 1998, would have been as follows:
<TABLE>
<CAPTION>
1997 1998
<S> <C> <C>
Net loss--as reported........................................... $ (5,340,855) $ (6,345,905)
Net loss--proforma.............................................. $ (5,435,880) $ (6,418,405)
</TABLE>
The amount of the pro forma charge has been determined using the minimum
value method as permitted for private companies by FASB Statement 123. For
purposes of the calculation, management used a risk free rate of return of
5.36%, a projected forfeiture rate of 0%, and an expected life of 5.1 years.
7. LONG-TERM DEBT
In December 1997, the Company entered into a credit agreement with Phoenix
Capital under which it may borrow up to $1,000,000. During 1998, the Company
borrowed approximately $480,722 under this agreement. The note bears interest at
a rate of 20.27% and is payable in monthly principal and interest payments of
$15,191. The line of credit is collateralized by substantially all of the
Company's computer equipment.
At October 31, 1998, required principal payments are as follows:
<TABLE>
<CAPTION>
YEAR
<S> <C>
1999.............................................................................. $ 123,326
2002.............................................................................. 148,322
2001.............................................................................. 100,039
----------
$ 371,687
----------
----------
</TABLE>
8. SUBSEQUENT EVENT
On November 5, 1998, the Company was acquired by Media Metrix, Inc. in
exchange for common stock of Media Metrix, Inc. The sale of the Company entitled
holders of the Series B-1, B-2, and C-1
F-27
<PAGE>
RELEVANTKNOWLEDGE, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. SUBSEQUENT EVENT (CONTINUED)
Preferred Stock to receive cumulative dividends in the form of cash or common
stock. The majority of holders elected to receive their dividends in the form of
common stock. As a result, in November 1998, the Company paid cash of $10,509
and issued 374,424 shares of common stock to holders of Series B-1, B-2, and C-1
Preferred Stock as payment of dividends.
Upon the sale of the Company, holders of options to purchase common stock
were immediately 100% vested in any options outstanding. In November, the
Company issued 480,945 shares in connection with the exercise of stock options.
Also as a result of the sale of the Company, 857,122 warrants issued in
connection with the sale of the convertible secured promissory notes became
exercisable on November 5, 1998.
F-28
<PAGE>
MEDIA METRIX, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
HISTORICAL
----------------------------
<S> <C> <C> <C> <C>
MEDIA RELEVANT PRO FORMA
METRIX KNOWLEDGE ADJUSTMENT PRO FORMA
<CAPTION>
(NOTE 2)
<S> <C> <C> <C> <C>
Revenues............................................ $ 6,330,485 $ 1,814,230 $ -- $ 8,144,715
Cost of revenues.................................... 4,120,569 2,879,037 -- 6,999,606
------------- ------------- ------------- --------------
Gross profit........................................ 2,209,916 (1,064,807) -- 1,145,109
Operating expenses:
Research and development.......................... 1,382,375 780,277 -- 2,162,652
Sales and marketing............................... 2,888,195 1,623,500 -- 4,511,695
General and administrative........................ 3,064,105 2,973,230 -- 6,037,335
Amortization of intangibles....................... 479,000 -- 2,392,922 2,871,922
Acquired in-process research and development...... 1,600,000 -- -- 1,600,000
------------- ------------- ------------- --------------
Total operating expenses............................ 9,413,675 5,377,007 2,392,922 17,183,604
------------- ------------- ------------- --------------
Loss from operations................................ (7,203,759) (6,441,814) (2,392,922) (16,038,495)
Interest income, net of interest expense............ 65,211 95,909 -- 161,120
------------- ------------- ------------- --------------
Net loss............................................ (7,138,548) (6,345,905) (2,392,922) (15,877,375)
Preferred stock dividends........................... (313,738) -- -- (313,738)
------------- ------------- ------------- --------------
Net loss applicable to common stockholders.......... $ (7,452,286) $ (6,345,905) $ (2,392,922) $ (16,191,113)
------------- ------------- ------------- --------------
------------- ------------- ------------- --------------
Basic and diluted net loss per share applicable
to common stockholders (Note 3)................... $ (0.98) $ (1.49)
------------- --------------
------------- --------------
Shares used in calculations of basic and diluted
net loss per share applicable to common
stockholders (Note 3)............................. 7,617,621 10,855,564
------------- --------------
------------- --------------
</TABLE>
See accompanying notes to unaudited pro forma statement of operations.
F-29
<PAGE>
MEDIA METRIX, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
1. BASIS OF PRESENTATION
The unaudited pro forma statement of operations gives effect to Media
Metrix, Inc.'s ("Media Metrix") acquisition of RelevantKnowledge, Inc. ("RKI")
as if it occurred on January 1, 1998. Such unaudited pro forma financial
statement sets forth the historical results of operations of Media Metrix for
the year ended December 31, 1998 and of RKI for the ten months ended October 31,
1998. The operations of RKI for the two months ended December 31, 1998 are
included in the operations of Media Metrix.
The unaudited pro forma statement of operations has been prepared by
management and should be read in conjunction with the historical financial
statements of Media Metrix and RKI. This statement does not purport to be
indicative of the results of operations that might have occurred if the RKI
acquisition was consummated on January 1, 1998, and do not purport to be
indicative of future results.
Management believes additional synergies and operational improvements, not
reflected in the accompanying unaudited pro forma statement of operations, will
be realized by the combined companies. Such amounts cannot be reasonable
quantified and, therefore, are not reflected in the unaudited pro forma
statement of operations.
2. PRO FORMA ADJUSTMENT
The pro forma adjustment reflects the additional amortization required for a
full year's amortization of the intangibles acquired. Total intangibles were
approximately $6,216,000 of which $1,200,000 was allocated to panel costs with a
life of 12 months and the balance was allocated to goodwill and various other
intangibles with lives of 3 years. The annual amortization consists of the
following:
<TABLE>
<S> <C>
Panel costs..................................................... $1,200,000
Goodwill and other intangibles.................................. 1,672,000
---------
Total amortization.............................................. $2,872,000
---------
---------
</TABLE>
3. NET LOSS PER SHARE APPLICABLE TO COMMON STOCKHOLDERS
Pro forma net loss per share applicable to common stockholders adjusts the
weighted average shares outstanding for Media Metrix's historical financial
statements for the shares issued to RKI stockholders as if such shares were
outstanding for the entire year.
F-30
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
, 1999
[LOGO]
SHARES OF COMMON STOCK
---------------------
P R O S P E C T U S
---------------------
DONALDSON, LUFKIN & JENRETTE
BANCBOSTON ROBERTSON STEPHENS
- ------------------------------------------------------------
We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in the prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor any
sales made hereunder after the date of this prospectus shall create an
implication that the information contained herein or the affairs of Media Metrix
have not changed since the date hereof.
Until , 1999 (25 days after the date of this prospectus), all dealers
that effect transactions in these shares of common stock may be required to
deliver a prospectus. This is in addition to the dealer's obligation to deliver
a prospectus when acting as an underwriter and with respect to their unsold
allotments or subscriptions.
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by Media Metrix in connection
with the sale of the common stock being registered hereby. All the amounts shown
are estimated, except the SEC registration fee, the NASD filing fee and the
Nasdaq National Market listing fee.
<TABLE>
<S> <C>
SEC Registration Fee.................................................... $13,427.40
NASD Filing Fee......................................................... 5,330.00
Nasdaq National Market Listing Fee......................................
Printing Expenses.......................................................
Legal Fees and Expenses.................................................
Accounting Fees and Expenses............................................
Blue Sky Expenses and Counsel Fees......................................
Transfer Agent and Registrar Fees.......................................
Miscellaneous...........................................................
---------
Total................................................................... $
---------
---------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145(a) of the General Corporation Law of the State of Delaware
("DGCL") provides that a Delaware corporation may indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation), by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
cause to believe his conduct was unlawful.
Section 145(b) of the DGCL provides that a Delaware corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he
acted in any of the capacities set forth above, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted under similar
standards, except that no indemnification may be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the corporation unless and only to the extent that the court in which such
action or suit was brought shall determine that despite the adjudication of
liability, such person is fairly and reasonably entitled to be indemnified for
such expenses which the court shall deem proper.
Section 145 of the DGCL further provides that to the extent a director or
officer of a corporation has been successful in the defense of any action, suit
or proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue or matter therein, he shall be indemnified against expenses
actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; and that the
corporation may purchase and maintain insurance on behalf of any person who is
II-1
<PAGE>
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or enterprise, against any liability asserted
against him or incurred by him in any such capacity or arising out of his status
as such whether or not the corporation would have the power to indemnify him
against such liabilities under such Section 145.
Section 102(b)(7) of the DGCL provides that a certificate of incorporation
may contain a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director provided that such provision shall not eliminate
or limit the liability of a director: (i) for any breach of the director's duty
of loyalty to the corporation or its stockholders; (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law; (iii) under Section 174 of the DGCL; or (iv) for any transaction from
which the director derived an improper personal benefit.
Article Tenth of Media Metrix's Amended Certificate of Incorporation, states
that to the fullest extent permitted by the DGCL, no director of Media Metrix
shall be personally liable to Media Metrix, any of its stockholders or any other
person or entity for monetary damages for breach of fiduciary duty owed to Media
Metrix, its stockholders or such other person or entity owing to such director's
position as a director of Media Metrix.
Article Ninth of Media Metrix's Amended Certificate of Incorporation,
contains substantially the same provisions for indemnification as those
contained in Section 145 of the DGCL. Additionally, Article Ninth provides that
in any judicial proceeding in which a person seeks indemnification pursuant to
Article Ninth, the burden of proving that such person is not entitled to
indemnification shall be on Media Metrix. Article Ninth further provides that
any person who successfully establishes a right to indemnification, in whole or
in part, under Article Ninth in any such proceeding shall be indemnified by
Media Metrix against expenses incurred (including attorneys' fees) in
establishing such right to indemnification. Finally, Article Ninth provides that
in the event the DGCL is amended to expand further the indemnification permitted
to the persons covered by Article Ninth, Media Metrix shall indemnify such
persons to the fullest extent permitted by the DGCL, as so amended. Reference is
made to the Amended Certificate of Incorporation and By-Laws filed as Exhibits
3.1 and 3.2, respectively.
Media Metrix intends to enter into indemnification agreements with its
current directors and executive officers. Media Metrix intends to insure its
directors and officers against losses arising from any claim against them as
such for wrongful acts or omission, subject to certain limitations.
Under Section of the Underwriting Agreement, the underwriters are
obligated, under certain circumstances, to indemnify officers, directors and
controlling persons of Media Metrix against certain liabilities, including
liabilities under the Securities Act of 1933. Reference is made to the form of
Underwriting Agreement filed as Exhibit 1.1 hereto.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since March 1997, the Registrant has issued and sold unregistered securities
in the amounts, at the times, and for the aggregate amounts of consideration
listed as follows:
1. On April 14, 1997, Media Metrix merged with PC Meter, L.P. Under the
terms of the merger agreement, each of PC Meter's outstanding 438,767.7324 Class
A Limited Partnership Units was exchanged for 0.09446 shares of Media Metrix
redeemable preferred stock, or 41,446 shares in the aggregate. Each of PC
Meter's outstanding Class B Limited Partnership Units was exchanged for 12.75
shares of Media Metrix common stock, or 2,142,770 shares in the aggregate. All
of the outstanding Class A Limited Partnership Units were held by The NPD Group,
Inc. NPD also held 79,000 Class B Limited Partnership Units. The 1995 Scott
Johnson Trust and The 1995 Stacey Johnson Trust each held
II-2
<PAGE>
19,323.5 Class B Limited Partnership Units. After the merger, NPD, The 1995
Scott Johnson Trust and The 1995 Stacey Johnson Trust held 1,007,350, 246,375
and 246,375 shares of Media Metrix common stock, respectively.
2. On April 14, 1997, the Registrant issued:
- warrants to purchase 377,642 shares of common stock at an exercise price
of $2.88 per share to Veronis Suhler & Associates in repayment of an
outstanding obligation;
- 495,603 shares of Series A Preferred Stock convertible into 2,155,176
shares of common stock, at an effective purchase price per share of common
stock of $1.86; and
- warrants to purchase 159,640 shares of Series B Preferred Stock at an
exercise price of $12.53 per share. The Series A Preferred Stock and
warrants to purchase Series B Preferred Stock were sold to three
accredited investors for an aggregate purchase price of $4.0 million.
All of the outstanding shares of the Series A Preferred Stock were converted
into shares of common stock on November 4, 1998. Warrants to purchase 119,713
shares of Series B Preferred Stock were exercised on November 4, 1998 and such
shares of Series B Preferred Stock were converted into 520,590 shares of common
stock on the same date. The Registrant received aggregate proceeds of $1.5
million from the exercise of such warrants. The remaining warrants to purchase
39,926 shares of Series B Preferred Stock were converted into warrants to
purchase 173,629 shares of common stock at an exercise price of $2.88 per share.
3. On November 5, 1998, RelevantKnowledge merged with Media Metrix. The
Registrant issued an aggregate of 3,885,531 shares of common stock, or 0.3111
shares of common stock for each outstanding share of common stock and preferred
stock of RelevantKnowledge. The Registrant also replaced 1,160,290 warrants to
purchase shares of RelevantKnowledge common stock with a weighted average
exercise price of $2.31 with warrants to purchase 360,930 shares of common stock
with a weighted average exercise price of $1.38; and issued 46,775 options to
purchase common stock to the employees of RelevantKnowledge who became employees
of the Registrant after the merger. These options replaced options to purchase
RelevantKnowledge common stock which expired at the time of the merger. These
options were issued at an exercise price of $3.50 per share, and in general vest
incrementally over a period of four years, with credit given for prior service
with RelevantKnowledge.
4. On January 4, 1999, the Registrant issued to Investment A.B. Bure
("Bure") 194,380 shares of common stock at a purchase price per shares of
$10.29, for an aggregate purchase price of approximately $2 million, pursuant to
a stock purchase agreement between the Registrant and Bure.
5. The Registrant granted stock options to purchase 963,497 shares of common
stock at exercise prices ranging from $0.23 to $11.26 per share to employees,
consultants and directors pursuant to its Stock Option Plan and 1998 Equity
Plan.
6. From inception through February 15, 1999, the Registrant issued and sold
14,663 shares of its common stock to investors for aggregate consideration of
$467.00 pursuant to exercises of warrants to purchase common stock.
No underwriters were engaged in connection with the foregoing sales of
securities. Such sales of common stock and Preferred Stock were made in reliance
upon the exemption from registration set forth in Section 4(2) of the Securities
Act of 1933 and Rule 506 of Regulation D promulgated thereunder for transactions
not involving a public offering, and all purchasers were accredited investors as
such term is defined in Rule 501(a) of Regulation D. Issuances of options to
Media Metrix's employees, directors and consultants were made pursuant to Rule
701 promulgated under the Securities Act of 1933.
II-3
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibit Index
<TABLE>
<CAPTION>
NO. DESCRIPTION
<C> <S>
1.1 Underwriting Agreement*
2.1 Plan of Merger and Reorganization between Media Metrix, Inc. and RelevantKnowledge dated as of September
30, 1998 (schedules and exhibits omitted)
2.2 Plan of Merger between Media Metrix and PC Meter L.P. dated as of March 31, 1996
3.1 Certificate of Incorporation
3.2 Form of Restated Certificate of Incorporation to be in effect upon the closing of this offering*
3.3 Bylaws
3.4 Form of Amended and Restated Bylaws to be in effect upon the closing of this offering*
4.1 Registration Rights Agreement dated as of November 5, 1998, by and among Media Metrix and the
Stockholders listed on Schedule I thereto.
4.2 Stockholder's Agreement dated as of November 5, 1998, by and among Media Metrix and the Stockholders
listed on Schedule I thereto.
4.3 Co-Sale Agreement dated as of November 5, 1998, by and among Media Metrix and the Stockholders listed on
Schedule I thereto.
4.4 Media Metrix Stock Option Plan
4.5 1998 Equity Incentive Plan
4.6.1 Form of Warrant
4.6.2 Form of Warrant
4.6.3 Form of Warrant
5.1 Opinion of Fulbright & Jaworski L.L.P. re: legality*
10.1 Management Services Agreement dated as of September 30, 1998 by and between Media Metrix, The NPD Group,
Inc. and Tod Johnson.
10.2 Services Agreement dated as of September 30, 1998 by and between Media Metrix and The NPD Group, Inc.
10.3 License Agreement dated as of November 5, 1998 by and between Media Metrix and The NPD Group, Inc.
10.4 Stock Purchase Agreement dated as of December 23, 1998 by and between Media Metrix and Investment A.B.
Bure
10.5.1 Building Lease between Eagle Insurance Company and The NPD Group, Inc. dated as of August 18, 1997
10.5.2 Lease Agreement between Carriage House Associates Limited Partnership and RelevantKnowledge, Inc. dated
as of May 16, 1997.
10.6 Form of Indemnification Agreement*
10.7.1 Form of Non-Disclosure Agreement and Confidential Information and Invention Assignment Agreement
10.7.2 Form of Non-Disclosure Agreement and Confidential Information and Invention Assignment Agreement
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
NO. DESCRIPTION
<C> <S>
10.8 Employment Agreement by and between Media Metrix and Jeffrey C. Levy, dated as of November 5, 1998
10.9 Agreement with Tod Johnson*
10.10 Consulting Agreement by and between Media Metrix and Timothy F.S. Cobb, dated as of , 1999.*
23.1 Consent of Fulbright & Jaworski L.L.P. (included in Exhibit 5.1)*
23.2 Consent of Ernst & Young LLP
23.3 Consent of PricewaterhouseCoopers LLP
24.1 Power of attorney (on signature page)
27.1 Financial Data Schedule
</TABLE>
* TO BE FILED BY AMENDMENT
(b) Financial Statement Schedules. The following financial statement
schedules are filed herewith:
None.
All other schedules are omitted because they are not required or are not
applicable or the information is included in the financial statements or notes
thereto.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act") may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933,
as amended, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on February 24, 1999.
<TABLE>
<S> <C> <C>
MEDIA METRIX, INC.
By: /s/ TOD JOHNSON
-----------------------------------------
Tod Johnson
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below and on the following page constitutes and appoints each of Tod Johnson and
Thomas A. Lynch as his true and lawful attorney-in-fact and agent, each acting
alone, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
to this Registration Statement, including post-effective amendments, and to file
the same, with all exhibits thereto, and all documents in connection therewith,
with the Securities and Exchange Commission, granting unto each said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, and hereby ratifies and confirms all that any said attorney-in-fact and
agent, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
II-6
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>
/s/ TOD JOHNSON Chief Executive Officer February 24, 1999
- ------------------------------ and
Tod Johnson Chairman of the Board
(Principal Executive
Officer)
/s/ THOMAS A. LYNCH Chief Financial Officer, February 24, 1999
- ------------------------------ Secretary and Treasurer
Thomas A. Lynch (Principal Financial and
Accounting Officer)
/s/ JEFFREY C. LEVY Vice Chairman and Director February 24, 1999
- ------------------------------
Jeffrey C. Levy
/s/ MICHAEL BROOKS Director February 24, 1999
- ------------------------------
Michael Brooks
/s/ WILLIAM W. HELMAN Director February 24, 1999
- ------------------------------
William W. Helman
/s/ STIG KRY Director February 24, 1999
- ------------------------------
Stig Kry
/s/ JAMES MORTENSEN Director February 24, 1999
- ------------------------------
James Mortensen
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
NO. DESCRIPTION PAGE
<C> <S> <C>
1.1 Underwriting Agreement*
2.1 Plan of Merger and Reorganization between Media Metrix, Inc. and RelevantKnowledge dated as of
September 30, 1998 (schedules and exhibits omitted)
2.2 Plan of Merger between Media Metrix and PC Meter L.P. dated as of March 31, 1996
3.1 Certificate of Incorporation
3.2 Form of Restated Certificate of Incorporation to be in effect upon the closing of this offering*
3.3 Bylaws
3.4 Form of Amended and Restated Bylaws to be in effect upon the closing of this offering*
4.1 Registration Rights Agreement dated as of November 5, 1998, by and among Media Metrix and the
Stockholders listed on Schedule I thereto.
4.2 Stockholder's Agreement dated as of November 5, 1998, by and among Media Metrix and the
Stockholders listed on Schedule I thereto.
4.3 Co-Sale Agreement dated as of November 5, 1998, by and among Media Metrix and the Stockholders
listed on Schedule I thereto.
4.4 Media Metrix Stock Option Plan
4.5 1998 Equity Incentive Plan
4.6.1 Form of Warrant
4.6.2 Form of Warrant
4.6.3 Form of Warrant
5.1 Opinion of Fulbright & Jaworski L.L.P. re: legality*
10.1 Management Services Agreement dated as of September 30, 1998 by and between Media Metrix, The NPD
Group, Inc. and Tod Johnson.
10.2 Services Agreement dated as of September 30, 1998 by and between Media Metrix and The NPD Group,
Inc.
10.3 License Agreement dated as of November 5, 1998 by and between Media Metrix and The NPD Group,
Inc.
10.4 Stock Purchase Agreement dated as of December 23, 1998 by and between Media Metrix and Investment
A.B. Bure
10.5.1 Building Lease between Eagle Insurance Company and The NPD Group, Inc. dated as of August 18,
1997
10.5.2 Lease Agreement between Carriage House Associates Limited Partnership and RelevantKnowledge, Inc.
dated as of May 16, 1997.
10.6 Form of Indemnification Agreement*
10.7.1 Form of Non-Disclosure Agreement and Confidential Information and Invention Assignment Agreement
10.7.2 Form of Non-Disclosure Agreement and Confidential Information and Invention Assignment Agreement
10.8 Employment Agreement by and between Media Metrix and Jeffrey C. Levy, dated as of November 5,
1998
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NO. DESCRIPTION PAGE
<C> <S> <C>
10.9 Agreement with Tod Johnson*
10.10 Consulting Agreement by and between Media Metrix and Timothy F.S. Cobb, dated as of ,
1999.*
23.1 Consent of Fulbright & Jaworski L.L.P. (included in Exhibit 5.1)*
23.2 Consent of Ernst & Young LLP
23.3 Consent of PricewaterhouseCoopers LLP
24.1 Power of attorney (on signature page)
27.1 Financial Data Schedule
</TABLE>
* TO BE FILED BY AMENDMENT
<PAGE>
Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
dated as of
September 30, 1998
by and between
MEDIA METRIX, INC.
and
RELEVANTKNOWLEDGE, INC.
<PAGE>
TABLE OF CONTENTS
Page Nos.
RECITALS..................................................................... 1
ARTICLE I
THE REORGANIZATION........................................................... 2
Section 1.01 The Merger...................................... 2
Section 1.02 Conversion of Shares............................ 2
Section 1.03 Exchange of Certificates........................ 3
Section 1.04 Fractional Shares............................... 4
Section 1.05 RKI Stock Option Plan........................... 5
Section 1.06 Warrants........................................ 5
Section 1.07 Benefits Arrangements........................... 6
Section 1.08 Directors and Officers of MMX................... 6
ARTICLE II
THE SURVIVING CORPORATION.................................................... 7
Section 2.01 Certificate of Incorporation.................... 7
Section 2.02 Bylaws.......................................... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MMX........................................ 7
Section 3.01 Corporate Existence and Power................... 8
Section 3.02 Corporate Authorization......................... 8
Section 3.03 Governmental Consents and Approvals............. 8
Section 3.04 Non-Contravention............................... 8
Section 3.05 Capitalization.................................. 9
Section 3.06 Subsidiaries; Joint Ventures.................... 10
Section 3.07 Financial Statements............................ 11
Section 3.08 Absence of Certain Changes...................... 11
Section 3.09 No Undisclosed Liabilities...................... 12
Section 3.10 Litigation...................................... 12
Section 3.11 Taxes........................................... 12
Section 3.12 Employee Benefits; Employees.................... 13
Section 3.13 Intellectual Property........................... 14
Section 3.14 Labor Matters................................... 14
Section 3.15 Compliance with Laws............................ 15
Section 3.16 Contracts and Other Agreements.................. 15
Section 3.17 Properties...................................... 16
Section 3.18 Environmental Matters........................... 17
Section 3.19 Finder's Fees................................... 18
i
<PAGE>
Section 3.20 Transactions with Management.................... 18
Section 3.21 Insurance....................................... 18
Section 3.22 Disclosure...................................... 18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF RKI........................................ 19
Section 4.01 Corporate Existence and Power................... 19
Section 4.02 Corporate Authorization......................... 19
Section 4.03 Governmental Consents and Approvals............. 19
Section 4.04 Non-Contravention............................... 20
Section 4.05 Capitalization.................................. 20
Section 4.06 Subsidiaries; Joint Ventures.................... 21
Section 4.07 Financial Statements............................ 21
Section 4.08 Absence of Certain Changes...................... 22
Section 4.09 No Undisclosed Liabilities...................... 22
Section 4.10 Litigation...................................... 22
Section 4.11 Taxes........................................... 23
Section 4.13 Intellectual Property........................... 25
Section 4.14 Labor Matters................................... 25
Section 4.15 Compliance with Laws............................ 25
Section 4.16 Contracts and Other Agreements.................. 26
Section 4.17 Properties...................................... 27
Section 4.19 Finder's Fees................................... 28
Section 4.20 Transactions with Management.................... 28
Section 4.21 Insurance....................................... 28
Section 4.22 Disclosure...................................... 28
Section 4.23 Dissenters' Rights.............................. 28
ARTICLE V
COVENANTS OF RKI............................................................. 28
Section 5.01 Conduct of RKI.................................. 28
Section 5.02 Access to Financial, Operating and Technical
Information .................................... 30
Section 5.03 Other Offers.................................... 31
Section 5.04 Maintenance of Business......................... 31
Section 5.05 Compliance with Obligations..................... 31
Section 5.06 Confidentiality................................. 32
Section 5.07 Accrued Preferred Dividends..................... 32
Section 5.08 Notice to Option Holders........................ 32
Section 5.09 Stockholders' Meeting........................... 32
ii
<PAGE>
ARTICLE VI
COVENANTS OF MMX............................................................. 32
Section 6.01 Conduct of MMX.................................. 32
Section 6.02 New MMX Option Plan............................. 34
Section 6.03 Access to Financial, Operating and
Technical Information .......................... 34
Section 6.04 Other Offers.................................... 34
Section 6.05 Maintenance of Business......................... 35
Section 6.06 Compliance with Obligations..................... 35
Section 6.07 Confidentiality................................. 35
Section 6.08 Tax Matters..................................... 35
ARTICLE VII
COVENANTS OF MMX AND RKI..................................................... 36
Section 7.01 Joint Transition Committee...................... 36
Section 7.02 Advice of Changes............................... 36
Section 7.03 Regulatory Approvals............................ 37
Section 7.04 Actions Contrary to Stated Intent............... 37
Section 7.05 Certain Filings................................. 37
Section 7.06 Public Announcements............................ 37
Section 7.07 Satisfaction of Conditions Precedent............ 37
Section 7.08 Capitalization Table............................ 38
ARTICLE VIII
CONDITIONS TO THE MERGER..................................................... 38
Section 8.01 Conditions to Obligations of MMX................ 38
(a) Accuracy of Representations and
Warranties............................... 38
(b) Covenants................................ 38
(c) Dissenting Shares........................ 38
(d) No Material Adverse Change............... 38
(e) Opinion of Counsel....................... 38
(f) MMX Co-Sale Agreement; MMX
Stockholders' Agreement.................. 38
(g) Registration Rights Agreement............ 39
(h) Other RKI Agreement...................... 39
(i) Employment Agreements.................... 39
(j) Certificate as to Real Property
Interests................................ 39
(k) Accrued Dividends........................ 39
(l) Consents................................. 39
Section 8.02 Conditions to Obligations of RKI................ 40
(a) Accuracy of Representations and
Warranties............................... 40
(b) Covenants................................ 40
(c) No Material Adverse Change............... 40
(d) Opinion of Counsel....................... 40
(e) Registration Rights Agreement............ 40
iii
<PAGE>
(f) MMX Co-Sale Agreement; MMX
Stockholders' Agreement.................. 40
(g) Conversion of Preferred Stock............ 40
(h) MMX Common Stock Split................... 41
(i) MMX Charter Amendment.................... 41
(j) License Agreement........................ 41
(k) Management Services Agreement............ 41
(l) Services Agreement....................... 41
(m) Employment Agreements.................... 41
Section 8.03 Conditions to Obligations of Each Party......... 41
(a) Consents................................. 41
(b) Illegality or Legal Constraint........... 42
(c) Governmental Authorizations.............. 42
(d) Releases................................. 42
(e) Capitalization........................... 42
ARTICLE IX
TERMINATION OF AGREEMENT..................................................... 42
Section 9.01 Termination..................................... 42
Section 9.02 Effect of Termination........................... 43
ARTICLE X
MISCELLANEOUS................................................................ 43
Section 10.01 Further Assurances.............................. 43
Section 10.02 Fees and Expenses............................... 43
Section 10.03 Nonsurvival of Representations and
Warranties...................................... 43
Section 10.04 Notices......................................... 44
Section 10.05 Governing Law................................... 45
Section 10.06 Binding upon Successors and Assigns............. 45
Section 10.07 Severability.................................... 45
Section 10.08 Entire Agreement................................ 45
Section 10.09 Other Remedies.................................. 45
Section 10.10 Amendment and Waivers........................... 45
Section 10.11 No Waiver....................................... 46
Section 10.12 Construction of Agreement; Knowledge............ 46
Section 10.13 Counterparts.................................... 46
iv
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is
dated as of this 30th day of September, 1998, by and among Media Metrix, Inc., a
Delaware corporation ("MMX") and RelevantKnowledge, Inc., a Delaware corporation
("RKI").
RECITALS
A. The Boards of Directors of MMX and RKI have each determined to engage
in the transactions contemplated hereby, pursuant to which (i) RKI will merge
(the "Merger") with and into MMX and (ii) each share of common stock, par value
$0.001 per share ("RKI Common Stock"), of RKI, each share of Series A-1
Preferred Stock, par value $0.001 per share ("RKI Series A-1 Stock"), of RKI,
each share of Series B-1 Preferred Stock, par value $0.001 per share ("RKI
Series B-1 Stock"), of RKI, each share of Series B-2 Preferred Stock, par value
$0.001 per share ("RKI Series B-2 Stock"), of RKI, and each share of Series C-1
Preferred Stock, par value $0.001 per share ("RKI Series C-1 Stock"), of RKI,
(except for such shares owned by RKI or MMX) shall be converted into shares of
common stock, par value $.01 per share, of MMX ("MMX Common Stock") in the
manner herein described, all upon the terms and subject to the conditions set
forth herein.
B. The Board of Directors of RKI has approved this Agreement and the
Merger.
C. The Board of Directors and stockholders of MMX have approved this
Agreement, the Merger, the issuance of MMX Common Stock in connection therewith
and the MMX Charter Amendment (as defined below).
D. The parties intend for the Merger to qualify as a plan of
reorganization in accordance with the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code") and for this Agreement to
constitute a plan of reorganization within the meaning of Section 368(a) of the
Code and Treasury regulations thereunder.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties agree as follows:
<PAGE>
ARTICLE I
THE REORGANIZATION
Section 1.01 The Merger.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, RKI shall be merged with and into MMX in accordance with the General
Corporation Law of the State of Delaware ("Delaware Law"), whereupon the
separate existence of RKI shall cease, and MMX shall be the surviving
corporation (the "Surviving Corporation").
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger, RKI and MMX shall
file a certificate of merger (the "Certificate of Merger") with the Secretary of
State of the State of Delaware and make all other filings or recordings required
by Delaware Law in connection with the Merger. The Merger shall become effective
at such time as the certificate of merger is duly filed with the Secretary of
State of the State of Delaware in accordance with the Delaware Law or at such
later time as specified in the certificate of merger (the "Effective Time" ).
Immediately prior to the filing of the certificate of merger, a closing (the
"Closing") will be held at the offices of Fulbright & Jaworski L.L.P., 666 Fifth
Avenue, New York, New York 10103, for the purpose of confirming all of the
foregoing (the date on which the Closing occurs being hereinafter referred to as
the "Closing Date"). The Closing shall occur upon the later of (i) November 2,
1998 and (ii) the second business day after satisfaction of the latest to occur
of the conditions set forth in Article VIII hereof (other than any conditions
which are waived in accordance with said Article), unless another date is agreed
to in writing by the parties hereto.
(c) From and after the Effective Time, the separate corporate
existence of MMX with its purpose, object, rights, privileges, powers,
certificates and franchises, shall continue unimpaired by the Merger. At the
Effective Time, the separate corporate existence of RKI shall cease, and the
Surviving Corporation shall succeed to all the properties and assets of RKI and
to all debts, choses in action and other interests due or belonging to MMX and
shall be subject to, and responsible for, all the debts, liabilities and duties
of MMX with the effects provided by the applicable provisions of Delaware Law.
Section 1.02 Conversion of Shares.
(a) At the Effective Time:
(i) each share of RKI Common Stock, RKI Series A-1 Stock, RKI
Series B-1 Stock, RKI Series B-2 Stock and RKI Series C-1 Stock, if any,
held by RKI as treasury stock or owned by MMX or any subsidiary of MMX
immediately prior to the Effective Time shall be canceled and retired and
all rights in respect thereof shall cease to exist without any conversion
thereof or payment therefor;
2
<PAGE>
(ii) each share of RKI Common Stock outstanding immediately
prior to the Effective Time shall be converted into the right to receive
.21238995 fully-paid, validly issued and nonassessable shares of MMX
Common Stock (the "Common Stock Exchange Ratio");
(iii) each share of RKI Series A-1 Stock outstanding
immediately prior to the Effective Time shall be converted into the right
to receive .21238995 fully-paid, validly issued and nonassessable shares
of MMX Common Stock (the "Series A-1 Exchange Ratio");
(iv) each share of RKI Series B-1 Stock outstanding
immediately prior to the Effective Time shall be converted into the right
to receive .21238995 fully-paid, validly issued and nonassessable shares
of MMX Common Stock (the "Series B-1 Exchange Ratio");
(v) each share of RKI Series B-2 Stock outstanding immediately
prior to the Effective Time shall be converted into the right to receive
.21238995 fully-paid, validly issued and nonassessable shares of MMX
Common Stock (the "Series B-2 Exchange Ratio");
(vi) each share of RKI Series C-1 Stock outstanding
immediately prior to the Effective Time shall be converted into the right
to receive .21238995 fully-paid, validly issued and nonassessable shares
of MMX Common Stock (the "Series C-1 Exchange Ratio"). The outstanding
shares of RKI Common Stock, RKI Series A-1 Stock, RKI Series B-1 Stock,
RKI Series B-2 Stock and RKI Series C-1 Stock are referred to collectively
herein as the "RKI Shares" and the Common Stock Exchange Ratio, the Series
A-1 Exchange Ratio, the Series B-1 Exchange Ratio, the Series B-2 Exchange
Ratio and the Series C-1 Exchange Ratio are referred to collectively
herein as the "Exchange Ratios."
(b) If between the date of this Agreement and the Effective Time the
outstanding shares of RKI Common Stock, RKI Series A-1 Stock, RKI Series B-1
Stock, RKI Series B-2 Stock, RKI Series C-1 Stock or MMX Common Stock shall have
been changed into a different number of shares or a different class, by reason
of any stock dividend, subdivision, reclassification, recapitalization,
split-up, combination, exchange of shares or the like, the Exchange Ratio(s)
relating to the capital stock affected by such change shall be correspondingly
adjusted.
Section 1.03 Exchange of Certificates.
(a) At the Closing, MMX shall make available for exchange in
accordance with this Section 1.03 the shares of MMX Common Stock issuable
pursuant to Section 1.02 in exchange for outstanding RKI Shares.
(b) At the Closing, each holder of record of a stock certificate
that, immediately prior to the Effective Time, represented RKI Shares (a
"Certificate") whose shares are being converted into MMX Common Stock pursuant
to Section 1.02 shall surrender the Certificate in exchange for a certificate
evidencing MMX Common Stock. Upon surrender of a Certificate for
3
<PAGE>
cancellation to MMX, the holder of such Certificate shall be entitled to receive
in exchange therefor a certificate for the number of whole shares of MMX Common
Stock to which the holder of RKI Shares is entitled pursuant to Section 1.02
hereof and is represented by the Certificate so surrendered. The Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of RKI Shares which is not registered in the transfer records of RKI, MMX Common
Stock may be delivered to a transferee if the Certificate representing such RKI
Shares is presented to MMX and accompanied by all documents required to evidence
and effect such transfer and to evidence that any applicable stock transfer
taxes have been paid. Until surrendered as contemplated by this Section 1.03(b),
each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender such whole number of
shares of MMX Common Stock as provided by Section 1.02 and the provisions of
Delaware Law.
(c) No dividends or other distributions declared or made after the
Effective Time on the MMX Common Stock shall be paid to the holder of any
unsurrendered Certificate until the holder of record of such Certificate shall
surrender such Certificate; provided, however, that upon surrender of a
Certificate, but subject to the effect, if any, of applicable escheat and other
laws, there shall be paid to the holder of such Certificate, without interest,
the amount of dividends or distributions, if any, which theretofore became
payable, but which were not paid by reason of the foregoing, with respect to the
number of whole shares of MMX Common Stock represented by the Certificate or
Certificates issued upon such surrender.
(d) All MMX Common Stock delivered upon the surrender for exchange
of RKI Shares in accordance with the terms hereof shall be deemed to have been
delivered in full satisfaction of all rights pertaining to such RKI Shares.
After the Effective Time, there shall be no further registration of transfers on
the stock transfer books of RKI of the RKI Shares that were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented for any reason, they shall be canceled and exchanged
as provided in this Section 1.03.
Section 1.04 Fractional Shares. No certificate or scrip representing
fractional shares of MMX Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to enjoy any other rights of a stockholder of MMX.
Each fractional share of MMX Common Stock issuable to holders of Certificates
pursuant to Section 1.02 shall be rounded up to the nearest whole share.
Section 1.05 RKI Stock Option Plan.
(a) At the Effective Time, each unexpired and unexercised option to
purchase shares of RKI Common Stock (each an "RKI Option") under the RKI Stock
Option Plan (the "RKI Stock Option Plan") which is not exercised or does not by
its terms terminate shall become fully vested and exercisable in accordance with
the terms of the RKI Stock Option Plan. RKI shall notify each holder of an RKI
Option as soon as practicable following the public announcement of the
transaction pursuant to Section 11(c) of the RKI Stock Option Plan that such RKI
Option shall be exercisable for a period of 15 days from the date of such
notice, and that such RKI Option shall
4
<PAGE>
terminate upon the expiration of the 15-day period. MMX shall grant to each
holder of an RKI Option which is not exercised within the 15-day period (a
"Non-Exercising Holder") an option (an "MMX Option") pursuant to the MMX 1998
Equity Incentive Plan to purchase a number of shares of MMX Common Stock equal
to the number of shares of RKI Common Stock that could have been purchased under
the RKI Option multiplied by the Common Stock Exchange Ratio (rounded downward
to the nearest whole share), at a price per share of MMX Common Stock equal to
the fair market value of the MMX Common Stock at the Effective Time. Where
applicable, MMX shall grant additional options to each Non-Exercising Holder in
recognition of the difference between the original exercise price of the RKI
Options and the exercise price of the MMX Options. Such MMX Option shall be
granted as of the Effective Date and shall provide for the same vesting as the
corresponding RKI Option held by the Non-Exercising Holder. MMX shall reserve
for issuance the number of shares of MMX Common Stock that will become subject
to MMX Options pursuant to this Section 1.05, (ii) from and after the Effective
Time, upon exercise of the MMX Options make available for issuance all shares of
MMX Common Stock covered thereby, and (iii) promptly after the Effective Time,
issue to each holder of an expired RKI Option a document evidencing the new MMX
Option.
(b) It is the intention of the parties that the RKI Options replaced
by MMX qualify following the Effective Time of the Merger as incentive stock
options as defined in Section 422 of the Code to the extent such RKI Options
qualified as incentive stock options prior to the Effective Time of the Merger.
(c) RKI and MMX agree that Exhibit 7.08 reflects the number of RKI
Options as of the date hereof.
Section 1.06 Warrants. In the case of each of the RKI Common Stock
Warrants (as defined below) which are outstanding at the Effective Time, MMX
shall, effective as of the Effective Time, assume the RKI Common Stock Warrants
(and if required by the terms of the RKI Common Stock Warrant or if otherwise
appropriate under the terms of the RKI Common Stock Warrant, execute a
supplemental agreement in connection therewith) and shall reserve, make
available for issuance and, upon exercise of such RKI Common Stock Warrants in
accordance with their terms after the Effective Time, issue the number of shares
of MMX Common Stock equal to the number of shares of RKI Common Stock that could
have been purchased under the RKI Common Stock Warrant multiplied by the Common
Stock Exchange Ratio (rounded downward to the nearest whole share), at a price
per share of MMX Common Stock equal to the RKI Common Stock Warrant purchase
price divided by the Common Stock Exchange Ratio (rounded upward to the nearest
whole cent).
Section 1.07 Benefits Arrangements.
(a) Immediately after the Effective Time, MMX shall employ all of
the individuals who were employees of RKI and MMX at the Effective Time, on the
same terms and conditions as previously in effect.
5
<PAGE>
(b) From and after the Effective Time and consistent with the terms
of the Management Services Agreement (as defined below), MMX shall provide all
of the employees of MMX and all former employees of RKI who were employees of
RKI at the Effective Time with all employee benefit plans, programs, policies or
arrangements (the "Benefit Plans"), as are provided by MMX to its own employees
who are similarly situated.
(c) From and after the Effective Time, MMX shall provide all
employees of the MMX and all former employees of RKI who were employees of RKI
at the Effective Time with the opportunity to participate in any employee stock
option or other incentive compensation plan of MMX (on substantially the same
terms and subject to substantially the same conditions as are available to
similarly situated employees of MMX at the Effective Time).
(d) From and after the Effective Time, MMX shall honor and pay,
without modification, set-off, counterclaim or recoupment, all benefits and
other amounts required or due under or with respect to, all agreements or plans
which relate to any employee or former employee of RKI, or the terms of any
employee's employment or termination of employment as in effect immediately
prior to the Effective Time.
Section 1.08 Directors and Officers of MMX.
(a) At the Effective Time and in accordance with the terms of the
MMX Stockholders' Agreement (as defined below), the Board of Directors of MMX
shall consist of eight directors, and Tod Johnson (who shall also be elected
Chairman), Michael Brooks, Timothy Cobb, William H. Helman, Stig Kry, Jeffrey
Levy, James Mortensen and David Hathaway shall be duly appointed or elected to
the Board of Directors as the sole members of the Board of Directors of MMX.
(b) At the Effective Time, the following persons shall be appointed
as officers of MMX:
Name Title
----------- -----------------------
Tod Johnson Chief Executive Officer
Mary Ann Packo President and Chief Operating Officer
Timothy Cobb Vice Chairman
Jeffrey Levy Vice Chairman
Steven Coffey Vice Chairman and Executive Vice President
Thomas Lynch Chief Financial Officer
6
<PAGE>
(c) Immediately prior to the Effective Time, MMX shall file an
amendment to its Certificate of Incorporation, substantially in the form
attached hereto as Exhibit 1.08(c) (the "MMX Charter Amendment") which shall
increase the number of shares of common stock which MMX is authorized to issue
from 10,000,000 shares to 15,000,000 shares.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.01 Certificate of Incorporation. The Certificate of
Incorporation of the Surviving Corporation shall be the Certificate of
Incorporation of MMX, as in effect immediately prior to the Effective Time.
Section 2.02 Bylaws. The Bylaws of MMX, as in effect immediately prior to
the Effective Time, shall be the Bylaws of the Surviving Corporation, until
thereafter amended in accordance with applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MMX
Except as specifically set forth (by reference to the applicable Section
of this Agreement) in MMX's disclosure schedule previously delivered to RKI (the
"Disclosure Schedule")and attached hereto, MMX represents and warrants to RKI as
follows:
Section 3.01 Corporate Existence and Power. MMX is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals (collectively, "Governmental
Authorizations") required to own, lease and operate its properties and to carry
on its business as now conducted. MMX is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary except where the failure to be so licensed or
qualified would not have a Material Adverse Effect on MMX. For purposes of this
Agreement, a "Material Adverse Effect", with respect to any person or entity,
means a material adverse effect on the financial condition, business,
liabilities (including contingent liabilities), prospects or results of
operations of such person or entity taken as a whole; and "Material Adverse
Change" shall mean a change or a development involving a prospective change
which would have a Material Adverse Effect. MMX has heretofore delivered to RKI
true and complete copies of its Certificate of Incorporation and Bylaws as
currently in effect.
7
<PAGE>
Section 3.02 Corporate Authorization. The execution, delivery and
performance by MMX of this Agreement, the MMX Co-Sale Agreement (as defined
below), the MMX Registration Rights Agreement (as defined below), the Management
Services Agreement (as defined below) and the MMX Stockholders' Agreement
(collectively, the "Transaction Agreements") and the consummation by MMX of the
transactions contemplated hereby and thereby are within MMX's corporate powers
and have been duly authorized by all necessary corporate action. Each of the
Transaction Agreements constitutes a valid and binding agreement of MMX,
enforceable against MMX in accordance with its terms.
Section 3.03 Governmental Consents and Approvals. The execution, delivery
and performance by MMX of each of the Transaction Agreements and the
consummation of the Merger by MMX require no action by or in respect of, or
filing with, any governmental body, agency, official or authority other than:
(a) the filing of the Certificate of Merger in accordance with
Delaware Law; and
(b) such other filings or registrations with, or authorizations,
consents or approvals of, governmental bodies, agencies, officials or
authorities, the failure of which to make or obtain would not have a Material
Adverse Effect on MMX, or would not materially adversely affect the ability of
MMX or RKI to consummate the Merger.
Section 3.04 Non-Contravention. The execution, delivery and performance by
MMX of this Agreement and the consummation by MMX of the Merger do not and will
not:
(a) contravene or conflict with the Certificate of Incorporation or
Bylaws of MMX;
(b) assuming compliance with the matters referred to in Section
3.03, contravene or conflict with or constitute a violation of any provision of
any law, regulation, judgment, injunction, order or decree binding upon or
applicable to MMX;
(c) constitute a default under or give rise to a right of
termination, cancellation, acceleration or loss of any material benefit under
any agreement, contract, license or other instrument binding upon MMX or any
license, franchise, permit or other similar authorization held by MMX; or
(d) result in the creation or imposition of any Lien (as defined
below) on any material asset of MMX.
For purposes of this Agreement, the term "Lien" means, with respect to any
asset, any mortgage, lien, pledge, charge, security interest or encumbrance of
any kind in respect of such asset.
8
<PAGE>
Section 3.05 Capitalization. (a) The authorized capital stock of MMX
consists of 10,000,000 shares of MMX Common Stock and 5,000,000 shares of
preferred stock, par value $.01 per share of which (i) 495,603 shares are
designated as Series A Preferred Stock, (ii) 159,640 shares are designated as
Series B Preferred Stock, and (iii) 41,446 shares are designated as Redeemable
Preferred Stock ("Redeemable Preferred Stock").
(b) As of the date hereof, there are outstanding:
(i) 1,500,100 shares of MMX Common Stock;
(ii) 495,603 shares of MMX Series A Preferred Stock;
(iii) 41,446 shares of Redeemable Preferred Stock;
(iv) MMX Options to purchase an aggregate of 115,725 shares of
MMX Common Stock (none of which are exercisable);
(v) Warrants to purchase an aggregate of 86,842 shares of MMX
Common Stock (the "MMX Common Stock Warrants"); and
(vi) Warrants to purchase an aggregate of 159,640 shares of
MMX Series B Preferred Stock (the "MMX Series B Warrants" and, together
with the MMX Common Stock Warrants, the "MMX Warrants").
At or prior to the Effective Time, MMX Warrants to purchase an aggregate
of $1,500,000 of MMX capital stock will be exercised. Any MMX Series B Warrants
which remain outstanding at the Effective Time will be converted into Warrants
to purchase MMX Common Stock. The agreements covering the MMX Options will be
amended to delete the provisions restricting exercisability which were dependent
upon the occurrence of a "Realization Event."
(c) The MMX Disclosure Schedule accurately sets forth (i) the name
of each holder of a MMX Option, the number of shares subject to each MMX Option,
the date of grant and expiration date of each MMX Option and the exercise price
of each MMX Option, and (ii) the name of each holder of MMX Warrants, the number
of shares subject to each MMX Warrant, the date of grant and expiration date of
each MMX Warrant and exercise price of each MMX Warrant.
(d) All outstanding MMX Shares and shares of Redeemable Preferred
Stock are, and the shares of MMX Common Stock to be issued pursuant to Section
1.02 hereof when issued in accordance with the terms of this Agreement will be,
duly authorized, validly issued, fully paid and nonassessable and free of any
preemptive or similar rights in respect thereto. As of the date hereof, no
bonds, debentures, notes or other indebtedness having the right to vote (or
convertible into securities having the right to vote) ("Voting Debt") of MMX are
issued or outstanding. Except as set forth above, as of the date hereof, there
are no existing options, warrants, calls, subscriptions or
9
<PAGE>
other rights or other agreements or commitments of any character relating to the
issued or unissued capital stock or Voting Debt of MMX or obligating MMX to
issue, register, transfer or sell or cause to be issued, registered, transferred
or sold any shares of capital stock or Voting Debt of, or other equity interests
in, MMX or securities convertible into or exchangeable for such shares or equity
interests or obligating MMX to grant, extend or enter into any such option,
warrant, call, subscription or other right, agreement or commitment. As of the
date hereof, there are no outstanding contractual obligations of MMX to
repurchase, redeem or otherwise acquire any shares of capital stock or Voting
Debt of MMX. For purposes hereof, all MMX Shares, MMX Options, MMX Warrants,
Redeemable Preferred Stock and Voting Debt of MMX are collectively referred to
herein as "MMX Securities." All of the outstanding MMX Securities have been
issued in compliance with all applicable Federal and state securities laws
pursuant to an exemption from registration thereunder.
Section 3.06 Subsidiaries; Joint Ventures. MMX has no Subsidiaries or
Joint Ventures. For purposes of this Agreement, (i) "Subsidiary" means, with
respect to any entity, any corporation of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are directly or
indirectly owned by such entity, and (ii) "Joint Venture" means, with respect to
any entity, any corporation or organization (other than such entity and any
Subsidiary thereof) of which such entity or any Subsidiary thereof is, directly
or indirectly, the beneficial owner of 25% or more of any class of equity
securities or equivalent profit participation interest. MMX does not, directly
or indirectly, own any interests in any person that is not a Subsidiary.
Section 3.07 Financial Statements. MMX has delivered to RKI (i) the
audited balance sheet of MMX as of December 31, 1997, and the unaudited balance
sheet of MMX as of June 30, 1998, (ii) the related audited statements of income,
stockholders' equity and cash flows of MMX for the fiscal year ended December
31, 1997, together with the notes thereto, and the unaudited statements of
income, stockholders' equity and cash flows for the period ended June 30, 1998
and (iii) the audited balance sheet of PC Meter, L.P. as of December 31, 1996
and the related audited statements of income, partners' equity and cash flows of
PC Meter, L.P. for the fiscal year ended December 31, 1996 (collectively, the
"MMX Financial Statements"). The MMX Financial Statements present fairly, in
conformity with generally accepted accounting principles applied on a consistent
basis (except as may be indicated in the notes thereto), the financial position
of MMX (with respect to periods following December 31, 1996) and the financial
position of PC Meter, L.P. (with respect to periods prior to January 1, 1997) as
of the dates thereof and their results of operations and cash flows for the
periods then ended (subject to normal year-end adjustments in the case of any
interim financial statements which are not, in the aggregate, material). For
purposes of this Agreement, "MMX Balance Sheet" means the balance sheet of MMX
as of June 30, 1998, and the notes thereto, contained in the MMX Financial
Statements and "MMX Balance Sheet Date" means June 30, 1998.
10
<PAGE>
Section 3.08 Absence of Certain Changes. Since the MMX Balance Sheet
Date, MMX has in all material respects conducted business in the ordinary course
and there has not been:
(a) any Material Adverse Change with respect to MMX;
(b) any declaration, setting aside or payment of any dividend or
other distribution in respect of any shares of capital stock of MMX, or any
repurchase, redemption or other acquisition by MMX of any outstanding shares of
capital stock or other securities of, or other ownership interests in, MMX;
(c) any amendment of any material term of any outstanding MMX
Securities;
(d) any damage, destruction or other casualty loss (whether or not
covered by insurance) materially affecting the business or assets of MMX;
(e) any material change in any method of accounting or accounting
practice by MMX, except for any such change required by reason of a concurrent
change in generally accepted accounting principles or disclosed in the MMX
Financial Statements; or
(f) any (i) grant of any severance or termination pay to any
director, officer or employee of MMX, (ii) entering into of any written
employment, deferred compensation or other similar agreement (or any amendment
to any such existing agreement) with any director, officer or employee of MMX,
(iii) increase in benefits payable under any existing severance or termination
pay policies or employment agreements, or (iv) increase in compensation, bonus
or other benefits payable to any director or, other than in the ordinary course
of business, officer or employee of MMX.
Section 3.09 No Undisclosed Liabilities. Except for liabilities under this
Agreement, liabilities disclosed or provided for on the MMX Balance Sheet,
liabilities disclosed on the MMX Disclosure Schedule or liabilities incurred in
the ordinary course of business consistent with past practice, since the MMX
Balance Sheet Date MMX has not incurred any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, which have, or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on MMX or that would be required by generally accepted accounting
principles to be reflected on a balance sheet of MMX (including the notes
thereto).
Section 3.10 Litigation. There is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of MMX, threatened against, MMX or
any of its properties before any court or arbitrator or any governmental body,
agency or official, and MMX is not subject to any outstanding order, writ,
injunction or decree which, insofar as can be reasonably foreseen, individually
or in the aggregate, in the future would have a Material Adverse Effect on MMX
or would prevent MMX from consummating the transactions contemplated hereby. To
the knowledge of MMX, there is no fact, event or circumstance now in existence
that reasonably could be expected to give rise to any action,
11
<PAGE>
suit, claim, proceeding or investigation that individually or in the aggregate
would have a Material Adverse Effect upon MMX or the transactions contemplated
hereby.
Section 3.11 Taxes. All Tax (as defined below) returns, statements,
reports and forms (including estimated Tax returns and reports and information
returns and reports) required to be filed with any Taxing Authority (as defined
below) with respect to any Taxable (as defined below) period ending on or before
the Effective Time by or on behalf of MMX (collectively, the "MMX Tax Returns"),
have been or will be filed when due (including any extensions of such due date),
except to the extent all such failures to file, taken together, are not
material. MMX has timely paid, withheld or made provision on its books for all
Taxes owed or accrued as of the Effective Time. Any provision for Taxes
reflected in the MMX Financial Statements is adequate to cover any and all Tax
liabilities of MMX in respect of its assets, properties, business and operations
during the period covered by such financial statements and all prior periods.
MMX is not a party to any agreement, contract, arrangement or plan that has
resulted or would result, separately or in the aggregate, in the payment of any
excess parachute payments within the meaning of Section 280G of the Code. MMX
has made available all relevant information regarding all material elections and
consents with respect to any Tax, or computation thereof, affecting MMX. MMX has
not agreed to, or is required to, make any adjustments under Section 481(a) of
the Code by reason of a change in accounting method or otherwise. MMX has not
granted any extension or waiver of the limitation period applicable to any MMX
Tax Returns. There is no claim, audit, action, suit, proceeding or investigation
now pending or, to MMX's knowledge, threatened in writing against or with
respect to MMX in respect of any Tax or assessment. There are no liens for Taxes
upon the assets of MMX except liens for current Taxes not yet due. MMX has not
been a member of an affiliated group or filed or been included in a combined,
consolidated or unitary Tax return other than one filed by MMX (or a return for
a group consisting solely of its predecessors), or participated in any other
similar arrangement whereby any income, revenues, receipts, gains, losses,
deductions, credits or other Tax items of MMX was determined or taken into
account for Tax purposes with reference to or in conjunction with any such items
of another person other than MMX or its predecessor. All amounts required to be
collected or withheld by MMX with respect to Taxes have been duly collected or
withheld and any such amounts that are required to be remitted to any Taxing
Authority have been duly remitted. No closing agreement pursuant to Section 7121
of the Code (or any predecessor provision) or similar provision of state, local
or foreign law has been entered into with respect to MMX nor has MMX received or
requested, which request is pending, a ruling from any Taxing Authority.
For the purposes of this Agreement, "Tax" (and, with correlative
meaning, "Taxes" and "Taxable") means, for any entity, (i) any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, withholding on amounts paid to
or by such entity, payroll, employment, excise, severance, stamp, occupation,
property, environmental or windfall profit tax, or other tax or surtax, together
with any interest or any penalty, addition to tax or additional amount imposed
by any governmental authority (a "Taxing Authority") responsible for the
imposition of any such tax (domestic or foreign), (ii) liability of such entity
for the payment of any amounts of the type described in (i) as a result of being
a member of an affiliated, consolidated, combined or unitary group for any
Taxable period and (iii) liability of such
12
<PAGE>
entity for the payment of any amounts of the type described in clauses (i) or
(ii) as a result of any express or implied obligation to indemnify any other
person.
Section 3.12 Employee Benefits; Employees.
(a) With respect to each employee benefit plan (including, without
limitation, any "employee benefit plan" as defined in Section 3(3) of The
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), and any
material bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit, hospitalization,
insurance or other plan, agreement, arrangement or understanding (whether or not
legally binding) (all of the foregoing being herein called the "MMX Benefit
Plans"), maintained or contributed to by MMX, MMX has made available to RKI a
true and correct copy of (i) such MMX Benefit Plan, (ii) each trust agreement
and group annuity contract, if any, relating to such MMX Benefit Plan (iii) the
most recent annual report (Form 5500) filed with the Internal Revenue Service,
(iv) the most recent IRS determination letter relating to the MMX Benefit Plan
intended to be qualified under Sections 401(a) and 501(a) of the Code, and (v)
the most recent actuarial report or valuation relating to a MMX Benefit Plan
subject to Title IV of ERISA. The MMX Disclosure Schedule sets forth a brief
description of each MMX Benefit Plan.
(b) Each of the MMX Benefit Plans is in material compliance with all
of the applicable substantive provisions of ERISA or the Code (including the
periodic reporting obligations under those statutes) and no such plan has any
accumulated funding deficiency (whether or not waived) or any liability to the
Pension Benefit Guaranty Corporation. With respect to the MMX Benefit Plans,
individually and in the aggregate, no event has occurred and, to MMX's
knowledge, there exists no condition or set of circumstances, in connection with
which it or its Subsidiary could be subject to any liability that is reasonably
likely to have a Material Adverse Effect on MMX.
(c) With respect to the MMX Benefit Plans, individually and in the
aggregate, there are no funded benefit obligations for which contributions have
not been made or properly accrued and there are no material unfunded benefit
obligations which have not been accounted for by reserves, or otherwise properly
footnoted in accordance with generally accepted accounting principles, on the
MMX Financial Statements. Each of the MMX Benefit Plans subject to Title IV of
ERISA is fully funded in accordance with the actuarial assumptions used by the
Pension Benefit Guaranty Corporation to determine the level of funding required
in the event of termination.
(d) Each employee of MMX is an "employee at will."
13
<PAGE>
Section 3.13 Intellectual Property. MMX owns, or is licensed to use, or,
to the knowledge of MMX, otherwise has the full right to use all patents,
trademarks, service marks, trade names, trade secrets, franchises, inventions
and copyrights, all information regarding the registration of any of the
foregoing, or applications therefor, and all grants and licenses or other rights
running to or from MMX relating to any of the foregoing, that are necessary for
the conduct of its business (collectively, the "Proprietary Rights"). A list of
all material copyright registrations, trademark registrations and applications,
patents and patent applications are set forth in the MMX Disclosure Schedule,
and such list indicates whether such Proprietary Rights are owned or licensed.
All patents, registered trademarks and copyright registrations included in the
Proprietary Rights are valid and subsisting and all "taxes" or "annuities" with
respect thereto have been paid, and MMX is not aware of any interfering
proprietary rights of third parties. MMX is not aware of any claim by any third
party that the business of MMX as currently conducted or proposed to be
conducted infringes upon the proprietary rights of others, nor has MMX received
any notice or claim of infringement from any third party of such infringement by
MMX. MMX is not aware of any infringement by any third party on, or any
competing claim of right to use or own any of, the Proprietary Rights. To the
knowledge of MMX, none of the activities of the employees of MMX on behalf of
MMX violates any agreements or arrangements which any such employees have with
former employers. MMX has taken measures it deems reasonable to maintain the
confidentiality of the processes and formulae, research and development results
and other know-how of MMX, the value of which to MMX is contingent upon
maintenance of the confidentiality thereof. The License Agreement (as
hereinafter defined) will provide for the license by MMX of all software
previously licensed by MMX from The NPD Group, Inc. ("NPD") pursuant to the
Amended and Restated Management Services Agreement between MMX and NPD dated
April 7, 1997.
Section 3.14 Labor Matters. MMX is not a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by MMX, nor do the executive officers of MMX know of any continuing
activities or proceedings of any labor union to organize any group of such
employees.
Section 3.15 Compliance with Laws.
(a) MMX has all licenses, permits, franchises, orders or approvals
of any federal, state, local or foreign governmental or regulatory body as are
necessary under applicable law to own its properties and conduct its businesses
(collectively, "Permits"), except to the extent the failure to have such Permits
would not, individually or in the aggregate, have a Material Adverse Effect on
MMX. Such Permits are in full force and effect, and no proceeding is pending or,
to the knowledge of MMX, threatened to revoke or limit any Permit. The MMX
Disclosure Schedule contains a true and complete list of all material Permits.
(b) MMX is not in violation of and has no liabilities, whether
accrued, absolute, contingent or otherwise, under any federal, state, local or
foreign law, ordinance or regulation or any order, judgment, injunction, decree
or other requirement of any court, arbitrator or governmental or regulatory
body, including without limitation laws relating to labor and employment
practices, health
14
<PAGE>
and safety, zoning, pollution or protection of the environment, including
without limitation laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals, or industrial, toxic
or hazardous substances or wastes into the environment, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances (as defined in Section 3.18),
except for violations of or liabilities under any of the foregoing which would
not, individually or in the aggregate, have a Material Adverse Effect on MMX.
During the last three years, MMX has not received notice of, and there has not
been any citation, fine or penalty imposed against MMX for, any such violation
or alleged violation.
Section 3.16 Contracts and Other Agreements. Each of the contracts set
forth on the MMX Disclosure Schedule is valid, subsisting, in full force and
effect, binding upon MMX, and to the knowledge of MMX, binding upon the other
parties thereto in accordance with their terms, and MMX has paid in full or
accrued all amounts now due from it thereunder and has satisfied in full or
provided for all of its liabilities and obligations thereunder which are
presently required to be satisfied or provided for, and is not in default under
any of them, nor, to the knowledge of MMX, 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.
The continuation, validity and effectiveness of all contracts and agreements to
which MMX is a party will in no way be affected by the Merger or the other
transactions contemplated hereby. The MMX Disclosure Schedule sets forth a list
of the following contracts and other agreements to which MMX is a party or by or
to which it or its assets or properties are bound or subject:
(a) any agreement that individually requires aggregate expenditures
by MMX in any one year of more than $50,000;
(b) any indenture, trust agreement, loan agreement or note that
involves or evidences outstanding indebtedness, obligations or liabilities for
borrowed money in excess of $50,000;
(c) any lease, sublease, installment purchase or similar arrangement
for the purchase, use or occupancy of real or personal property (i) that
individually requires aggregate expenditures by MMX in any one year of more than
$50,000, or (ii) pursuant to which MMX is the lessor of any real property which
has rentals over $50,000 per year, together with the date of termination of such
leases, the name of the other party and the annual rental payments required to
be made under such leases;
(d) any agreement of surety, guarantee or indemnification, other
than (i) an agreement in the ordinary course of business with respect to
obligations in an amount not in excess of $50,000, or (ii) indemnification
provisions contained in agreements not otherwise required to be disclosed;
15
<PAGE>
(e) any agreement, including without limitation employment
agreements and bonus plans, relating to the compensation of (i) officers, (ii)
employees earning more than $50,000 per year or (iii) former employees;
(f) any agreement containing covenants of MMX not to compete in any
line of business, in any geographic area or with any person or covenants of any
other person not to compete with MMX or in any line of business of MMX;
(g) any license or agreement granting or restricting the right of
MMX to use a trade name, trade mark, logo or Proprietary Rights; and
(h) any agreement with any customer or supplier that cannot be
terminated without penalty in excess of $50,000 by MMX within one year.
True and complete copies of all the contracts and other agreements
set forth in the MMX Disclosure Schedule have been previously made available to
RKI.
Section 3.17 Properties. MMX owns and has good title to all of its assets
and properties reflected in the MMX Balance Sheet, free and clear of any Lien,
except for (i) the Liens reflected on the MMX Balance Sheet, (ii) assets and
properties disposed of, or subject to purchase or sales orders, in the ordinary
course of business since the date of the MMX Balance Sheet, or (iii) Liens
securing the liens of materialmen, carriers, landlords and like persons, all of
which are not yet due and payable. MMX owns or has a valid leasehold interest
in, or other incontrovertible right to occupy, all of the buildings, structures,
leasehold improvements, equipment and other tangible property material to the
business of MMX, all of which are in good and sufficient operating condition and
repair, ordinary wear and tear excepted, for the conduct of their business in
accordance with past practices and MMX has not received notice that any of such
property is in violation in any material respect of any existing law or any
building, zoning, health, safety or other ordinance, code or regulation.
Section 3.18 Environmental Matters.
(a) MMX has not within the five years preceding the date hereof
received any written notice, demand, citation, summons, complaint or order or
any notice of any penalty, lien or assessment, and to MMX's knowledge, no
investigation or review is pending by any governmental entity, with respect to
any material (i) alleged violation by MMX of any Environmental Law (as defined
below), (ii) alleged failure by MMX to have any environmental permit,
certificate, license, approval, registration or authorization required in
connection with the conduct of its business or (iii) Regulated Activity (as
defined below).
(b) To MMX's knowledge, it has no material Environmental Liabilities
(as defined below), and it has not had within the five years preceding the date
hereof a release of Hazardous Substances (as defined below) into the environment
in violation of any Environmental Law or
16
<PAGE>
environmental permit. MMX has disclosed to MMX in writing any known presence of
asbestos in any of its premises other than fully encapsulated
asbestos-containing construction materials.
(c) For the purposes of this Agreement the following terms have the
following meanings:
"Environmental Laws" shall mean any and all Federal, state and local
and foreign laws (including case law), regulations, ordinances, rules,
judgments, orders, decrees, codes, plans, injunctions, permits,
concessions, grants, franchises, licenses, agreements and governmental
restrictions relating to human health, the environment or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances
or wastes into the environment or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or
the clean-up or other remediation thereof.
"Environmental Liabilities" shall mean all liabilities, whether
vested or unvested, contingent or fixed, which (i) arise under or relate
to Environmental Laws and (ii) relate to actions occurring or conditions
existing on or prior to the Effective Time.
"Hazardous Substances" shall mean any toxic, radioactive, caustic or
otherwise hazardous substance or material regulated by any Environmental
Law, including petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any material constituent elements
displaying any of the foregoing characteristics.
"Regulated Activity" shall mean any generation, treatment, storage,
recycling, transportation, disposal or release of any Hazardous
Substances.
Section 3.19 Finder's Fees. There is no investment banker, broker, finder
or other intermediary which has been retained by or is authorized to act on
behalf of MMX who is entitled to any fee or commission from MMX upon
consummation of the transactions contemplated by this Agreement.
Section 3.20 Transactions with Management. Except as disclosed in the MMX
Disclosure Schedule, no executive officer or director of MMX has (whether
directly or indirectly through another entity in which such person has a
material interest, other than as the holder of less than 2% of a class of
securities of a publicly traded company) any material interest in (a) any
property or assets of MMX (except as a stockholder), (b) any current competitor,
customer, supplier or agent of MMX, or (c) any person which is currently a party
to any contract or agreement with MMX.
17
<PAGE>
Section 3.21 Insurance. The MMX Disclosure Schedule sets forth a list of
all policies or binders of fire, liability, product liability, workmen's
compensation, vehicular, directors' and officers' and other insurance held by or
on behalf of MMX. Such policies and binders are in full force and effect, are
reasonably believed to be adequate for the businesses engaged in by MMX and are
in conformity with the requirements of all leases or other agreements to which
MMX is a party and, to the knowledge of MMX, are valid and enforceable in
accordance with their terms. MMX is not in default with respect to any provision
contained in any such policy or binder nor has MMX failed to give any notice or
present any claim under any such policy or binder in due and timely fashion.
There are no outstanding unpaid claims under any such policy or binder. MMX has
not received notice of cancellation or non-renewal of any such policy or binder.
Section 3.22 Disclosure. The representations, warranties and statements
made by MMX in this Agreement and in the certificates delivered pursuant hereto
do not contain any untrue statement of a material fact, and, when taken
together, do not omit to state any material fact necessary to make such
representations, warranties and statements, in light of the circumstances under
which they are made, not misleading.
Section 3.23 Reorganization. Neither MMX nor any of its Affiliates has
taken or agreed to take any action that would prevent the Merger from
constituting a reorganization qualifying under the provisions of Section 368(a)
of the Code.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF RKI
Except as specifically set forth (by reference to the applicable
Section of this Agreement) in RKI's disclosure schedule previously delivered to
MMX (the "RKI Disclosure Schedule") and attached hereto, RKI represents and
warrants to MMX as follows:
Section 4.01 Corporate Existence and Power. RKI is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and has all corporate powers and all material Governmental
Authorizations required to own, lease and operate its properties and to carry on
its business as now conducted. RKI is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary except where the failure to be so licensed or qualified
would not have a Material Adverse Effect on RKI. RKI has heretofore delivered to
MMX true and complete copies of its Certificate of Incorporation and Bylaws as
currently in effect.
18
<PAGE>
Section 4.02 Corporate Authorization. The execution, delivery and
performance by RKI of this Agreement and the consummation by RKI of the
transactions contemplated hereby, are within RKI's corporate powers and have
been duly authorized by all necessary corporate action, subject to the requisite
approval of the RKI stockholders. This Agreement constitutes a valid and binding
agreement of RKI, enforceable against RKI in accordance with its terms. RKI has
entered into a Voting Agreement and Proxy, substantially in the form of Exhibit
4.02 hereto, with holders of a majority of the outstanding shares of each of the
RKI Common Stock, RKI Series A-1 Stock, RKI Series B-1 Stock, RKI Series B-2
Stock and RKI Series C-1 Stock, pursuant to which such stockholders agree to
vote to approve this Agreement and the Merger, and give an irrevocable proxy to
the Board of Directors of MMX to vote such stockholders' shares in favor of the
same.
Section 4.03 Governmental Consents and Approvals. The execution, delivery
and performance by RKI of this Agreement and the consummation of the Merger by
RKI require no action by or in respect of, or filing with, any governmental
body, agency, official or authority other than:
(a) the filing of the Certificate of Merger in accordance with
Delaware Law; and
(b) such other filings or registrations with, or authorizations,
consents or approvals of, governmental bodies, agencies, officials or
authorities, the failure of which to make or obtain would not have a Material
Adverse Effect on RKI, or would not materially adversely affect the ability of
MMX or RKI to consummate the Merger.
Section 4.04 Non-Contravention. The execution, delivery and performance by
RKI of this Agreement and the consummation by RKI of the Merger do not and will
not:
(a) contravene or conflict with the Certificate of Incorporation or
Bylaws of RKI;
(b) assuming compliance with the matters referred to in Section
4.03, contravene or conflict with or constitute a violation of any provision of
any law, regulation, judgment, injunction, order or decree binding upon or
applicable to RKI;
(c) constitute a default under or give rise to a right of
termination, cancellation, acceleration or loss of any material benefit under
any agreement, contract, license or other instrument binding upon RKI or any
license, franchise, permit or other similar authorization held by RKI; or
(d) result in the creation or imposition of any Lien on any material
asset of RKI.
Section 4.05 Capitalization. (a) As of the date hereof, the authorized
capital stock of RKI consists of 15,500,000 shares of RKI Common Stock and
10,000,000 shares of preferred stock, par value $.001 per share, of which (i)
1,500,000 shares are designated as Series A-1 Preferred Stock, (ii) 3,000,000
shares are designated as Series B-1 Preferred Stock, (iii) 1,000,000 shares are
designated as Series B-2 Preferred Stock, (iv) 3,500,000 shares are designated
as Series C-1 Preferred Stock, and (v) 1,000,000 shares are designated as Series
C-2 Preferred Stock.
19
<PAGE>
(b) As of the date hereof, there are outstanding:
(i) 3,641,812 shares of RKI Common Stock;
(ii) 1,456,949 shares of RKI Series A-1 Stock;
(iii) 2,754,587 shares of RKI Series B-1 Stock;
(iv) 858,420 shares of RKI Series B-2 Stock;
(v) 2,713,321 shares of RKI Series C-1 Stock;
(vi) no shares of RKI Series C-2 Stock;
(vii) options to purchase an aggregate of 851,091 shares of
RKI Common Stock (all of which options shall become exercisable pursuant
to the RKI Stock Option Plan);
(viii) warrants to purchase an aggregate of 1,160,290 shares
of RKI Common Stock (collectively, the "RKI Warrants") (all of which
warrants are exercisable); and
(ix) any right of Investment A.B. Bure ("Bure") to purchase
shares of RKI Series C-2 Stock pursuant to Section 2.2 of the Series C-1
and C-2 Preferred Stock Purchase Agreement dated as of July 9, 1998 (the
"RKI Series C-2 Purchase Right").
(c) The RKI Disclosure Schedule accurately sets forth (i) the name
of each holder of an RKI Option, the number of shares subject to each RKI
Option, the date of grant and expiration date of each RKI Option and the
exercise price of each RKI Option and (ii) the name of each holder of RKI
Warrants, the number of shares subject to each RKI Warrant, the date of grant
and expiration date of each RKI Warrant and exercise price of each RKI Warrant.
(d) All RKI Shares are duly authorized, validly issued, fully paid
and nonassessable and free of any preemptive or similar rights in respect
thereto. As of the date hereof, no Voting Debt of RKI is issued or outstanding.
Except as set forth above, as of the date hereof, there are no existing options,
warrants, calls, subscriptions or other rights or other agreements or
commitments of any character relating to the issued or unissued capital stock or
Voting Debt of RKI or obligating RKI to issue, register, transfer or sell or
cause to be issued, registered, transferred or sold any shares of capital stock
or Voting Debt of, or other equity interests in, RKI or securities convertible
into or exchangeable for such shares or equity interests or obligating RKI to
grant, extend or enter into any such option, warrant, call, subscription or
other right, agreement or commitment. As of the date hereof, there are no
outstanding contractual obligations of RKI to repurchase, redeem or otherwise
acquire any shares of capital stock or Voting Debt of RKI. For purposes hereof,
all shares of RKI Common Stock, shares of RKI preferred stock, options to
purchase RKI Common Stock, RKI
20
<PAGE>
Warrants, RKI Series C-2 Purchase Right and Voting Debt of RKI are collectively
referred to herein as "RKI Securities." All of the outstanding RKI Securities
have been issued in compliance with all applicable Federal and state securities
laws pursuant to an exemption from registration thereunder.
Section 4.06 Subsidiaries; Joint Ventures. RKI has no Subsidiaries or
Joint Ventures. RKI does not, directly or indirectly, own any interests in any
person that is not a Subsidiary.
Section 4.07 Financial Statements. RKI has delivered to MMX the audited
balance sheets of RKI as of December 31, 1996 and 1997, and the unaudited
balance sheet as of June 30, 1998, and the related audited statements of income,
stockholder's equity and cash flows for the fiscal years ended December 31, 1996
and 1997, together with the notes thereto and the unaudited statements of
income, stockholder's equity and cash flows for the period ended June 30, 1998
(the "RKI Financial Statements"). The RKI Financial Statements present fairly,
in conformity with generally accepted accounting principles applied on a
consistent basis (except as may be indicated in the notes thereto), the
financial position of RKI as of the dates thereof and their results of
operations and cash flows for the periods then ended (subject to normal year-end
adjustments in the case of any interim financial statements which are not, in
the aggregate, material). For purposes of this Agreement, "RKI Balance Sheet"
means the balance sheet of RKI as of June 30, 1998, and the notes thereto,
contained in the RKI Financial Statements and "RKI Balance Sheet Date" means
June 30, 1998.
Section 4.08 Absence of Certain Changes. Since the RKI Balance Sheet Date,
RKI has in all material respects conducted business in the ordinary course and
there has not been:
(a) any Material Adverse Change with respect to RKI;
(b) any declaration, setting aside or payment of any dividend or
other distribution in respect of any shares of capital stock of RKI, or any
repurchase, redemption or other acquisition by RKI of any outstanding shares of
capital stock or other securities of, or other ownership interests in, RKI;
(c) any amendment of any material term of any outstanding RKI
Securities;
(d) any damage, destruction or other casualty loss (whether or not
covered by insurance) materially affecting the business or assets of RKI;
(e) any material change in any method of accounting or accounting
practice by RKI, except for any such change required by reason of a concurrent
change in generally accepted accounting principles or disclosed in the RKI
Financial Statements; or
(f) any (i) grant of any severance or termination pay to any
director, officer or employee of RKI, (ii) entering into of any written
employment, deferred compensation or other similar agreement (or any amendment
to any such existing agreement) with any director, officer or employee of RKI,
(iii) increase in benefits payable under any existing severance or termination
pay policies or
21
<PAGE>
employment agreements, or (iv) increase in compensation, bonus or other benefits
payable to any director or, other than in the ordinary course of business,
officer or employee of RKI.
Section 4.09 No Undisclosed Liabilities. Except for liabilities under this
Agreement, liabilities disclosed or provided for on the RKI Balance Sheet,
liabilities disclosed on the RKI Disclosure Schedule or liabilities incurred in
the ordinary course of business consistent with past practice, since the RKI
Balance Sheet Date RKI has not incurred any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, which have, or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on RKI or that would be required by generally accepted accounting
principles to be reflected on a balance sheet of RKI (including the notes
thereto).
Section 4.10 Litigation. There is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of RKI, threatened against, RKI or
any of its properties before any court or arbitrator or any governmental body,
agency or official, and RKI is not subject to any outstanding order, writ,
injunction or decree which, insofar as can be reasonably foreseen, individually
or in the aggregate, in the future would have a Material Adverse Effect on RKI
or would prevent RKI from consummating the transactions contemplated hereby. To
the knowledge of RKI, there is no fact, event or circumstance now in existence
that reasonably could be expected to give rise to any action, suit, claim,
proceeding or investigation that individually or in the aggregate would have a
Material Adverse Effect upon RKI or the transactions contemplated hereby.
Section 4.11 Taxes.
(a) All Tax returns, statements, reports and forms (including
estimated Tax returns and reports and information returns and reports) required
to be filed with any Taxing Authority with respect to any Taxable period ending
on or before the Effective Time by or on behalf of RKI (collectively, the "RKI
Tax Returns"), have been or will be filed when due (including any extensions of
such due date), except to the extent all such failures to file, taken together,
are not material. RKI has timely paid, withheld or made provision on its books
for all Taxes owed or accrued as of the Effective Time. Any provision for Taxes
reflected in the RKI Financial Statements is adequate to cover any and all Tax
liabilities of RKI in respect of its assets, properties, business and operations
during the period covered by such financial statements and all prior periods.
RKI is not a party to any agreement, contract, arrangement or plan that has
resulted or would result, separately or in the aggregate, in the payment of any
excess parachute payments within the meaning of Section 280G of the Code. RKI
has made available all relevant information regarding all material elections and
consents with respect to any Tax, or computation thereof, affecting RKI. RKI has
not agreed to, or is required to, make any adjustments under Section 481(a) of
the Code by reason of a change in accounting method or otherwise. RKI has not
granted any extension or waiver of the limitation period applicable to any RKI
Tax Returns. There is no claim, audit, action, suit, proceeding or investigation
now pending or, to RKI's knowledge, threatened in writing against or with
respect to RKI in respect of any Tax or assessment. There are no liens for Taxes
upon the assets of RKI except liens for current Taxes not yet due. RKI has not
been a member of an affiliated group or filed or been included in a
22
<PAGE>
combined, consolidated or unitary Tax return other than one filed by RKI (or a
return for a group consisting solely of its predecessors), or participated in
any other similar arrangement whereby any income, revenues, receipts, gains,
losses, deductions, credits or other Tax items of RKI was determined or taken
into account for Tax purposes with reference to or in conjunction with any such
items of another person other than RKI or its predecessor. All amounts required
to be collected or withheld by RKI with respect to Taxes have been duly
collected or withheld and any such amounts that are required to be remitted to
any Taxing Authority have been duly remitted. No closing agreement pursuant to
Section 7121 of the Code (or any predecessor provision) or any similar provision
of state, local or foreign law has been entered into with respect to RKI nor has
RKI received or requested, which request is pending, a ruling from any Taxing
Authority.
(b) During the three-year period prior to the Merger, no assets of
RKI have been disposed of except in the ordinary course of business. Neither RKI
nor MMX, nor any person related to either of them (within the meaning of United
States Treasury Regulation Section 1.368-1(e)(3)) has, or will prior to the
Merger, acquire for consideration other than MMX Common Stock, or redeem any of
the issued and outstanding shares of capital stock of RKI in a transaction or
transactions related to the Merger (or otherwise in connection with the Merger).
No extraordinary distribution has been, or will be, made with respect to the
capital stock of RKI prior to the Merger in a transaction or transactions
related to the Merger (or otherwise in connection with the Merger). The
liabilities of RKI assumed by MMX and the liabilities to which the transferred
assets of RKI are subject were incurred by RKI in the ordinary course of its
business. The fair market value of the assets of RKI transferred to MMX will
equal or exceed the sum of the liabilities assumed by MMX plus the amount of
liabilities, if any, to which the transferred assets are subject.
Section 4.12 Employee Benefits; Employers.
(a) With respect to each employee benefit plan (including, without
limitation, any "employee benefit plan" as defined in Section 3(3) of ERISA),
and any material bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability, death benefit,
hospitalization, insurance or other plan, agreement, arrangement or
understanding (whether or not legally binding) (all of the foregoing being
herein called the "RKI Benefit Plans"), maintained or contributed to by RKI, RKI
has made available to RKI a true and correct copy of (i) such RKI Benefit Plan,
(ii) each trust agreement and group annuity contract, if any, relating to such
RKI Benefit Plan (iii) the most recent annual report (Form 5500) filed with the
Internal Revenue Service, (iv) the most recent IRS determination letter relating
to the RKI Benefit Plan intended to be qualified under Sections 401(a) and
501(a) of the Code, and (v) the most recent actuarial report or valuation
relating to a RKI Benefit Plan subject to Title IV of ERISA. The RKI Disclosure
Schedule sets forth a brief description of each RKI Benefit Plan.
23
<PAGE>
(b) Each of the RKI Benefit Plans is in material compliance with all
of the applicable substantive provisions of ERISA or the Code (including the
periodic reporting obligations under those statutes) and no such plan has any
accumulated funding deficiency (whether or not waived) or any liability to the
Pension Benefit Guaranty Corporation. With respect to the RKI Benefit Plans,
individually and in the aggregate, no event has occurred and, to RKI's
knowledge, there exists no condition or set of circumstances, in connection with
which it or its Subsidiary could be subject to any liability that is reasonably
likely to have a Material Adverse Effect on RKI.
(c) With respect to the RKI Benefit Plans, individually and in the
aggregate, there are no funded benefit obligations for which contributions have
not been made or properly accrued and there are no material unfunded benefit
obligations which have not been accounted for by reserves, or otherwise properly
footnoted in accordance with generally accepted accounting principles, on the
RKI Financial Statements. Each of the RKI Benefit Plans subject to Title IV of
ERISA is fully funded in accordance with the actuarial assumptions used by the
Pension Benefit Guaranty Corporation to determine the level of funding required
in the event of termination.
(d) Each employee of RKI is an "employee at will."
Section 4.13 Intellectual Property. RKI owns, or is licensed to use or, to
the knowledge of RKI, otherwise has the full right to use all patents,
trademarks, service marks, trade names, trade secrets, franchises, inventions
and copyrights, all information regarding the registration of any of the
foregoing, or applications therefor, and all grants and licenses or other rights
running to or from RKI relating to any of the foregoing, that are necessary for
the conduct of its business (collectively, the "RKI Proprietary Rights"). A list
of all material copyright registrations, trademark registrations and
applications, patents and patent applications are set forth in the RKI
Disclosure Schedule, and such list indicates whether such Proprietary Rights are
owned or licensed. All patents, registered trademarks and copyright
registrations included in the Proprietary Rights are valid and subsisting and
all "taxes" or "annuities" with respect thereto have been paid, and RKI is not
aware of any interfering proprietary rights of third parties. RKI is not aware
of any claim by any third party that the business of RKI as currently conducted
or proposed to be conducted infringes upon the proprietary rights of others, nor
has RKI received any notice or claim of infringement from any third party of
such infringement by RKI. RKI is not aware of any infringement by any third
party on, or any competing claim of right to use or own any of, the Proprietary
Rights. To the knowledge of RKI, none of the activities of the employees of RKI
on behalf of RKI violates any agreements or arrangements which any such
employees have with former employers. RKI has taken measures it deems reasonable
to maintain the confidentiality of the processes and formulae, research and
development results and other know-how of RKI, the value of which to RKI is
contingent upon maintenance of the confidentiality thereof.
24
<PAGE>
Section 4.14 Labor Matters. RKI is not a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by RKI, nor do the executive officers of RKI know of any continuing
activities or proceedings of any labor union to organize any group of such
employees.
Section 4.15 Compliance with Laws.
(a) RKI has all licenses, permits, franchises, orders or approvals
of any federal, state, local or foreign governmental or regulatory body as are
necessary under applicable law to own its properties and conduct its businesses
(collectively, "Permits"), except to the extent the failure to have such Permits
would not, individually or in the aggregate, have a Material Adverse Effect on
RKI. Such Permits are in full force and effect, and no proceeding is pending or,
to the knowledge of RKI, threatened to revoke or limit any Permit. The RKI
Disclosure Schedule contains a true and complete list of all material Permits.
(b) RKI is not in violation of and has no liabilities, whether
accrued, absolute, contingent or otherwise, under any federal, state, local or
foreign law, ordinance or regulation or any order, judgment, injunction, decree
or other requirement of any court, arbitrator or governmental or regulatory
body, including without limitation laws relating to labor and employment
practices, health and safety, zoning, pollution or protection of the
environment, including without limitation laws relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Substances
(as defined in Section 3.18), except for violations of or liabilities under any
of the foregoing which would not, individually or in the aggregate, have a
Material Adverse Effect on RKI. During the last three years, RKI has not
received notice of, and there has not been any citation, fine or penalty imposed
against RKI for, any such violation or alleged violation.
Section 4.16 Contracts and Other Agreements. Each of the contracts set
forth on the RKI Disclosure Schedule is valid, subsisting, in full force and
effect, binding upon RKI, and to the knowledge of RKI, binding upon the other
parties thereto in accordance with their terms, and RKI has paid in full or
accrued all amounts now due from it thereunder and has satisfied in full or
provided for all of its liabilities and obligations thereunder which are
presently required to be satisfied or provided for, and is not in default under
any of them, nor, to the knowledge of RKI, 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.
The continuation, validity and effectiveness of all contracts and agreements to
which RKI is a party will in no way be affected by the Merger or the other
transactions contemplated hereby.
The RKI Disclosure Schedule sets forth a list of the following
contracts and other agreements to which RKI is a party or by or to which it or
its assets or properties are bound or subject:
25
<PAGE>
(a) any agreement that individually requires aggregate expenditures
by RKI in any one year of more than $50,000;
(b) any indenture, trust agreement, loan agreement or note that
involves or evidences outstanding indebtedness, obligations or liabilities for
borrowed money in excess of $50,000;
(c) any lease, sublease, installment purchase or similar arrangement
for the purchase, use or occupancy of real or personal property (i) that
individually requires aggregate expenditures by RKI in any one year of more than
$50,000, or (ii) pursuant to which RKI is the lessor of any real property which
has rentals over $50,000 per year, together with the date of termination of such
leases, the name of the other party and the annual rental payments required to
be made under such leases;
(d) any agreement of surety, guarantee or indemnification, other
than (i) an agreement in the ordinary course of business with respect to
obligations in an amount not in excess of $50,000, or (ii) indemnification
provisions contained in agreements not otherwise required to be disclosed;
(e) any agreement, including without limitation employment
agreements and bonus plans, relating to the compensation of (i) officers, (ii)
employees earning more than $50,000 per year or (iii) former employees;
(f) any agreement containing covenants of RKI not to compete in any
line of business, in any geographic area or with any person or covenants of any
other person not to compete with RKI or in any line of business of RKI;
(g) any license or agreement granting or restricting the right of
RKI to use a trade name, trade mark, logo or Proprietary Rights; and
(h) any agreement with any customer or supplier that cannot be
terminated without penalty in excess of $50,000 by RKI within one year.
True and complete copies of all the contracts and other agreements
set forth in the RKI Disclosure Schedule have been previously made available to
RKI.
Section 4.17 Properties. RKI owns and has good title to all of its assets
and properties reflected in the RKI Balance Sheet, free and clear of any Lien,
except for (i) the Liens reflected on the RKI Balance Sheet, (ii) assets and
properties disposed of, or subject to purchase or sales orders, in the ordinary
course of business since the date of the RKI Balance Sheet, or (iii) Liens
securing the liens of materialmen, carriers, landlords and like persons, all of
which are not yet due and payable. RKI owns or has a valid leasehold interest
in, or other incontrovertible right to occupy, all of the buildings, structures,
leasehold improvements, equipment and other tangible property material to the
business of RKI, all of which are in good and sufficient operating condition and
repair, ordinary wear and tear
26
<PAGE>
excepted, for the conduct of their business in accordance with past practices
and RKI has not received notice that any of such property is in violation in any
material respect of any existing law or any building, zoning, health, safety or
other ordinance, code or regulation.
Section 4.18 Environmental Matters.
(a) RKI has not within the five years preceding the date hereof
received any written notice, demand, citation, summons, complaint or order or
any notice of any penalty, lien or assessment, and to RKI's knowledge, no
investigation or review is pending by any governmental entity, with respect to
any material (i) alleged violation by RKI of any Environmental Law, (ii) alleged
failure by RKI to have any environmental permit, certificate, license, approval,
registration or authorization required in connection with the conduct of its
business or (iii) Regulated Activity.
(b) To RKI's knowledge, it has no material Environmental Liabilities
(as defined below), and it has not had within the five years preceding the date
hereof a release of Hazardous Substances (as defined below) into the environment
in violation of any Environmental Law or environmental permit. RKI has disclosed
to MMX in writing any known presence of asbestos in any of its premises other
than fully encapsulated asbestos-containing construction materials.
Section 4.19 Finder's Fees. There is no investment banker, broker, finder
or other intermediary which has been retained by or is authorized to act on
behalf of RKI who is entitled to any fee or commission upon consummation of the
transactions contemplated by this Agreement.
Section 4.20 Transactions with Management. Except as disclosed in the RKI
Disclosure Schedule, no executive officer or director of RKI has (whether
directly or indirectly through another entity in which such person has a
material interest, other than as the holder of less than 2% of a class of
securities of a publicly traded company) any material interest in (a) any
property or assets of RKI (except as a stockholder), (b) any current competitor,
customer, supplier or agent of RKI, or (c) any person which is currently a party
to any contract or agreement with RKI.
Section 4.21 Insurance. The RKI Disclosure Schedule sets forth a list of
all policies or binders of fire, liability, product liability, workmen's
compensation, vehicular, directors' and officers' and other insurance held by or
on behalf of RKI. Such policies and binders are in full force and effect, are
reasonably believed to be adequate for the businesses engaged in by RKI and are
in conformity with the requirements of all leases or other agreements to which
RKI is a party and, to the knowledge of RKI, are valid and enforceable in
accordance with their terms. RKI is not in default with respect to any provision
contained in any such policy or binder nor has RKI failed to give any notice or
present any claim under any such policy or binder in due and timely fashion.
There are no outstanding unpaid claims under any such policy or binder. RKI has
not received notice of cancellation or non-renewal of any such policy or binder.
27
<PAGE>
Section 4.22 Disclosure. The representations, warranties and statements
made by RKI in this Agreement and in the certificates delivered pursuant hereto
do not contain any untrue statement of a material fact, and, when taken
together, do not omit to state any material fact necessary to make such
representations, warranties and statements, in light of the circumstances under
which they are made, not misleading.
Section 4.23 Dissenters' Rights. To RKI's knowledge, no holder of RKI
Shares intends to exercise such holder's dissenters' rights in accordance with
Delaware law.
ARTICLE V
COVENANTS OF RKI
RKI agrees that:
Section 5.01 Conduct of RKI. From the date hereof until the Effective
Time, RKI shall in all material respects conduct its business in the ordinary
course. Without limiting the generality of the foregoing, from the date hereof
until the Effective Time, except as contemplated hereby, without the written
consent of MMX:
(a) RKI will not adopt or propose any change in its Certificate of
Incorporation or Bylaws;
(b) Except as contemplated by this Agreement or as previously
approved by MMX in writing, RKI will not:
(i) enter into any written contract, agreement, plan or
arrangement covering any director, officer or employee of RKI that
provides for the making of any payments, the acceleration of vesting of
any benefit or right or any other entitlement contingent upon (A) the
Merger or (B) the termination of employment after the Merger; or
(ii) enter into or amend any employment agreements (oral or
written) to increase the compensation payable or to become payable by it
to any of its employees or otherwise materially alter its employment
relationship with, officers, directors, or consultants over the amount
payable as of the date hereof, or increase the compensation payable to any
other employees (other than (A) increases in the ordinary course of
business which are not in the aggregate material to RKI, or (B) pursuant
to plans disclosed in the RKI Disclosure Schedule), or adopt or amend any
employee benefit plan or arrangement (oral or written) other than its
outstanding option agreements;
28
<PAGE>
(c) (i) Except pursuant to the exercise of RKI Options, RKI Warrants
or the RKI Series C-2 Purchase Right outstanding on the date hereof, RKI will
not issue or authorize or propose the issuance of, any RKI Securities or
authorize or propose the issuance of, any shares of capital stock, Voting Debt,
or securities convertible or exchangeable into shares of capital stock of RKI
and (ii) except pursuant to the terms of the RKI Option Plan or any agreement
evidencing an RKI Option, RKI will not amend or change the period of
exercisability or accelerate the exercisability of any outstanding RKI Options
or RKI Warrants, or accelerate, amend or change the vesting period of any
outstanding restricted stock;
(d) RKI will keep in full force and effect its existing insurance
policies and will not modify or reduce the coverage thereunder;
(e) Other than as set forth in the RKI Disclosure Schedule, RKI will
not (i) pay any dividend or make any other distribution to holders of its or
their capital stock, (ii) split, combine or reclassify any of its capital stock
or propose or authorize the issuance of any other securities in respect of or in
lieu of or in substitution for any shares of its capital stock, or (iii)
repurchase, redeem or otherwise acquire any shares of its capital stock or other
RKI Securities;
(f) RKI will not directly or indirectly, merge or consolidate with
another entity or sell, transfer, license, sublicense or otherwise dispose of or
acquire (i) any material properties, securities or assets except in the ordinary
course of business or (ii) any real property;
(g) RKI will not incur any additional indebtedness for borrowed
money (including, without limitation, by way of guarantee or the issuance and
sale of debt securities or rights to acquire debt securities);
(h) RKI will not enter into any transaction that would in the
reasonable judgment of MMX delay the occurrence of the Effective Time beyond
November 15, 1998;
(i) RKI will not (i) other than the granting of software licenses in
the ordinary course of business, sell, license or otherwise transfer or dispose
of or encumber, or otherwise restrict, any tangible or intangible assets of RKI,
including any Proprietary Rights, or (ii) other than in the ordinary course of
business, acquire any tangible or intangible assets of any third party,
including any license, distribution or similar arrangement with respect to any
product or technology not owned or licensed by RKI on the date of this
Agreement;
(j) RKI will not settle or compromise, or agree to settle or
compromise, any suit or other litigation matter or matter in an arbitration
proceeding for any material amount (after taking into account any insurance
proceeds to which RKI is entitled) or otherwise on terms which would have a
Material Adverse Effect on RKI; and
29
<PAGE>
(k) RKI will not agree or commit to do any of the foregoing.
Section 5.02 Access to Financial, Operating and Technical Information.
Subject to Section 5.07 hereof, from the date hereof until the Effective Time,
RKI will give MMX, its counsel, financial advisors, auditors and other
authorized representatives reasonable access during normal business hours to the
offices, properties, books and records of RKI, will furnish to MMX, its counsel,
financial advisors, auditors and other authorized representatives such financial
and operating data and all other scientific and technical information as such
persons may reasonably request and will instruct RKI's employees, counsel and
financial advisors to cooperate with MMX in its investigation of the business of
RKI and in the planning for the combination of the businesses of RKI and MMX
following the consummation of the Merger; provided, however, that no
investigation pursuant to this Section shall affect any representation or
warranty given by RKI to MMX hereunder; and provided, further, however, that the
foregoing shall not require RKI to permit any inspection, or to disclose any
information, which in the reasonable judgement of RKI would result in the
disclosure of any trade secrets of third parties or violate any obligation of
RKI with respect to confidentiality. In addition, RKI will cooperate in
arranging joint meetings among representatives of RKI, MMX and persons with whom
RKI maintains business relationships. All requests for information made pursuant
to this Section shall be directed to the Chief Executive Officer of RKI or such
person as may be designated by him.
Section 5.03 Other Offers. From the date hereof until the earlier of the
Effective Time or the termination of this Agreement in accordance with the terms
hereof, RKI and its officers, directors, employees or other agents will not,
directly or indirectly (i) take any action to solicit, initiate, encourage or
facilitate the making of any Acquisition Proposal (as hereinafter defined); (ii)
agree to or endorse any Acquisition Proposal; or (iii) engage in negotiations
with, or disclose any nonpublic information relating to RKI or afford access to
the properties, books or records of RKI to, any person or entity. Until this
Agreement shall be terminated in accordance with the terms hereof, RKI will not
enter into any agreement to merge or consolidate with, or sell a substantial
portion of its assets to, any person or entity. RKI will promptly notify MMX
after receipt of any Acquisition Proposal or any request for nonpublic
information relating to RKI in connection with an Acquisition Proposal or for
access to the properties, books or records of RKI by any person or entity which
has made, or which reasonably could be expected to make, an Acquisition
Proposal, and all relevant information in respect thereof. The term "Acquisition
Proposal" shall mean any offer or proposal for, or any indication of interest
in, (i) any merger, consolidation, tender offer, exchange offer or other
business combination involving RKI, (ii) any acquisition of a substantial equity
interest in, or a substantial portion of the assets of, RKI, other than in each
case the transactions contemplated by this Agreement or (iii) any license,
distribution or similar agreement in respect of any product or Proprietary Right
of RKI. For purposes hereof, a "substantial equity interest" shall mean any
equity interest representing beneficial ownership of five percent or more of the
outstanding RKI Securities. Notwithstanding the foregoing, RKI and its officers
and directors may disclose to the stockholders of RKI any Acquisition Proposal
by any person or entity received by RKI subsequent to the date hereof and prior
to the Effective Time, if the Board of Directors of RKI determines, upon advice
of counsel, that such disclosure is required by law.
30
<PAGE>
Section 5.04 Maintenance of Business. RKI will use its commercially
reasonable efforts to carry on its business, keep available the services of its
officers and employees and preserve its relationships with those of its
customers, suppliers, licensors, licensees and others having business
relationships with it that are material to its business in substantially the
same manner as it has prior to the date hereof. If RKI becomes aware of a
material deterioration or facts which are likely to result in a material
deterioration in the relationship with any material customer, supplier,
licensor, licensee or others having business relationships with it, it will
promptly bring such information to the attention of MMX in writing.
Section 5.05 Compliance with Obligations. Prior to the Effective Time, RKI
shall comply in all material respects with (i) all applicable Federal, state,
local and foreign laws, rules and regulations, (ii) all material agreements and
obligations, including its Certificate of Incorporation and Bylaws, by which it,
its properties or its assets may be bound, and (iii) all decrees, orders, writs,
injunctions, judgments, statutes, rules and regulations applicable to RKI, its
properties or its assets.
Section 5.06 Confidentiality. RKI agrees that the Non-Disclosure Agreement
dated as of September 1, 1998 between RKI and MMX shall survive the execution,
expiration or termination of this Agreement.
Section 5.07 Accrued Preferred Dividends. Immediately prior to the
Effective Time, the accrued dividend on the RKI Series B-1 Preferred Stock, RKI
Series B-2 Preferred Stock and Series C-1 Preferred Stock shall have been
converted into shares of RKI Common Stock, subject to the provisions of Section
8.01(m) hereof.
Section 5.08 Notice to Option Holders. RKI shall deliver to each holder of
an unexpired and unexercised RKI Option the notice required by Section 1.05 of
this Agreement as soon as practicable following the public announcement by MMX
and RKI of the execution of this Agreement.
Section 5.09 Stockholders' Meeting. On November 2, 1998 or on such other
date as the parties shall agree, RKI shall hold a special meeting of RKI
stockholders in accordance with Delaware Law to approve this Agreement and the
transactions contemplated hereby. MMX shall have received and had the
opportunity to review any disclosure documents sent to the RKI stockholders in
connection with such meeting.
31
<PAGE>
ARTICLE VI
COVENANTS OF MMX
MMX agrees that:
Section 6.01 Conduct of MMX. From the date hereof until the Effective
Time, MMX shall in all material respects conduct its business in the ordinary
course. Without limiting the generality of the foregoing, from the date hereof
until the Effective Time, except as contemplated hereby, without the written
consent of RKI:
(a) MMX will not adopt or propose any changes in its Certificate of
Incorporation or Bylaws, other than the filing of the MMX Charter Amendment;
(b) Except as contemplated by this Agreement or as previously
approved by RKI in writing, MMX will not:
(i) enter into any written contract, agreement, plan or
arrangement covering any director, officer or employee of MMX that
provides for the making of any payments, the acceleration of vesting of
any benefit or right or any other entitlement contingent upon (A) the
Merger or (B) the termination of employment after the Merger; or
(ii) enter into or amend any employment agreements (oral or
written) to increase the compensation payable or to become payable by it
to any of its employees or otherwise materially alter its employment
relationship with, officers, directors, or consultants over the amount
payable as of the date hereof, or increase the compensation payable to any
other employees (other than (A) increases in the ordinary course of
business which are not in the aggregate material to MMX, or (B) pursuant
to plans disclosed in the MMX Disclosure Schedule), or adopt or amend any
employee benefit plan or arrangement (oral or written);
(c) Except pursuant to the exercise of options or warrants
outstanding as of the date hereof, MMX will not issue any MMX Securities, or
authorize or propose the issuance of, any shares of capital stock, Voting Debt,
or securities convertible or exchangeable into shares of capital stock of MMX,
and MMX will not amend or change the period of exercisability or accelerate the
exercisability of any outstanding options to purchase MMX Common Stock or
warrants, or accelerate, amend or change the vesting period of any outstanding
restricted stock;
(d) MMX will keep in full force and effect its existing insurance
policies and will not modify or reduce the coverage thereunder;
32
<PAGE>
(e) Other than as set forth in the MMX Disclosure Schedule and as
contemplated by the MMX Charter Amendment, MMX will not (i) pay any dividend or
make any other distribution to holders of its capital stock, (ii) split, combine
or reclassify any of its capital stock or propose or authorize the issuance of
any other securities in respect of or in lieu of or in substitution for any
shares of its capital stock, or (iii) repurchase, redeem or otherwise acquire
any shares of its capital stock or other MMX Securities;
(f) MMX will not directly or indirectly merge or consolidate with
another entity or sell, transfer, license, sublicense or otherwise dispose of or
acquire (i) any material properties, securities or assets except in the ordinary
course of business or (ii) any real property;
(g) MMX will not incur any additional indebtedness for borrowed
money (including, without limitation, by way of guarantee or the issuance and
sale of debt securities or rights to acquire debt securities);
(h) MMX will not enter into any transaction that would in the
reasonable judgment of RKI delay the occurrence of the Effective Time beyond
November 15, 1998; and
(i) MMX will not (i) other than software licenses in the ordinary
course of business (including without limitation the granting of the IBOPE
License (as defined in the MMX Disclosure Schedule)), sell, license or otherwise
transfer or dispose of or encumber, or otherwise restrict, any tangible or
intangible assets of MMX, including any Proprietary Rights, or (ii) other than
in the ordinary course of business, acquire any tangible or intangible assets of
any third party, including any license, distribution or similar arrangement with
respect to any product or technology not owned or licensed by MMX on the date of
this Agreement;
(j) MMX will not settle or compromise, or agree to settle or
compromise, any suit or other litigation matter or matter in an arbitration
proceeding for any material amount (after taking into account any insurance
proceeds to which MMX is entitled) or otherwise on terms which would have a
Material Adverse Effect on MMX; and
(k) MMX will not agree or commit to do any of the foregoing.
Section 6.02 New MMX Option Plan. Prior to the Effective Time, MMX will
adopt the equity incentive plan attached as Exhibit 6.02(1) hereto and shall
grant options to purchase MMX Common Stock to certain individuals agreed upon by
the Board of Directors who were employees of MMX and RKI prior to the Effective
Time.
33
<PAGE>
Section 6.03 Access to Financial, Operating and Technical Information.
Subject to Section 6.07 hereof, from the date hereof until the Effective Time,
MMX will give RKI, its counsel, financial advisors, auditors and other
authorized representatives reasonable access during normal business hours to the
offices, properties, books and records of MMX, will furnish to RKI, its counsel,
financial advisors, auditors and other authorized representatives such financial
and operating data and all other scientific and technical information as such
persons may reasonably request and will instruct MMX's employees, counsel and
financial advisors to cooperate with RKI in its investigation of the business of
MMX and in the planning for the combination of the businesses of RKI and MMX
following the consummation of the Merger; provided, however, that no
investigation pursuant to this Section shall affect any representation or
warranty given by MMX to RKI hereunder; and provided, further, however, that the
foregoing shall not require MMX to permit any inspection, or to disclose any
information, which in the reasonable judgement of MMX would result in the
disclosure of any trade secrets of third parties or violate any obligation of
MMX with respect to confidentiality. All requests for information made pursuant
to this Section shall be directed to the Chief Executive Officer of MMX or such
person as may be designated by him.
Section 6.04 Other Offers. From the date hereof until the earlier of the
Effective Time or the termination of this Agreement in accordance with the terms
hereof, MMX and its officers, directors, employees or other agents will not,
directly or indirectly (i) take any action to solicit, initiate, encourage or
facilitate the making of any Acquisition Proposal; (ii) agree to or endorse any
Acquisition Proposal; or (iii) engage in negotiations with, or disclose any
nonpublic information relating to MMX or afford access to the properties, books
or records of MMX to, any person or entity; provided, however, that the
foregoing shall not preclude MMX from continuing negotiations and discussions
regarding a possible transaction with Internet Profiles Corporation. Until this
Agreement shall be terminated in accordance with the terms hereof, MMX will not
enter into any agreement to merge or consolidate with, or sell a substantial
portion of its assets to, any person or entity. MMX will promptly notify RKI
after receipt of any Acquisition Proposal or any request for nonpublic
information relating to MMX in connection with an Acquisition Proposal or for
access to the properties, books or records of MMX by any person or entity which
has made, or which reasonably could be expected to make, an Acquisition
Proposal, and all relevant information in respect thereof. Notwithstanding the
foregoing, MMX and its officers and directors may disclose to the stockholders
of MMX any Acquisition Proposal by any person or entity received by MMX
subsequent to the date hereof and prior to the Effective Time, if the Board of
Directors of MMX determines, upon advice of counsel, that such disclosure is
required by law.
Section 6.05 Maintenance of Business. MMX will use its commercially
reasonable efforts to carry on its business, keep available the services of its
officers and employees and preserve its relationships with those of its
customers, suppliers, licensors, licensees and others having business
relationships with it that are material to its business in substantially the
same manner as it has prior to the date hereof. If MMX becomes aware of a
material deterioration or facts which are likely to result in a material
deterioration in the relationship with any material customer, supplier,
licensor, licensee or others having business relationships with it, it will
promptly bring such information to the attention of RKI in writing.
34
<PAGE>
Section 6.06 Compliance with Obligations. Prior to the Effective Time, MMX
shall comply in all material respects with (i) all applicable Federal, state,
local and foreign laws, rules and regulations, (ii) all material agreements and
obligations, including its Certificate of Incorporation and Bylaws, by which it,
its properties or its assets may be bound, and (iii) all decrees, orders, writs,
injunctions, judgments, statutes, rules and regulations applicable to MMX, its
properties or its assets.
Section 6.07 Confidentiality. MMX agrees that the Non-Disclosure Agreement
dated as of September 1, 1998 between RKI and MMX shall survive the execution,
expiration and termination of this Agreement.
Section 6.08 Tax Matters.
(a) MMX will not, in connection with the Merger, redeem and no
person related to MMX (within the meaning of Treas. Reg. Section 1.368-1(e)(3))
will, in connection with the Merger, acquire any of the shares of MMX Common
Stock issued in the Merger (other than in exchange for MMX stock). For purposes
of this covenant, repurchases in the ordinary course of business of unvested
shares, if any, acquired from terminating employees of MMX or RKI will be
disregarded.
(b) MMX will use a significant portion of RKI's historic business
assets in a business. For purposes of this covenant, MMX will be deemed to
satisfy this requirement if the members of MMX's qualified group (as defined in
Treas. Reg. Section 1.368-1(d)(4)), in the aggregate, continue the historic
business of RKI or use a significant portion of RKI's historic business assets
in a business, or the foregoing activities are undertaken by a partnership as
contemplated by Treas. Reg. Section 1.368-1(d)(4).
(c) Following the Merger, MMX will comply with the record-keeping
and information filing requirements of Treas. Reg. Section 1.368-3.
Section 6.09 Amendment to Certificate of Designations. MMX shall take all
actions necessary to file a Certificate of Amendment to the Certificate of
Designations (the "Certificate of Amendment") to eliminate its authorized Series
A Preferred Stock and the Series B Preferred Stock.
ARTICLE VII
COVENANTS OF MMX AND RKI
RKI and MMX agree that:
35
<PAGE>
Section 7.01 Joint Transition Committee. RKI and MMX shall promptly
following the date hereof establish a joint transition committee, composed of
Timothy Cobb, Jeffrey Levy, Mary Ann Packo, Steve Coffey, Thomas Lynch and Randy
Jackson, to recommend steps to be carried out in combining the operations of the
companies, to facilitate access to information and to consult and advise with
respect to major activities of RKI and MMX pending the Merger.
Section 7.02 Advice of Changes. Each party will promptly advise the other
such party in writing of:
(a) any notice or other communication from any person alleging that
the consent of such person is or may be required in connection with the Merger;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the Merger;
(c) any actions, suits, claims, investigations or other judicial
proceedings commenced or threatened against it which, if pending on the date of
this Agreement, would have been required to have been disclosed pursuant to this
Agreement or which relate to the consummation of the Merger;
(d) any event known to its executive officers occurring subsequent
to the date of this Agreement that would render any representation or warranty
of such party contained in this Agreement, if made on or as of the date of such
event or the Closing Date, untrue, inaccurate or misleading in any material
respect (other than an event so affecting a representation or warranty which is
expressly limited to a state of facts existing at a time prior to the occurrence
of such event); and
(e) any Material Adverse Change in the business condition of the
party.
Section 7.03 Regulatory Approvals. Prior to the Effective Time, each party
shall execute and file, or join in the execution and filing of, any application
or other document that may be necessary in order to obtain the authorization,
approval or consent of any governmental body, Federal, state, local or foreign,
which may be reasonably required, or that the other company may reasonably
request, in connection with the consummation of the Merger. Each party shall use
its commercially reasonable efforts to obtain all such authorizations, approvals
and consents.
Section 7.04 Actions Contrary to Stated Intent. Each of the parties shall
use reasonable best efforts to cause the Merger to constitute a reorganization
under Section 368(a) of the Code. Each of RKI and MMX shall use its commercially
reasonable efforts to cause its Affiliates (as defined below) not to take any
action, or fail to take any required action, that would prevent the Merger from
qualifying as a reorganization under Section 368(a) of the Code. Neither party
shall take any action that would, or reasonably might be expected to, result in
any of its representations and warranties set forth herein being or becoming
untrue in any material respect, or in any of the conditions to the Merger
36
<PAGE>
set forth in Article VIII not being satisfied. An "Affiliate" of any person
means any other person who controls, is controlled by or is under common control
with such person.
Section 7.05 Certain Filings. RKI and MMX shall cooperate with one
another:
(a) in determining whether any action by or in respect of, or filing
with, any governmental body, agency or official, or authority is required, or
any actions, consents, approvals or waivers are required to be obtained from
parties to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement; and
(b) in seeking any such actions, consents, approvals or waivers or
making any such filings, furnishing information required in connection therewith
and seeking timely to obtain any such actions, consents, approvals or waivers.
Section 7.06 Public Announcements. RKI and MMX will consult each other
before issuing any press release or making any public statement with respect to
this Agreement and the transactions contemplated hereby and, except as may be
required by applicable law, no such press release or public statement (other
than in response to unsolicited inquiries) shall be issued without the approval
of RKI or MMX prior to such consultation.
Section 7.07 Satisfaction of Conditions Precedent. RKI and MMX will use
their best efforts to satisfy or cause to be satisfied all the conditions
precedent that are set forth in Article VIII, as applicable to each of them, and
to cause the transactions contemplated by this Agreement to be consummated, and,
without limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with, and give all
notices to, third parties that may be necessary or reasonably required on its
part in order to effect the transactions contemplated hereby.
Section 7.08 Capitalization Table. RKI and MMX agree that Exhibit 7.08
hereto reflects the intended capitalization of MMX immediately following the
Effective Time.
ARTICLE VIII
CONDITIONS TO THE MERGER
Section 8.01 Conditions to Obligations of MMX. The obligations of MMX
hereunder are subject to the fulfillment or satisfaction, on and as of the
Closing Date, of each of the following conditions (any one or more of which may
be waived by MMX, but only in a writing signed by MMX):
(a) Accuracy of Representations and Warranties. The representations
and warranties of RKI contained in Article IV shall be true and accurate in all
material respects on and as of the Closing Date with the same force and effect
as if they had been made on the Closing Date (except to the extent a
representation or warranty speaks only as of an earlier date). RKI shall have
37
<PAGE>
provided MMX with a certificate executed by the President and the Chief
Financial Officer of RKI, dated as of the Closing Date, certifying compliance
with this subsection (a).
(b) Covenants. RKI shall have performed and complied with all of its
covenants contained in Articles V and VII in all material respects on or before
the Closing Date, and MMX shall receive a certificate to such effect signed by
RKI's President and Chief Financial Officer.
(c) Dissenting Shares. Holders of not more than 4% of the RKI Shares
shall have perfected dissenters' rights in accordance with Delaware Law.
(d) No Material Adverse Change. There shall have been no Material
Adverse Change in RKI since the RKI Balance Sheet Date.
(e) Opinion of Counsel. MMX shall have received the opinion of
Wilson Sonsini Goodrich & Rosati, counsel to RKI, dated the Closing Date and in
substantially the form of Exhibit 8.01(e) hereto.
(f) MMX Co-Sale Agreement; MMX Stockholders' Agreement.
(x) Each of the holders of capital stock of RKI outstanding
immediately prior to the Effective Time who are parties to the Amended and
Restated Right of First Refusal and Co-Sale Agreement dated July 9, 1998 (the
"RKI Co-Sale Agreement") shall have executed and delivered the Co-Sale Agreement
of MMX (the "MMX Co-Sale Agreement") and the Stockholders' Agreement of MMX (the
"MMX Stockholders' Agreement"), substantially in the forms of Exhibit 8.01(f)(1)
and Exhibit 8.01(f)(2) hereto, respectively.
(y) The RKI Co-Sale Agreement shall have been terminated in
accordance with its terms.
(g) Registration Rights Agreement.
(x) Each of the holders of capital stock of RKI outstanding
immediately prior to the Effective Time who are parties to the Third Amended and
Restated Investors' Rights Agreement dated July 9, 1998 (the "RKI Investors'
Rights Agreement") shall have executed and delivered the Registration Rights
Agreement of MMX (the "MMX Registration Rights Agreement"), substantially in the
form of Exhibit 8.01(g) hereto.
(y) The RKI Investors' Rights Agreement shall have been
terminated in accordance with its terms.
38
<PAGE>
(h) Other RKI Agreement. The Voting Rights Agreement of RKI shall
have been terminated in accordance with its terms.
(i) Employment Agreements. Jeffrey Levy and Timothy Cobb shall have
entered into employment agreements with MMX, each substantially in the form of
Exhibit 8.01(i) hereto.
(j) Certificate as to Real Property Interests. At or prior to the
Closing, RKI shall (1) deliver to MMX, pursuant to Section 1445(b)(3) of the
Code and Treasury Regulation Sections 1.897-2(h) and 1.1445-2(c)(3), a valid
certification, dated not more than 30 days prior to the Closing Date, that
interests in RKI are not United States real property interests within the
meaning of Section 897(c)(1) of the Code and (2) provide, in accordance with
Treasury Regulation Section 1.897-2(h)(2), notice to the Internal Revenue
Service of its delivery of such certification to MMX.
(k) Accrued Dividends. As of the Effective Time, holders of RKI
Series B-1 Preferred Stock, RKI Series B-2 Preferred Stock and RKI Series C-1
Preferred Stock entitled to receive either shares of RKI Common Stock or cash in
satisfaction of an accrued dividend on such shares of RKI Series B-1 Preferred
Stock, RKI Series B-2 Preferred Stock and RKI Series C-1 Preferred Stock shall
not have elected to receive in the aggregate more than $100,000 of such accrued
dividend in cash. The total amount of such accrued dividend shall not exceed
$660,002.55. MMX shall have received all necessary information regarding the
calculation of such dividend and shall have concurred in the amount.
(l) Consents. RKI shall have obtained the consent of Phoenix Leasing
Incorporated under its Senior Loan and Security Agreement to the assignment of
such agreement to MMX.
(m) Shareholders' Meeting; Voting Agreements.
(i) The shareholders of RKI shall have approved this Agreement
and the transactions contemplated hereby pursuant to a stockholders'
meeting duly held in accordance with Delaware law.
(ii) Each of the Voting Agreements shall have been amended to
provide that the provisions of Section 4 thereof shall survive any
termination of such agreement.
Section 8.02 Conditions to Obligations of RKI. RKI's obligations hereunder
are subject to the fulfillment or satisfaction, on and as of the Closing Date,
of each of the following conditions (any one or more of which may be waived by
RKI, but only in a writing signed by RKI):
(a) Accuracy of Representations and Warranties. The representations
and warranties of MMX set forth in Article III shall be true and accurate in all
material respects on and as of the Closing Date with the same force and effect
as if they had been made on the Closing Date (except to the extent a
representation or warranty speaks only as of an earlier date). MMX shall have
39
<PAGE>
provided RKI with a certificate executed by the President and Chief Financial
Officer of MMX, dated as of the Closing Date, certifying compliance with this
subsection (a).
(b) Covenants. MMX shall have performed and complied with all of its
covenants contained in Articles VI and VII in all material respects on or before
the Closing Date, and RKI shall receive a certificate to such effect signed by
MMX's President.
(c) No Material Adverse Change. There shall have been no Material
Adverse Change in MMX since the MMX Balance Sheet Date.
(d) Opinion of Counsel. RKI shall have received the opinion of
Fulbright & Jaworski L.L.P., counsel to MMX, dated the Closing Date and in
substantially the form of Exhibit 8.02(d) hereto.
(e) Registration Rights Agreement. MMX shall have executed and
delivered the Registration Rights Agreement.
(f) MMX Co-Sale Agreement; MMX Stockholders' Agreement. MMX shall
have executed and delivered the MMX Co-Sale Agreement and MMX Stockholders'
Agreement.
(g) Conversion of Preferred Stock. All of the outstanding shares of
preferred stock of MMX described in Section 4.05(e) hereof shall have been
converted into shares of MMX Common Stock.
(h) MMX Common Stock Split. MMX shall have effected a
2.96873078-to-one split of the issued and outstanding shares of MMX Common
Stock.
(i) MMX Charter Amendment. MMX shall have filed the MMX Charter
Amendment and the Certificate of Amendment, attached as Exhibit 1.08(c) hereto.
(j) License Agreement. MMX and NPD shall have entered into and
delivered a new License Agreement for the use by MMX of all NPD computer
software relevant to the business of MMX, substantially in the form of Exhibit
8.02(j) hereto.
(k) Management Services Agreement.
(x) NPD shall have executed and delivered a Management
Services Agreement between MMX and NPD (the "Management Services Agreement"),
substantially in the form of Exhibit 8.02(k) hereto.
(y) The Amended and Restated Management Services Agreement
between MMX and NPD dated April 7, 1997 shall have been terminated in accordance
with its terms.
40
<PAGE>
(l) Services Agreement.
(x) NPD shall have executed and delivered a Services Agreement
between MMX and NPD (the "Services Agreement"), substantially in the form of
Exhibit 8.02(l) hereto.
(y) The Services Agreement between PC Meter L.P. (the
predecessor of MMX) and NPD dated March 31, 1996 shall have been terminated.
(m) Employment Agreements. MMX shall have entered into an employment
agreement with each of Jeffrey Levy and Timothy Cobb, substantially in the form
of Exhibit 8.01(m) hereto.
Section 8.03 Conditions to Obligations of Each Party. The respective
obligations of RKI and MMX hereunder are subject to the fulfillment, on and as
of the Closing Date, of each of the following conditions (any one or more of
which may be waived by such parties, but only in a writing signed by such
parties):
(a) Consents. All written consents, assignments, waivers or
authorizations ("Consents"), that are required as a result of the Merger for the
continuation in full force and effect of any contracts or leases of RKI or MMX
shall have been obtained.
(b) Illegality or Legal Constraint. No statute, rule, regulation,
executive order, decree, injunction or restraining order shall have been
enacted, promulgated or enforced (and not repealed, superseded or otherwise made
inapplicable) by any court or governmental authority which prohibits the
consummation of the Merger (each party agreeing to use its commercially
reasonable efforts to have any such order, decree or injunction lifted).
(c) Governmental Authorizations. There shall have been obtained any
and all Governmental Authorizations, permits, approvals and consents of
securities or "blue sky" commissions of any jurisdiction and of any other
governmental body or agency, that may reasonably be deemed necessary so that the
consummation of the Merger will be in compliance with applicable laws, the
failure to comply with which would be reasonably likely to have a Material
Adverse Effect on MMX, RKI or the Surviving Corporation or would be reasonably
likely to subject any of MMX, RKI or any of their respective directors or
officers to substantial penalties or criminal liability.
(d) Releases. Each of the stockholders of MMX and the holders of a
majority of each of the RKI Common Stock, the RKI Series A-1 Stock, the RKI
Series B-1 Stock and the RKI Series B-2 Stock, and the RKI Series C-1 Stock
shall execute a release substantially in the form of Exhibit 8.03(d) hereto.
41
<PAGE>
(e) Capitalization. The capitalization of MMX shall be as set forth
on Exhibit 7.08 as of the Effective Time.
ARTICLE IX
TERMINATION OF AGREEMENT
Section 9.01 Termination. This Agreement may be terminated at any time
prior to the Effective Time whether before or after the approval by the
stockholders of RKI or MMX:
(a) by mutual consent of the Boards of Directors of MMX and RKI;
(b) by MMX, if it is not in material breach of its obligations under
this Agreement, and if (A) there has been a breach by RKI of any of its
representations and warranties hereunder such that Section 8.01(a) will not be
satisfied or (B) there has been the willful breach on the part of RKI of any of
its covenants or agreements contained in this Agreement such that Section
8.01(b) will not be satisfied, and, in both case (A) and case (B), such breach
has not been promptly cured within 15 days after notice to RKI;
(c) by RKI, if it is not in material breach of its obligations under
this Agreement, and if (A) there has been a breach by MMX any of its
representations and warranties hereunder such that Section 8.02(a) will not be
satisfied or (B) there has been the willful breach on the part of MMX of any of
their respective covenants or agreements contained in this Agreement such that
Section 8.02(b) will not be satisfied, and, in both case (A) and (B), such
breach has not been promptly cured within 15 days after notice to MMX; or
(d) by either MMX or RKI if the Merger shall not have been
consummated on or before November 15, 1998 unless the failure to so consummate
by such time is due to the breach of this Agreement by the party seeking to
terminate.
Section 9.02 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 9.01 hereof, this Agreement shall forthwith become
void, and there shall be no liability on the part of either MMX or RKI, except
that the agreements contained or referred to in Sections 5.07, 6.07 and 10.02
shall survive the termination hereof; provided, however, that in the event this
Agreement is terminated pursuant to Sections 9.01(b) or (c) hereof, as the case
may be, the party terminating the Agreement shall be entitled to reimbursement
for all its out-of-pocket expenses incurred in connection with this Agreement
from the other party. No termination of this Agreement shall relieve any person
from liability resulting from a breach by a party of any of its representations,
warranties, covenants or agreements set forth herein.
42
<PAGE>
ARTICLE X
MISCELLANEOUS
Section 10.01 Further Assurances. Each party agrees to cooperate fully
with the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement.
Section 10.02 Fees and Expenses. Each party shall bear its own fees and
expenses, including counsel fees provided that such fees will be reasonable and
appropriate for a transaction of this nature, in connection with the transaction
contemplated hereby. To the extent that the reasonable fees and expenses of
Wilson Sonsini Goodrich & Rosati relating to the transactions contemplated
hereby have not been paid prior to the Effective Time, MMX agrees to pay such
fees and expenses.
Section 10.03 Nonsurvival of Representations and Warranties. All
representations and warranties made herein, and in any instrument delivered
pursuant to Articles III and IV of this Agreement, shall be deemed to be
conditions to the Merger and shall not survive the Merger.
Section 10.04 Notices. Whenever any party hereto desires or is required to
give any notice, demand, or request with respect to this Agreement, each such
communication shall be in writing and shall be effective only if it is delivered
by personal service or mailed, United States registered or certified mail,
postage prepaid, or sent by prepaid overnight carrier or confirmed telecopier
addressed as follows:
MMX:
Media Metrix, Inc.
900 West Shore Road
Port Washington, New York 11050
Attention: Tod Johnson
With a copy to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Attention: Richard H. Gilden, Esq.
43
<PAGE>
RKI:
RelevantKnowledge, Inc.
530 Means Street, NW
Suite G-1
Atlanta, GA 30318
Attention: Jeffrey Levy and Timothy Cobb
With a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
Attention: Hank Barry, Esq.
Such communications shall be effective when they are received by the
addressee thereof. Any party may change its address for such communications by
giving notice thereof to the other parties in conformity with this Section.
Section 10.05 Governing Law. The laws of the State of New York
(irrespective of its choice of law principles) shall govern the validity of this
Agreement, the construction of its terms, and the interpretation and enforcement
of the rights and duties of the parties.
Section 10.06 Binding upon Successors and Assigns. This Agreement is
personal to each of the parties and may not be assigned without the written
consent of the other parties. As used in this Section 10.06, assignment includes
any acquisition of a party by a person or affiliated group that constitutes a
change of control in fact of such party.
Section 10.07 Severability. If any provision of this Agreement, or the
application thereof, shall for any reason or to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall continue in full force and effect and in
no way be affected, impaired or invalidated.
Section 10.08 Entire Agreement. This Agreement and the other agreements
and instruments referenced herein and delivered in connection herewith
constitute the entire understanding and agreement of the parties with respect to
the subject matter hereof and supersede all prior and contemporaneous agreements
or understandings, inducements or conditions, express or implied, written or
oral, between the parties with respect.
44
<PAGE>
Section 10.09 Other Remedies. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party shall be deemed cumulative
with and not exclusive of any other remedy conferred hereby or by law on such
party, and the exercise of any one remedy shall not preclude the exercise of any
other.
Section 10.10 Amendment and Waivers. Any term or provision of this
Agreement may be amended, and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof or default in the performance hereof
shall not be deemed to constitute a waiver of any other default or any
succeeding breach or default. At any time before or after approval of this
Agreement and the Merger by the stockholders of RKI and MMX and prior to the
Effective Time, this Agreement may be amended or supplemented by RKI or MMX with
respect to any of the terms contained in this Agreement, except that following
approval by the stockholders of RKI and MMX there shall be no amendment or
change to the provisions hereof with respect to any Exchange Ratio without
further approval by the stockholders of RKI, and no other amendment shall be
made which by law requires further approval by such stockholders without such
further approval.
Section 10.11 No Waiver. The failure of any party to enforce any of the
provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
Section 10.12 Construction of Agreement; Knowledge. A reference to an
Article, Section or an Exhibit shall mean an Article of, a Section in, or
Exhibit to, this Agreement unless otherwise explicitly set forth. The titles and
headings herein are for reference purposes only and shall not in any manner
limit the construction of this Agreement which shall be considered as a whole.
For purposes of this Agreement, "knowledge" of any party shall mean the
knowledge of the executive officers of such party after such officers shall have
made inquiry that is customary and appropriate under the circumstances to which
reference is made.
Section 10.13 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original as against any party whose
signature appears thereon and all of which together shall constitute one and the
same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as signatories.
45
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
MEDIA METRIX, INC.
By: /s/ TOD JOHNSON
---------------------------------
Title: Chief Executive Officer
RELEVANTKNOWLEDGE, INC.
By: /s/ JEFFREY C. LEVY
---------------------------------
Title: Chief Executive Officer
46
<PAGE>
Exhibit 2.2
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 14, 1997 (this
"Agreement"), between Media Metrix, Inc., a Delaware corporation (the "Delaware
Corporation"), and PC Meter L.P., a Delaware limited partnership (the "Delaware
Partnership").
WITNESSETH:
WHEREAS, the Delaware Corporation desires to acquire the properties and
other assets, and to assume all of the liabilities and obligations, of the
Delaware Partnership by means of a merger of the Delaware Partnership with and
into the Delaware Corporation;
WHEREAS, Section 17-211 of the Delaware Revised Uniform Limited
Partnership Act, 6 Del. C. ss. 17-101, et seq. (the "Delaware RULPA"), and
Section 263 of the General Corporation Law of the State of Delaware, 8 Del. C.
ss. 101, et seq. (the "GCL"), authorize the merger of a Delaware limited
partnership with and into a Delaware corporation;
WHEREAS, the Delaware Corporation and the Delaware Partnership now desire
to merge (the "Merger"), following which the Delaware Corporation shall be the
surviving entity;
WHEREAS, the Delaware Corporation's Certificate of Incorporation and
By-laws permit, and resolutions adopted by the Delaware Corporation's Board of
Directors authorize, this Agreement and the consummation of the Merger;
WHEREAS, The NPD Group, Inc., in its capacity as the general partner of
the Delaware Partnership (the "Delaware GP"), and the requisite number of the
limited partners of the Delaware Partnership, have approved this Agreement and
the consummation of the Merger.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. (a) On April 14, 1997, after satisfaction or, to
the extent permitted hereunder, waiver of all conditions to the Merger, as the
Delaware Corporation and the Delaware GP shall determine, the Delaware
Corporation, which shall be the surviving entity, shall merge with the Delaware
Partnership and shall file a certificate of merger substantially in the form of
Exhibit 1 hereto (the "Certificate of Merger") with the Secretary of State of
the State of Delaware and make all other filings or recordings required by
Delaware law in connection with the Merger. The Merger shall become effective at
such time as is specified in the Certificate of Merger (the "Effective Time").
<PAGE>
(b) At the Effective Time, the Delaware Partnership shall be merged with
and into the Delaware Corporation, whereupon the separate existence of the
Delaware Partnership shall cease, and the Delaware Corporation shall be the
surviving entity of the Merger (the "Surviving Corporation") in accordance with
Section 17-211 of the Delaware RULPA and Section 263 of the GCL.
SECTION 1.02 Exchange of Interests. (a) At the Effective Time: Each Class
A Unit of the Delaware Partnership (the "Class A Units") held by Delaware GP
outstanding immediately prior to the Effective Time shall be exchanged for
.09446 shares of Delaware Corporation Redeemable Preferred Stock, par value
$1.00 (the "Corporation Redeemable Preferred Stock") so that upon the exchange
of all the Class A Units into Corporation Redeemable Preferred Stock, there
shall be 41,446 shares of Corporation Redeemable Preferred Stock outstanding;
and
(b) Each Class B Unit of the Delaware Partnership (the "Class B Units")
outstanding immediately prior to the Effective Time shall be exchanged for 12.75
shares of Delaware Corporation Common Stock, par value $1.00 (the "Corporation
Common Stock") so that upon the exchange of all the Class B Units into
Corporation Common Stock, there shall be 1,500,100 shares of Corporation Common
Stock outstanding.
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.01 Certificate of Incorporation and By-laws. The Certificate of
Incorporation and By-laws of the Delaware Corporation in effect at the Effective
Time shall be the Certificate of Incorporation and By-laws of the Surviving
Corporation unless and until amended in accordance with their terms and
applicable law. The name of the surviving Corporation shall be Media Metrix,
Inc.
SECTION 2.02 Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of the Delaware Corporation at the Effective
Time shall be the directors of the Surviving Corporation, and (ii) the officers
of the Delaware Corporation at the Effective Time shall be the officers of the
Surviving Corporation.
-2-
<PAGE>
ARTICLE III
TRANSFER AND CONVEYANCE OF ASSETS
AND ASSUMPTION OF LIABILITIES
SECTION 3.01 Transfer, Conveyance and Assumption. At the Effective Time,
the Delaware Corporation shall continue in existence as the Surviving
Corporation, and without further transfer, succeed to and possess all of the
rights, privileges and powers of the Delaware Partnership, and all of the assets
and property of whatever kind and character of the Delaware Partnership shall
vest in the Delaware Corporation without further act or deed; thereafter, the
Delaware Corporation, as the Surviving Corporation, shall be liable for all of
the liabilities and obligations of the Delaware Partnership, and any claim or
judgment against the Delaware Partnership may be forced against the Delaware
Corporation, as the Surviving Corporation, in accordance with Section 17-211 of
the Delaware RULPA and Section 263 of the GCL.
SECTION 3.02 Further Assurances. If at any time the Delaware Corporation
shall consider or be advised that any further assignment, conveyance or
assurance is necessary or advisable to vest, perfect or confirm of record in the
Surviving Corporation the title to any property or right of the Delaware
Partnership, or otherwise to carry out the provisions hereof, the proper
representatives of the Delaware Partnership as of the Effective Time shall
execute and deliver any and all proper deeds, assignments, and assurances and do
all things necessary or proper to vest, perfect or convey title to such property
or right in the Surviving Corporation, and otherwise to carry out the provisions
hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE DELAWARE PARTNERSHIP
The Delaware Partnership represents and warrants to the Delaware
Corporation that:
SECTION 4.01 Partnership Existence and Power. The Delaware Partnership is
a limited partnership duly formed, validly existing and in good standing under
the laws of the State of Delaware.
SECTION 4.02 Partnership Authorization. The execution, delivery and
performance by the Delaware Partnership of this Agreement and the consummation
by the Delaware Partnership of the transactions contemplated hereby have been
duly authorized by all necessary partnership action on its part. This Agreement
constitutes a valid, binding and enforceable agreement of the Delaware
Partnership.
-3-
<PAGE>
SECTION 4.03 Governmental Authorization. The execution, delivery and
performance by the Delaware Partnership of this Agreement and the consummation
of the Merger by the Delaware Partnership require no action by or in respect of,
or filing with, any governmental body, agency, official or authority.
SECTION 4.04 No Violation. The execution, delivery and performance by the
Delaware Partnership of this Agreement and the consummation by the Delaware
Partnership of the transactions contemplated hereby do not and will not (i)
violate the partnership agreement of the Delaware Partnership, (ii) violate any
provision of any law, rule or regulation applicable to the Delaware Partnership,
(iii) breach, or result in a default under, any existing obligation of the
Delaware Partnership under any provision of any agreement, contract or other
instrument to which the Delaware Partnership is a party or by which it or its
property is bound or (iv) breach or otherwise violate any existing obligation of
the Delaware Partnership under any court or administrative order, writ, judgment
or decree that names the Delaware Partnership and is specifically directed to it
or its property.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE DELAWARE CORPORATION
The Delaware Corporation represents and warrants to the Delaware
Partnership that:
SECTION 5.01 Corporate Existence and Power. The Delaware Corporation is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.
SECTION 5.02 Corporate Authorization. The execution, delivery and
performance by the Delaware Corporation of this Agreement and the consummation
by the Delaware Corporation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action subject to the approval
thereof of the requisite number of the stockholders of the Delaware Corporation.
This Agreement constitutes a valid, binding and enforceable agreement of the
Delaware Corporation.
SECTION 5.03 Governmental Authorization. The execution, delivery and
performance by the Delaware Corporation of this Agreement and the consummation
of the Merger by the Delaware Corporation require no action by or in respect of,
or filing with, any governmental body, agency, official or authority other than
the filing of the Certificate of Merger in accordance with Delaware law.
-4-
<PAGE>
SECTION 5.04 No Violation. The execution, delivery and performance by the
Delaware Corporation of this Agreement and the consummation by the Delaware
Corporation of the transactions contemplated hereby do not and will not (i)
violate the Certificate of Incorporation or By-laws of the Delaware Corporation,
(ii) violate any provision of any law, rule or regulation applicable to the
Delaware Corporation, (iii) breach, or result in a default under, any existing
obligation of the Delaware Corporation under any provision of any agreement,
contract or other instrument to which the Delaware Corporation is a party or by
which it or its property is bound or (iv) breach or otherwise violate any
existing obligation of the Delaware Corporation under any court or
administrative order, writ, judgment or decree that names the Delaware
Corporation and is specifically directed to it or its property.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01 Conditions to the Obligations of Each Party. The obligations
of the Delaware Partnership and the Delaware Corporation to consummate the
Merger are subject to the satisfaction of the following conditions as of the
Effective Time:
(i) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of the
Merger; and
(ii) all actions by or in respect of or filings with any
governmental body, agency, official or authority required to permit the
consummation of the Merger shall have been obtained; and
(iii) this Agreement shall have been adopted by the requisite number
of the stockholders of the Delaware Corporation required by and in accordance
with applicable law.
ARTICLE VII
TERMINATION
SECTION 7.01 Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time:
(i) by mutual written consent of the Delaware GP, on behalf of the
Delaware Partnership, and the Board of Directors of the Delaware Corporation;
(ii) by either the Delaware GP, on behalf of the Delaware
Partnership, or the Board of Directors of the Delaware Corporation, if there
shall be any law or regulation that makes consummation of the Merger illegal or
otherwise prohibited, or if any judgment, injunction, order or
-5-
<PAGE>
decree enjoining the Delaware Corporation or the Delaware Partnership from
consummating the Merger is entered and such judgment, injunction, order or
decree shall become final and nonappealable.
(iii) Effect of Termination. If this Agreement is terminated
pursuant to Section 7.01, this Agreement shall become void and of no effect with
no liability on the part of either party hereto.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement.
SECTION 8.02 Amendments; No Waivers. (a) Any provision of this Agreement
may, subject to applicable law, be amended or waived prior to the Effective Time
if, and only if, such amendment or waiver is in writing and signed by the
Delaware GP, on behalf of the Delaware Partnership, and by the Delaware
Corporation.
(b) No failure or delay by any party hereto in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 8.03 Integration. All prior or contemporaneous agreements,
contracts, promises, representations, and statements, if any, between the
Delaware Corporation and the Delaware Partnership, or their representatives, are
merged into this Agreement, and this Agreement shall constitute the entire
understanding between the Delaware Corporation and the Delaware Partnership with
respect to the subject matter hereof.
SECTION 8.04 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other party hereto.
SECTION 8.05 Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware, without
giving effect to principles of conflicts of law.
-6-
<PAGE>
SECTION 8.06 Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
the counterpart hereof signed by the other party hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized representatives as of the day and
year first-above written.
PC METER L.P.
By: The NPD Group, Inc., as General
Partner
By: /s/ RUPERT WALTERS
-------------------------------------
Name: Rupert Walters
Title: President
Attest: MEDIA METRIX, INC.
By: /s/ MARY ANN PACKO By: /s/ TOD JOHNSON
---------------------------------- -------------------------------------
Name: Mary Ann Packo Name: Tod Johnson
Title: President Title: Chairman and CEO
-7-
<PAGE>
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
MEDIA METRIX, INC.
The undersigned, a natural person, for the purpose of
organizing a corporation for conducting the business and promoting the purposes
hereinafter stated, under the provisions and subject to the requirements of the
laws of the State of Delaware (particularly Title 8, Chapter 1 of the Delaware
Code and the Acts amendatory thereof and supplemental thereto, and known,
identified, and referred to as the "General Corporation Law of the State of
Delaware"), does hereby certify:
ARTICLE I
NAME
The name of the Corporation is Media Metrix, Inc. (the "Corporation").
ARTICLE II
AGENT FOR SERVICE
The address of the Corporation's registered office in the
State of Delaware is The Corporation Trust Company, Corporation Trust Center,
1209 Orange Street, Wilmington, DE 19801. The name of the Corporation's
registered agent at such address is The Corporation Trust Company.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
ARTICLE IV
INCORPORATOR
The name and mailing address of the sole incorporator is as
follows:
Richard H. Gilden, Esq.
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
<PAGE>
ARTICLE V
CAPITAL
(1) CLASSES AND NUMBER OF SHARES
The total number of shares of all classes of stock which the
Corporation has authority to issue is fifteen million (15,000,000) shares,
consisting of ten million (10,000,000) shares of Common Stock, par value $1.00
per share (the "Common Stock") and five million (5,000,000) shares of Preferred
Stock, par value $1.00 per share, which shall have such designations as may be
authorized by the Board of Directors from time to time (the "Preferred Stock").
(2) PREFERRED STOCK. The Board of Directors is hereby
authorized, subject to the provisions contained in this Article V, to issue the
Preferred Stock from time to time in one or more series, which Preferred Stock
shall rank senior to the Common Stock as to dividends and distribution of assets
of the Corporation on dissolution, as hereinafter provided, and shall have such
distinctive designations as may be stated in the resolution or resolutions
providing for the issue of such stock adopted by the Board of Directors. In such
resolution or resolutions providing for the issuance of shares of a particular
series of Preferred Stock, the Board of Directors is hereby expressly authorized
and empowered to fix the number of shares constituting such series and to fix
the relative rights and preferences of the shares of the series so established
to the full extent allowable by law except insofar as such rights and
preferences are fixed herein. Such authorization in the Board of Directors shall
expressly include the authority to fix and determine the relative rights and
preferences of such shares in all respects including, without limitation, the
following:
1. the rate of dividend;
2. whether shares can be redeemed or called and, if so,
the redemption or call price and terms and conditions
of redemption or call;
3. the amount payable upon shares in the event of
dissolution, voluntary and involuntary liquidation or
winding up of the affairs of the Corporation;
4. purchase, retirement or sinking fund provisions, if
any, for the call, redemption or purchase of shares;
5. the terms and conditions, if any, on which shares may
be converted into Common Stock or any other
securities;
6. whether or not shares have voting rights, and the
extent of such voting rights, if any; and
-2-
<PAGE>
7. whether shares shall be cumulative, noncumulative, or
partially cumulative as to dividends and the date
from which any cumulative dividends are to
accumulate.
ARTICLE VI
MEETINGS
Meetings of the stockholders of the Corporation may be held
within or without the State of Delaware, as the Bylaws may provide. The books of
the Corporation may be kept (subject to any provisions contained in the
statutes) outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors or in the Bylaws of the
Corporation. Elections of directors need not be by written ballot unless the
Bylaws of the Corporation shall so provide.
ARTICLE VII
BYLAWS
In the furtherance and not in limitation of objects, purposes
and powers conferred by statute, the Board of Directors is expressly authorized
to make, alter or repeal the Bylaws of the Corporation.
ARTICLE VIII
CREDITORS
Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 the General Corporation Law of the State of Delaware
or on the application of trustees in dissolution or of any receiver or receivers
appointed for the Corporation under the provisions of Section 279 of the General
Corporation Law of the State of Delaware, order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of the Corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of the Corporation, as the case
may be, and also on the Corporation.
-3-
<PAGE>
ARTICLE IX
DIRECTOR LIABILITY
A director of the Corporation shall have no personal liability
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director; provided, however, this Article shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation Law
of the State of Delaware, or (iv) for any transaction from which the director
derived an improper personal benefit. If the General Corporation Law of the
State of Delaware is hereafter amended to authorize the further elimination or
limitation of the liability of directors, then the liability of a director of
the Corporation, in addition to the limitation on personal liability provided
herein, shall be limited to the fullest extent permitted by the amended General
Corporation Law of the State of Delaware. Any repeal or modification of this
Article by the stockholders of the Corporation shall be prospective only, and
shall not adversely affect any limitation on the personal liability of a
director of the Corporation existing at the time of such repeal or modification.
ARTICLE X
INDEMNIFICATION
The Corporation shall have the power to provide
indemnification to the fullest extent permitted by Section 145 of the General
Corporation Law of the State of Delaware.
ARTICLE XI
AMENDMENTS
The Corporation reserves the right to amend, alter, change or
repeal any provisions contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
-4-
<PAGE>
THE UNDERSIGNED, being the sole incorporator hereinbefore
named, for the purpose of forming the Corporation pursuant to the General
Corporation Law of the State of Delaware, does make this Certificate, hereby
declaring and certifying that this is his act and deed and the facts herein
stated are true, and accordingly has hereunto set his hand this 26th day of
March, 1997.
/s/ RICHARD H. GILDEN
--------------------------------------
Richard H. Gilden
-5-
<PAGE>
CERTIFICATE OF DESIGNATION
OF RIGHTS AND PREFERENCES
OF
SERIES A CONVERTIBLE PREFERRED STOCK,
SERIES B CONVERTIBLE PREFERRED STOCK AND
REDEEMABLE PREFERRED STOCK
OF
MEDIA METRIX, INC.
Pursuant to Section 151(g)
of the General Corporation Law of
the State of Delaware
---------------------------
Media Metrix, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), pursuant to authority conferred on the Board of Directors of the
Corporation by the Certificate of Incorporation and in accordance with the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, certifies that the Board of Directors of the Corporation, acting by
written consent dated April 10, 1997, duly adopted the following resolution:
RESOLVED: That, pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation in accordance with the
provisions of its Certificate of Incorporation, three series of Preferred Stock
of the Corporation be and hereby are established as set forth below; that the
Board of Directors be and hereby is authorized to issue shares of such series of
Preferred Stock from time to time and for such consideration and on such terms
as the Board of Directors shall determine; and that, subject to the limitations
provided by law and by the Certificate of Incorporation, the number, powers,
designations, preferences and relative, participating, optional or other special
rights of, and the qualifications, limitations or restrictions upon, said series
shall be as follows:
A. DESIGNATION.
(a) Four hundred ninety-five thousand six hundred and three
(495,603) shares of the authorized and unissued Preferred Stock of the
Corporation are hereby designated
<PAGE>
Series A Convertible Preferred Stock ("Series A Preferred Stock") with the
rights, preferences, powers, privileges and restrictions, qualifications and
limitations set forth below.
(b) One hundred fifty-nine thousand six hundred and forty
(159,640) shares of the authorized and unissued Preferred Stock of the
Corporation are hereby designated Series B Convertible Preferred Stock ("Series
B Preferred Stock") with the rights, preferences, powers, privileges and
restrictions, qualifications and limitations set forth below. The Series A
Preferred Stock and the Series B Preferred Stock are sometimes referred to
collectively herein as the "Convertible Preferred Stock."
(c) Forty-one thousand four hundred and forty-six (41,446)
shares of the authorized and unissued Preferred Stock of the Corporation are
hereby designated Redeemable Preferred Stock ("Redeemable Preferred Stock") with
the rights, preferences, powers, privileges and restrictions, qualifications and
limitations set forth below.
(A) DIVIDENDS.
(a) The holders of shares of Redeemable Preferred Stock shall
be entitled to receive dividends at a rate of 7% per annum, compounded quarterly
(subject to appropriate adjustment in the event of any stock dividend, stock
split, combination or other similar recapitalization affecting such shares),
payable when and as declared by the Board of Directors. Such dividends shall
accrue and shall be cumulative from the date of issuance of each share of
Redeemable Preferred Stock, whether or not declared.
(b) The holders of shares of Series A Preferred Stock shall be
entitled to receive dividends at a rate of [ %] per annum, compounded quarterly
commencing October 14,1999 (subject to appropriate adjustment in the event of
any stock dividend, stock split, combination or other similar recapitalization
affecting such shares), payable if, when and as declared by the Board of
Directors of the Corporation. The right to receive dividends on Series A
Preferred Stock shall be noncumulative, and no right to dividends shall accrue
by reason of the fact that no dividend has been declared on the Series A
Preferred Stock in any prior year.
(c) The Corporation shall not declare or pay any distributions
(as defined below) (i) on shares of Common Stock, Series A Preferred Stock or
Series B Preferred Stock until the holders of the Redeemable Preferred Stock
then outstanding shall have first received a distribution at the rate specified
in paragraph (a) of this Section 2 or (ii) on shares of Common Stock or Series B
Preferred Stock until the holders of Series A Preferred Stock then outstanding
shall have first received a distribution at the rate specified in paragraph (b)
of this Section 2.
2
<PAGE>
(d) For purposes of this Section 2, unless the context
requires otherwise, "distribution" shall mean the transfer of cash or property
without consideration, whether by way of dividend or otherwise, payable other
than in Common Stock or other securities of the Corporation, or the purchase or
redemption of shares of the Corporation (other than repurchases of Common Stock
held by employees or directors of, or consultants to, the Corporation upon
termination of their employment or services pursuant to agreements providing for
such repurchase at a price not exceeding fair market value of such shares) for
cash or property, including any such transfer, purchase or redemption by a
subsidiary of this Corporation, but excluding distributions upon the liquidation
or dissolution of the Corporation.
(A) LIQUIDATION DISSOLUTION OR WINDING UP; CERTAIN MERGERS,
CONSOLIDATIONS AND ASSET SALES:
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series A
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its stockholders, but before
any payment shall be made to the holders of Common Stock, Series B Preferred
Stock, Redeemable Preferred Stock or any other class or series of stock ranking
on liquidation junior to the Series A Preferred Stock (such Common Stock and
other stock being collectively referred to as "Junior Stock") by reason of their
ownership thereof, an amount equal to $8.07 per share (subject to appropriate
adjustment in the event of any stock dividend, stock split, combination or other
similar recapitalization affecting such shares), plus all accrued but unpaid
dividends on such shares. If upon any such liquidation, dissolution or winding
up of the Corporation the remaining assets of the Corporation available for
distribution to its stockholders shall be insufficient to pay the holders of
shares of Series A Preferred Stock the full amount to which they shall be
entitled, the holders of shares of Series A Preferred Stock and any class or
series of stock ranking on liquidation on a parity with the Series A Preferred
Stock shall share ratably in any distribution of the remaining assets and funds
of the Corporation in proportion to the respective amounts which would otherwise
be payable in respect of the shares held by them upon such distribution if all
amounts payable on or with respect to such shares were paid in full.
(b) After the payment of all preferential amounts required to
be paid to the holders of Series A Preferred Stock, upon the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
holders of shares of Series B Preferred Stock then outstanding shall be entitled
to be paid out of the assets of the Corporation available for distribution to
its stockholders, but before any payment shall be made to the holders of Common
Stock or Redeemable Preferred Stock or any other class or series of stock
ranking on liquidation junior to the Series B Preferred
3
<PAGE>
Stock, by reason of their ownership thereof, an amount equal to $12.53 per share
(subject to appropriate adjustment in the event of any stock dividend, stock
split, combination or other similar recapitalization affecting such shares),
plus any dividends declared but unpaid on such shares. If upon any such
liquidation, dissolution or winding up of the Corporation the remaining assets
of the Corporation available for distribution to its stockholders shall be
insufficient to pay the holders of shares of Series B Preferred Stock the full
amount to which they shall be entitled, the holders of shares of Series B
Preferred Stock and any class or series of stock ranking on liquidation on a
parity with the Series B Preferred Stock shall share ratably in any distribution
of the remaining assets and funds of the Corporation in proportion to the
respective amounts which would otherwise be payable in respect of the shares
held by them upon such distribution if all amounts payable on or with respect to
such shares were paid in full.
(c) After the payment of all preferential amounts required to
be paid to the holders of Convertible Preferred Stock upon the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
holders of shares of Redeemable Preferred Stock then outstanding shall be
entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders, but before any payment shall be made to the
holders of Common Stock or any other class or series of stock ranking on
liquidation junior to the Redeemable Preferred Stock, by reason of their
ownership thereof, an amount equal to $100.00 per share (subject to appropriate
adjustment in the event of any stock dividend, stock split, combination or other
similar recapitalization affecting such shares), plus any accrued but unpaid
dividends on such shares. If upon any such liquidation, dissolution or winding
up of the Corporation the remaining assets of the Corporation available for
distribution to its stockholders shall be insufficient to pay the holders of
shares of Redeemable Preferred Stock the full amount to which they shall be
entitled, the holders of shares of Redeemable Preferred Stock and any class or
series of stock ranking on liquidation on a parity with the Redeemable Preferred
Stock shall share ratably in any distribution of the remaining assets and funds
of the Corporation in proportion to the respective amounts which would otherwise
be payable in respect of the shares held by them upon such distribution if all
amounts payable on or with respect to such shares were paid in full.
(d) After the payment of all preferential amounts required to
be paid to (i) the holders of Series A Preferred Stock and any other class or
series of stock of the Corporation ranking on liquidation on a parity with the
Series A Preferred Stock, v (ii) the holders of Series B Preferred Stock and any
other class or series of stock of the Corporation ranking on liquidation on a
parity with the Series B Preferred Stock, and (iii) the holders of Redeemable
Preferred Stock and any other class or series of
4
<PAGE>
stock of the Corporation ranking on liquidation on a parity with the Redeemable
Preferred Stock, upon the dissolution, liquidation or winding up of the
Corporation, the holders of shares of Convertible Preferred Stock and Common
Stock then outstanding (treating the shares of Convertible Preferred Stock on an
as converted basis) shall receive the remaining assets and funds of the
Corporation available for distribution to its stockholders.
(e) In the event of any merger or consolidation of the
Corporation into or with another corporation (except one in which the holders of
capita stock of the Corporation immediately prior to such merger or
consolidation continue to hold at least a majority by voting power of the
capital stock of the surviving corporation), or the sale of all or substantially
all the assets of the Corporation, such merger, consolidation or asset sale
shall be deemed to be a liquidation of the Corporation, and all consideration
payable to the stockholders of the Corporation (in the case of a merger or
consolidation), or all consideration payable to the Corporation, together with
all other available assets of the Corporation (in the case of an asset sale),
shall be distributed to the holders of capital stock of the Corporation in
accordance with Subsections 2(a), 2(b), 2(c) and 2(d) above. The Corporation
shall promptly provide to the holders of shares of Preferred Stock such
information concerning the terms of such merger, consolidation or asset sale and
the value of the assets of the Corporation as may reasonably be requested by the
holders of Preferred Stock. If applicable, the Corporation shall cause the
agreement or plan of merger or consolidation to provide for a rate at which the
shares of capital stock of the Corporation are converted into or exchanged for
cash, new securities or other property which gives effect to this provision. The
amount deemed distributed to the holders of Preferred Stock upon any such merger
or consolidation shall be the cash or the value of the property, rights or
securities distributed to such holders by the acquiring person, firm or other
entity. The value of such property, rights or other securities shall be
determined in good faith by the Board of Directors of the Corporation.
4. VOTING.
(a) Each holder of outstanding shares of Convertible Preferred
Stock shall be entitled to the number of votes equal to the number of whole
shares of Common Stock into which the shares of Convertible Preferred Stock held
by such holder are then convertible (as adjusted from time to time pursuant to
Section 5 hereof), at each meeting of stockholders of the Corporation (and
written actions of stockholders in lieu of meetings) with respect to any and all
matters presented to the stockholders of the Corporation for their action or
consideration. Except as provided by law, by the provisions of Subsections 4(b)
or 4(c) below or by the provisions v establishing any other series of Preferred
Stock, holders of Convertible Preferred Stock and of any other outstanding
series of Preferred Stock shall vote together with the holders of Common Stock
as a single class.
5
<PAGE>
(b) Each holder of outstanding shares of Redeemable Preferred
Stock shall be entitled to one hundred votes for each share held at each meeting
of stockholders of the Corporation (and written actions of stockholders in lieu
of meetings) with respect to any and all matters presented to the stockholders
of the Corporation for their action or consideration. Except as provided by law,
holders of Redeemable Preferred Stock shall vote together with the holders of
Common Stock as a single class.
(c) The Corporation shall not (i) amend, alter or repeal any
provision of its Certificate of Incorporation if such action would alter or
change the preferences, special rights or other powers of the Convertible
Preferred Stock so as to affect adversely the Convertible Preferred Stock, (ii)
authorize or issue shares of any class of stock having any preference or
priority as to dividends or assets superior to or on a parity with the
Convertible Preferred Stock, or (iii) authorize a merger, sale, lease, transfer
or disposition of substantially all of the assets of the Corporation,
recapitalization or reorganization of the Corporation, without the written
consent or affirmative vote of the holders of at least a majority of the then
outstanding shares of Series A Preferred Stock and Series B Preferred Stock, as
the case may be, given in writing or by vote at a meeting, each such Series
consenting or voting (as the case may be) separately as a single class.
5. OPTIONAL CONVERSION. The holders of the Convertible Preferred Stock
shall have conversion rights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT. Each share of Convertible Preferred
Stock shall be convertible, at the option of the holder thereof, at any time and
from time to time, and without the payment of additional consideration by the
holder thereof, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing $8.07 (with respect to the conversion
of shares of Series A Preferred Stock) and $12.53 (with respect to the
conversion of shares of Series B Preferred Stock) by the applicable Conversion
Price (as defined below) in effect at the time of conversion. The conversion
price at which shares of Common Stock shall be deliverable upon conversion of
Convertible Preferred Stock without the payment of additional consideration by
the holder thereof (the "Conversion Price") shall initially be $8.07 (with
respect to the conversion of shares of Series A Preferred Stock) and $12.53
(with respect to the conversion of shares of Series B Preferred Stock). Such
initial Conversion Price, and the rate at which shares of Convertible Preferred
Stock may be converted into shares of Common Stock, shall be subject to
adjustment as provided below.
In the event any holder of Convertible Preferred Stock elects to have
any shares of Convertible Preferred Stock redeemed pursuant to Section 7 hereof,
the Conversion Rights of the shares designated for redemption shall terminate at
the close of business on the fifth full day preceding the date fixed for
redemption, unless
6
<PAGE>
the redemption price is not paid when due, in which case the Conversion Rights
for such shares shall continue until such price is paid in full. In the event of
a liquidation of the Corporation, the Conversion Rights shall terminate at the
close of business on the first full day preceding the date fixed for the payment
of any amounts distributable on liquidation to the holders of Convertible
Preferred Stock.
(b) FRACTIONAL SHARES. No fractional shares of Common Stock
shall be issued upon conversion of the Convertible Preferred Stock. In lieu of
any fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective applicable Conversion Price.
(c) MECHANICS OF CONVERSION.
(i) In order for a holder of Convertible Preferred
Stock to convert shares of Convertible Preferred Stock into shares of Common
Stock, such holder shall surrender the certificate or certificates for such
shares of Convertible Preferred Stock, at the office of the transfer agent for
the Convertible Preferred Stock (or at the principal office of the Corporation
if the Corporation serves as its own transfer agent), together with written
notice that such holder elects to convert all or any number of the shares of the
Convertible Preferred Stock represented by such certificate or certificates.
Such notice shall state such holder's name or the names of the nominees in which
such holder wishes the certificate or certificates for shares of Common Stock to
be issued. If required by the Corporation, certificates surrendered for
conversion shall be endorsed or accompanied by a written instrument or
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the registered holder or his or its attorney duly authorized in writing. The
date of receipt of such certificates and notice by the transfer agent (or by the
Corporation if the Corporation serves as its own transfer agent) shall be the
conversion date ("Conversion Date"). The Corporation shall, as soon as
practicable after the Conversion Date, issue and deliver at such office to such
holder of Convertible Preferred Stock, or to his or its nominees, a certificate
or certificates for the number of shares of Common Stock to which such holder
shall be entitled, together with cash in lieu of any fraction of a share.
(ii) The Corporation shall at all times when the
Convertible Preferred Stock shall be outstanding, reserve and keep available out
of its authorized but unissued stock, for the purpose of effecting the
conversion of the Convertible Preferred Stock, such number of its duly
authorized shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding Convertible Preferred Stock. Before
taking any action which would cause an adjustment reducing the Conversion Price
below the then par value of the shares of Common Stock issuable upon conversion
of the Convertible Preferred Stock, the Corporation will take any corporate
action which may, in the opinion of its counsel, be necessary in
7
<PAGE>
order that the Corporation may validly and legally issue fully paid and
nonassessable shares of Common Stock at such adjusted Conversion Price.
(iii) Upon any such conversion, no adjustment to the
Conversion Price shall be made for any declared but unpaid dividends on the
Convertible Preferred Stock surrendered for conversion or on the Common Stock
delivered upon conversion.
(iv) All shares of Convertible Preferred Stock which
shall have been surrendered for conversion as herein provided shall no longer be
deemed to be outstanding and all rights with respect to such shares, including
the rights, if any, to receive notices and to vote, shall immediately cease and
terminate on the Conversion Date, except only the right of the holders thereof
to receive shares of Common Stock in exchange therefor and payment of any
dividends declared but unpaid thereon. Any shares of Convertible Preferred Stock
so converted shall be retired and cancelled and shall not be reissued, and the
Corporation (without the need for stockholder action) may from time to time take
such appropriate action as may be necessary to reduce the authorized Convertible
Preferred Stock accordingly.
(v) The Corporation shall pay any and all issue and
other taxes that may be payable in respect of any issuance or delivery of shares
of Common Stock upon conversion of shares of Convertible Preferred Stock
pursuant to this Section 5. The Corporation shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of shares of Common Stock in a name other than that in
which the shares of Convertible Preferred Stock so converted were registered,
and no such issuance or delivery shall be made unless and until the person or
entity requesting such issuance has paid to the Corporation the amount of any
such tax or has established, to the satisfaction of the Corporation, that such
tax has been paid.
(d) ADJUSTMENTS TO CONVERSION PRICE FOR DILUTING ISSUES:
(i) SPECIAL DEFINITIONS. For purposes of this
Subsection 5(d), the following definitions shall apply:
(A) "OPTION" shall mean rights, options or
warrants to subscribe for, purchase or otherwise acquire Common Stock or
Convertible Securities, excluding (i) awards granted to employees, directors or
consultants of the Corporation pursuant to the Corporation's Executive Option
Plan as adopted by the Board of Directors, to acquire up to a maximum of shares
of Common Stock (subject to appropriate adjustment for any stock dividend, stock
split, combination or v other similar recapitalization affecting such
8
<PAGE>
shares) and (ii) warrants issued to (x) the holders of Series A Preferred Stock
(subject to appropriate adjustment for any stock dividend, stock split,
combination or other similar recapitalization affecting such warrants) (the
"Series K Warrants") and (y) Veronis, Suhler & Associates (subject to
appropriate adjustment for any stock dividend, stock split, combination or other
similar recapitalization affecting such warrants) (the "Veronis Suhler
Warrant").
(B) "ORIGINAL ISSUE DATE" shall mean the
date on which a share of Series A Preferred Stock was first issued.
(C) "CONVERTIBLE SECURITIES" shall mean any
evidences of indebtedness, shares or other securities directly or indirectly
convertible into or exchangeable for Common Stock, other than shares of Series B
Preferred Stock issued upon exercise of the Series B Warrants.
(D) "ADDITIONAL SHARES OF COMMON STOCK"
shall mean all shares of Common Stock issued (or, pursuant to Subsection 5(d)(H)
below, deemed to be issued) by the Corporation after the Original Issue Date,
other than:
(I) shares of Common Stock
issued or issuable upon
conversion of shares of
Series A Preferred Stock
outstanding on the Original
Issue Date;
(II) shares of Common Stock
issued or issuable upon
conversion of shares of
Series B Preferred Stock
issued upon exercise of
Series B Warrants
outstanding on the Original
Issue Date.
(III) shares of Common Stock
issued or issuable as a
dividend or distribution on
Convertible Preferred Stock;
(IV) shares of Common Stock
issued or issuable by
reason of a dividend, stock
split, split up or other
distribution on shares of
Common Stock that is
covered by Subsection 5(e)
or 5(f) below; or
(V) upon the exercise of awards
or warrants excluded from
the definition of "Option"
in Section 5(d)(i)(A).
(ii) NO ADJUSTMENT OF CONVERSION PRICE. No adjustment
in the number of shares of Common Stock into which the Convertible Preferred
Stock is convertible shall be made, by adjustment in the applicable Conversion
Price thereof:
9
<PAGE>
(a) unless the consideration per share (determined pursuant to Subsection
5(d)(v)) for an Additional Share of Common Stock issued or deemed to be issued
by the Corporation is less than the applicable Conversion Price in effect on the
date of, and immediately prior to, the issue of such Additional Shares, or (b)
if prior to such issuance, the Corporation receives written notice from the
holders of (i) at least a majority of the then outstanding shares of Series A
Preferred Stock (with respect to the Conversion Price thereof) and/or (ii) at
least a majority of the then outstanding shares of Series B Preferred Stock
(with respect to the Conversion Price thereof) agreeing that no such adjustment
shall be made as the result of the issuance of Additional Shares of Common
Stock.
(iii) ISSUE OF SECURITIES DEEMED ISSUE OF ADDITIONAL
SHARES OF COMMON STOCK.
If the Corporation at any time or from time to time after the Original
Issue Date shall issue any Options or Convertible Securities or shall fix a
record date for the determination of holders of any class of securities entitled
to receive any such Options or Convertible Securities, then the maximum number
of shares of Common Stock (as set forth in the instrument relating thereto
without regard to any provision contained therein for a subsequent adjustment of
such number) issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall have
been fixed, as of the close of business on such record date, provided that
Additional Shares of Common Stock shall not be deemed to have been issued unless
the consideration per share (determined pursuant to Subsection 5(d)(v) hereof)
of such Additional Shares of Common Stock would be less than the applicable
Conversion Price in effect on the date of and immediately prior to such issue,
or such record date, as the case may be, and provided further that in any such
case in which Additional Shares of Common Stock are deemed to be issued:
(A) No further adjustment in the Conversion
Price shall be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such Options or conversion or
exchange of such Convertible Securities;
(B) If such Options or Convertible
Securities by their terms provide, with the passage of time or otherwise, for
any increase in the consideration payable to the Corporation, upon the exercise,
conversion or exchange thereof, the Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon any such increase
becoming effective, be recomputed to reflect such increase insofar as it affects
such Options or the rights of conversion or exchange under such Convertible
Securities;
10
<PAGE>
(C) Upon the expiration or termination of
any unexercised Option, the Conversion Price shall not be readjusted, but the
Additional Shares of Common Stock deemed issued as the result of the original
issue of such Option shall not be deemed issued for the purposes of any
subsequent adjustment of the Conversion Price;
(D) In the event of any change in the number
of shares of Common Stock issuable upon the exercise, conversion or exchange of
any Option or Convertible Security, including, but not limited to, a change
resulting from the anti-dilution provisions thereof, the Conversion Price then
in effect shall forthwith be readjusted to such Conversion Price as would have
obtained had the adjustment which was made upon the issuance of such Option or
Convertible Security not exercised or converted prior to such change been made
upon the basis of such change, and
(E) No readjustment pursuant to clause (B)
or (D) above shall have the effect of increasing the Conversion Price to an
amount which exceeds the lower of (i) the Conversion Price on the original
adjustment date, or (ii) the Conversion Price that would have resulted from any
issuances of Additional Shares of Common Stock between the original adjustment
date and such readjustment date.
In the event the Corporation, after the Original Issue Date, amends the
terms of any Options or Convertible Securities (whether such Options or
Convertible Securities were outstanding on the Original Issue Date or were
issued after the Original Issue Date), then such Options or Convertible
Securities, as so amended, shall be deemed to have been issued after the
Original Issue Date and the provisions of this Subsection 5(d)(iii) shall apply.
(IV) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON STOCK.
In the event the Corporation shall at any time after the Original Issue
Date issue Additional Shares of Common Stock (including Additional Shares of
Common Stock deemed to be issued pursuant to Subsection 5(d)(iii), but excluding
shares issued as a stock split or combination as provided in Subsection 5(e) or
upon a dividend or distribution as provided in Subsection 5(f)), without
consideration or for a consideration per share less than the applicable
Conversion Price in effect on the date of and immediately prior to such issue,
then and in such event, such Conversion Price shall be reduced, concurrently
with such issue, to a price (calculated to the nearest cent) determined by
multiplying such Conversion Price by a fraction, (A) the numerator of which
shall be (1) the number of shares of Common Stock outstanding immediately prior
to such issue plus (2) the number of shares of Common Stock which the aggregate
consideration received or to be received by the Corporation for the-total number
of Additional Shares of Common Stock so issued would purchase at
11
<PAGE>
such Conversion Price; and (B) the denominator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issue plus the
number of such Additional Shares of Common Stock so issued; provided that, (i)
for the purpose of this Subsection 5(d)(iv), all shares of Common Stock issuable
upon conversion of shares of Convertible Preferred Stock outstanding immediately
prior to such issue shall be deemed to be outstanding, and (ii) the number of
shares of Common Stock deemed issuable upon conversion of shares of Convertible
Preferred Stock shall not give effect to any adjustments to the conversion price
or conversion rate of such shares resulting from the issuance of Additional
Shares of Common Stock that is the subject of this calculation.
(v) DETERMINATION OF CONSIDERATION. For purposes of
this Subsection 5(d), the consideration received by the Corporation for the
issue of any Additional Shares of Common Stock shall be computed as follows:
(A) Cash and Property: Such consideration
shall:
(I) insofar as it consists of cash,
be computed at the aggregate of cash received by the Corporation, excluding
amounts paid or payable for accrued interest or accrued dividends;
(II) insofar as it consists of
property other than cash, be computed at the fair market value thereof at the
time of such issue, as determined in good faith by the Board of Directors; and
(III) in the event Additional Shares
of Common Stock are issued together with other shares or securities or other
assets of the Corporation for consideration which covers both, be the proportion
of such consideration so received, computed as provided in clauses (I) and (II)
above, as determined in good faith by the Board of Directors.
(B) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Subsection 5(d)(iii),
relating to Options and Convertible Securities, shall be determined by dividing
(x) the total amount, if any,
received or receivable by the Corporation as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment of
such consideration) payable to the Corporation upon the exercise of such Options
or the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible
12
<PAGE>
Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities, by
(y) the maximum number of shares
of Common Stock (as set forth in the instruments relating thereto, without
regard to any provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or the conversion or exchange
of such Convertible Securities.
(vi) MULTIPLE CLOSING DATES. In the event the
Corporation shall issue on more than one date Additional Shares of Common Stock
which are comprised of shares of the same series or class of Preferred Stock,
and such issuance dates occur within a period of no more than 120 days, then the
Conversion Price shall be adjusted only once on account of such issuances, with
such adjustment to occur upon the final such issuance and to give effect to all
such issuances as if they occurred on the date of the final such issuance.
(e) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the
Corporation shall at any time or from time to time after the Original Issue Date
effect a subdivision of the outstanding Common Stock, the Conversion Price then
in effect immediately before that subdivision shall be proportionately
decreased. If the Corporation shall at any time or from time to time after the
Original Issue Date combine the outstanding shares of Common Stock, the
Conversion Price then in effect immediately before the combination shall be
proportionately increased. Any adjustment under this paragraph shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
(f) ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the
event the Corporation at any time, or from time to time after the Original Issue
Date shall make or issue, or fix a record date for the determination of holders
of Common Stock entitled to. receive, a dividend or other distribution payable
in additional shares of Common Stock, then and in each such event the Conversion
Price then in effect shall be decreased as of the time of such issuance or, in
the event such a record date shall have been fixed, as of the close of business
on such record date, by multiplying the Conversion Price then in effect by a
fraction:
(1) the numerator of which shall be the total number
of shares of Common Stock issued and outstanding immediately
prior to the time of such issuance or the close of business on
such record date, and
(2) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of
business on such record date
-13-
<PAGE>
plus the number of shares of Common Stock issuable in payment
of such dividend or distribution;
provided, however, if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed
therefor, the Conversion Price shall be recomputed accordingly as of the close
of business on such record date and thereafter the Conversion Price shall be
adjusted pursuant to this paragraph as of the time of actual payment of such
dividends or distributions; and provided further, however, that no such
adjustment shall be made if the holders of Convertible Preferred Stock
simultaneously receive a dividend or other distribution of shares of Common
Stock in a number equal to the number of shares of Common Stock as they would
have received if all outstanding shares of Convertible Preferred Stock had been
converted into Common Stock on the date of such event.
(g) ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In the
event the Corporation at any time or from time to time after the Original Issue
Date shall make or issue, or fix a record date for the determination of holders
of Common Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, then and in
each such event provision shall be made so that the holders of the Convertible
Preferred Stock shall receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Corporation that they would have received had such holder's shares of
Convertible Preferred Stock been converted into Common Stock on the date of such
event and such holder had thereafter, during the period from the date of such
event to and including the conversion date, retained such securities receivable
by them as aforesaid during such period, giving application to all adjustments
called for during such period under this paragraph with respect to the rights of
the holders of the Convertible Preferred Stock; and provided further, however,
that no such adjustment shall be made if the holders of Convertible Preferred
Stock simultaneously receive a dividend or other distribution of such securities
in an amount equal to the amount of such securities as they would have received
if all outstanding shares of Convertible Preferred Stock had been converted into
Common Stock on the date of such event.
(h) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE, OR
SUBSTITUTION. If the Common Stock issuable upon the conversion of the Conversion
Preferred Stock shall be changed into the same or a different number of shares
of any class or classes of stock, whether by capital reorganization,
reclassification, or otherwise (other than a subdivision or combination of
shares or stock dividend provided for above, or a reorganization, merger,
consolidation, or sale of assets provided for below), then and in each such
event the holder of each such share of Convertible Preferred Stock shall have
the right thereafter to convert such share into the kind and amount of shares of
stock and other securities and property receivable upon such reorganization,
reclassification, or other change, by holders of the number of shares of Common
-14-
<PAGE>
Stock into which such shares of Convertible Preferred Stock might have been
converted immediately prior to such reorganization, reclassification, or change,
all subject to further adjustment as provided herein.
(i) ADJUSTMENT FOR MERGER OR REORGANIZATION, ETC. In case of
any consolidation or merger of the Corporation with or into another corporation
or the sale of all or substantially all of the assets of the Corporation to
another corporation (other than a consolidation, merger or sale which is covered
by Subsection 3(e)), each share of Convertible Preferred Stock shall thereafter
be convertible (or shall be converted into a security which shall be
convertible) into the kind and amount of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock of the
Corporation deliverable upon conversion of such Convertible Preferred Stock
would have been entitled upon such consolidation, merger or sale; and, in such
case, appropriate adjustment (as determined in good faith by the Board of
Directors) shall be made in the application of the provisions in this Section 5
set forth with respect to the rights and interest thereafter of the holders of
the Convertible Preferred Stock, to the end that the provisions set forth in
this Section 5 (including provisions with respect to changes in and other
adjustments of the Conversion Price) shall thereafter be applicable, as nearly
as reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the conversion of the Convertible Preferred Stock.
(j) NO IMPAIRMENT. The Corporation will not, by amendment of
its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Corporation, but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Convertible Preferred Stock against impairment.
(k) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 5,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series A Preferred Stock and/or Series B Preferred Stock (as applicable) a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The Corporation
shall, upon the written request at any time of any holder of Convertible
Preferred Stock, furnish or cause to be furnished to such holder a similar
certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Price then in effect, and (iii) the number of shares of Common Stock
and the amount, if any, of other property which then would be
-15-
<PAGE>
received upon the conversion of Series A Preferred Stock and/or Series B
Preferred Stock (as applicable).
(l) NOTICE OF RECORD DATE. In the event:
(i) that the Corporation declares a dividend (or
any other distribution) on its Common Stock
payable in Common Stock or other securities
of the Corporation;
(ii) that the Corporation subdivides or combines
its outstanding shares of Common Stock;
(iii) of any reclassification of the Common Stock
of the Corporation (other than a subdivision
or combination of its outstanding shares of
Common Stock or a stock dividend or stock
distribution thereon), or of any
consolidation or merger of the Corporation
into or with another corporation, or of the
sale of all or substantially all of the
assets of the Corporation; or
(iv) of the involuntary or voluntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Convertible Preferred Stock, and shall cause
to be mailed to the holders of the Convertible Preferred Stock at their last
addresses as shown on the records of the Corporation or such transfer agent, at
least ten days prior to the date specified in (A) below or twenty days before
the date specified in (B) below, a notice stating
(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to
be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend,
distribution, subdivision or combination are to be
determined, or
(B) the date on which such reclassification,
consolidation, merger, sale, dissolution, liquidation
or winding up is expected to become effective, and
the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other
property deliverable upon such reclassification,
consolidation, merger, sale, dissolution or winding
up.
-16-
<PAGE>
6. MANDATORY CONVERSION.
(a) Upon the closing of the sale of shares of Common Stock, at
a price of at least $15.00 per share (subject to appropriate adjustment to the
value per share of the Common Stock after the date of this Agreement for stock
splits, stock dividends, combinations and other similar recapitalizations
affecting such shares), in a public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, resulting
in at least $15,000,000 of gross proceeds to the Corporation (a "Qualified
Public Offering") (such date, the "Mandatory Conversion Date"), (i) all
outstanding shares of Convertible Preferred Stock shall automatically be
converted into shares of Common Stock, at the then effective conversion rate,
and (ii) all provisions relating to the Convertible Preferred Stock and
references thereto shall be deleted and shall be of no further force or effect.
(b) All holders of record of shares of Convertible Preferred
Stock shall be given at least 10 days' prior written notice of the Mandatory
Conversion Date and the place designated for mandatory conversion of all such
shares of Convertible Preferred Stock pursuant to this Section 6. Such notice
shall be sent by first class or registered mail, postage prepaid, to each record
holder of Convertible Preferred Stock at such holder's address last shown on the
records of the transfer agent for the Convertible Preferred Stock (or the
records of the Corporation, if it serves as its own transfer agent). Upon
receipt of such notice, each holder of shares of Convertible Preferred Stock
shall surrender his or its certificate or certificates for all such shares to
the Corporation at the place designated in such notice, and shall thereafter
receive certificates for the number of shares of Common Stock to which such
holder is entitled pursuant to this Section 6. On the Mandatory Conversion Date,
all rights with respect to the Convertible Preferred Stock so converted,
including the rights, if any, to receive notices and vote (other than as a
holder of Common Stock) will terminate, except only the rights of the holders
thereof, upon surrender of their certificate or certificates therefor, to
receive certificates for the number of shares of Common Stock into which such
Convertible Preferred Stock has been converted, and payment of any declared but
unpaid dividends thereon. If so required by the Corporation, certificates
surrendered for conversion shall be endorsed or accompanied by written
instrument or instruments of transfer, in form satisfactory to the Corporation,
duly executed by the registered holder or by his or its attorney duly authorized
in writing. As soon as practicable after the Mandatory Conversion Date and the
surrender of the certificate or certificates for Convertible Preferred Stock,
the Corporation shall cause to be issued and delivered to such holder, or on his
or its written order, a certificate or certificates for the number of full
shares of Common Stock issuable on such conversion in accordance with the
provisions hereof and cash as provided in Subsection 5(b) in respect of any
fraction of a share of Common Stock otherwise issuable upon such conversion.
-17-
<PAGE>
(c) All certificates evidencing shares of Convertible
Preferred Stock which are required to be surrendered for conversion in
accordance with the provisions hereof shall, from and after the Mandatory
Conversion Date, be deemed to have been retired and cancelled and the shares of
Convertible Preferred Stock represented thereby converted into Common Stock for
all purposes, notwithstanding the failure of the holder or holders thereof to
surrender such certificates on or prior to such date. The Corporation may
thereafter take such appropriate action (without the need for stockholder
action) as may be necessary to reduce the authorized Convertible Preferred Stock
accordingly.
7. REDEMPTION OF CONVERTIBLE PREFERRED STOCK AT OPTION OF HOLDER.
(a) At any time or from time to time on or after the seventh
anniversary of April 14,1997 (the "Election Date") each holder of Series A
Preferred Stock and Series B Preferred Stock shall have the right to require the
Corporation to redeem on the date 30 days after the Election Date (the
"Redemption Date") any or all of the shares of Series A Preferred Stock or
Series B Preferred Stock held by such holder on such date at a price per share
equal to the then fair market value per share of such Series A Preferred Stock
or Series B Preferred Stock (as applicable), including all accrued and unpaid
dividends on such shares (the "Redemption Price"). Any holder desiring to
exercise the redemption right granted herein (a "Requesting Holder") shall
provide written notice to the Corporation setting forth the number of shares to
be redeemed on each Redemption Date. Upon a holder's surrender of his or her
certificates representing shares to be redeemed, 50% of the Redemption Price
shall be paid by the Corporation in cash on the Redemption Date and the
remaining 50% of the Redemption Price shall be paid to the Requesting Holder on
the first anniversary of the Redemption Date. The fair market value per share of
Series A Preferred Stock or Series B Preferred Stock shall be deemed to be the
amount determined in good faith by the Board of Directors to represent the fair
market value per share of the Series A Preferred Stock or Series B Preferred
Stock.
(b) Within five days following its receipt from a Requesting
Holder of a notice of intent to exercise redemption rights pursuant to
Subsection 7(a) hereof with respect to either or both series of Convertible
Preferred Stock, the Corporation shall provide each holder of shares of such
series of Convertible Preferred Stock, other than the Requesting Holder, with a
written notice (addressed to the holder at its address as it appears on the
stock transfer books of the Corporation) containing an offer to redeem shares of
such series of Convertible Preferred Stock as provided above, which notice shall
specify the applicable Redemption Price. Each holder of such series of
Convertible Preferred Stock, other than the Requesting Holder, will have until
10 days prior to the Redemption Date to provide the Corporation with written
notice of such holder's acceptance of the redemption offer, which notice shall
specify the number of shares to be redeemed. All notices or offers hereunder
shall
-18-
<PAGE>
be sent by first class or registered mail, postage prepaid, and shall be deemed
to have been provided when mailed.
(c) In the event that any holder of Convertible Preferred
Stock, other than the Requesting Holder, does not provide the Corporation with
written notice pursuant to Subsection 7(b) of the holder's acceptance of the
redemption offer on or before the date 10 days prior to the applicable
Redemption Date, the Corporation shall have no obligation to redeem any shares
of such series of Convertible Preferred Stock of such holder on the Redemption
Date specified in its notice to such holder or at any time thereafter.
(d) For the purpose of determining whether funds are legally
available for redemption of shares of Convertible Preferred Stock as provided
herein, the Corporation shall value its assets at the highest amount permissible
under applicable law. If the funds of the Corporation legally available for
redemption of Convertible Preferred Stock on a Redemption Date are insufficient
to redeem the number of shares of Convertible Preferred Stock to be redeemed on
such date, those funds which are legally available will be used to redeem the
maximum possible number of such shares of Convertible Preferred Stock ratably
among holders of Convertible Preferred Stock to be so redeemed on the basis of
the number of shares of Convertible Preferred Stock which would be redeemed on
such date if the funds of the Corporation legally available therefor had been
sufficient to redeem all shares of Convertible Preferred Stock to be redeemed on
such date. At any time thereafter when additional funds of the Corporation
become legally available for the redemption of Convertible Preferred Stock, such
funds will be used, at the end of the next succeeding fiscal quarter, to redeem
the balance of the shares which the Corporation was theretofore obligated to
redeem, ratably on the basis set forth in the preceding sentence.
(e) On or prior to a Redemption Date, the Requesting Holder
and each holder of Convertible Preferred Stock accepting the Corporation's
redemption offer shall surrender his or its certificate or certificates
representing the shares to be redeemed, in the manner and at the place
designated in the Corporation's redemption offer. If less than all shares
represented by such certificate or certificates are redeemed, the Corporation
shall issue a new certificate for the unredeemed shares. From and after the
Redemption Date, unless there shall be a default in payment of the Redemption
Price, all rights of each holder with respect to shares of Convertible Preferred
Stock redeemed on the Redemption Date shall cease (except the right to receive
the Redemption Price without interest upon surrender of the certificate or
certificates therefor), and such shares shall not be deemed to be outstanding
for any purpose whatsoever. Such shares of redeemed Convertible Preferred Stock
shall not be reissued, and the Corporation may from time to time take such
appropriate action as may be necessary to reduce the authorized Preferred Stock
accordingly.
-19-
<PAGE>
(f) The foregoing provisions of this Section 7 shall terminate
on the consummation of a Qualified Public Offering or any merger or
consolidation of the Corporation into or with another corporation in which all
consideration payable to the stockholders of the Corporation consists of cash
and/or marketable securities or the sale of all or substantially all of the
assets of the Corporation. For purposes of this subsection 7(e, marketable
securities shall include any securities listed on a national securities
exchange, the Nasdaq National Market System, the Nasdaq Small Cap Market, the
OTC Bulletin Board or another nationally recognized exchange or trading system.
8. MANDATORY REDEMPTION OF REDEEMABLE PREFERRED STOCK.
(a) Upon the earlier of (i) the consummation of a Qualified
Public Offering, (ii) the merger or consolidation of the Corporation into or
with another corporation or the sale of all or substantially all of the assets
of the Corporation and (iii) the liquidation, dissolution or winding up of the
Corporation (such earlier date, the "Redeemable Preferred Stock Redemption
Date"), the Corporation shall, subject to the conditions of Subsection 8(b)
below, redeem from each holder of Redeemable Preferred Stock all outstanding
shares of Redeemable Preferred Stock held by such holder, at a price equal to
$100.00 per share, plus all accrued and unpaid dividends on such shares (the
"Redemption Price").
(b) If the funds of the Corporation legally available for
redemption of the Redeemable Preferred Stock on the Redeemable Preferred Stock
Redemption Date are insufficient to redeem all of the Redeemable Preferred Stock
required under this Section 8 to be redeemed, those funds which are legally
available will be used to redeem the maximum possible number of such shares of
Redeemable Preferred Stock ratably among holders of the Redeemable Preferred
Stock to be so redeemed on the basis of the number of shares of Redeemable
Preferred Stock which would be redeemed on such date if the funds of the
Corporation legally available therefor had been sufficient to redeem all shares
of Redeemable Preferred Stock required to be redeemed on such date. At any time
thereafter when additional funds of the Corporation become legally available for
the redemption of Redeemable Preferred Stock, such funds will be used, at the
end of the next succeeding fiscal quarter, to redeem the balance of the shares
which the Corporation was theretofore obligated to redeem, ratably on the basis
set forth in the preceding sentence.
(c) The Corporation shall provide notice of the redemption of
Redeemable Preferred Stock pursuant to this Section 8 specifying the time and
place of redemption by first class or registered mail, postage prepaid, to each
holder of record of Redeemable Preferred Stock at the address for such holder
last shown on the records of the transfer agent therefor (or the records of the
Corporation, if it serves on its own transfer agent), not more than 20 nor less
than 10 days prior to the Redeemable Preferred Stock Redemption Date. Upon
mailing any such notice of
-20-
<PAGE>
redemption, the Corporation will become obligated to redeem at the time of
redemption specified therein all Redeemable Preferred Stock specified therein.
(d) On or prior to the Redeemable Preferred Stock Redemption
Date, each holder of Redeemable Preferred Stock shall surrender his or its
certificate or certificates representing the shares to be redeemed, in the
manner and at the place designated by the Corporation. If less than all shares
represented by such certificate or certificates are redeemed, the Corporation
shall issue a new certificate for the unredeemed shares. From and after the
Redeemable Preferred Stock Redemption Date, unless there shall be a default in
payment of the Redemption Price, all rights of each holder with respect to
shares of Redeemable Preferred Stock redeemed on the Redeemable Preferred Stock
Redemption Date shall cease (except the right to receive the Redemption Price
without interest upon surrender of the certificate or certificates therefor),
and such shares shall not be deemed to be outstanding for any purposes
whatsoever. Such shares of redeemed Redeemable Preferred Stock shall be
cancelled and will not under any circumstances be reissued, and the Corporation
may from time to time take such appropriate action as may be necessary to reduce
the authorized Redeemable Preferred Stock accordingly.
* * * Remainder of page intentionally left blank * * *
-21-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Certificate to be signed by its Chief Executive Officer
this 10th day of April, 1997.
MEDIA METRIX, INC.
By: /s/ TOD JOHNSON
-----------------------------
Chief Executive Officer
-22-
<PAGE>
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
OF
MEDIA METRIX, INC.
MEDIA METRIX, INC., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify:
FIRST: That the Board of Directors of the Corporation (the "Board"), by
the written consent of the Board, adopted a resolution proposing and declaring
advisable the following amendment to the Certificate of Incorporation of the
Corporation:
"RESOLVED, the Certificate of Incorporation of the corporation
be amended by striking Section (1) of Article V in its
entirety and replacing therefor:
(1) CLASSES AND NUMBER OF SHARES
The total number of shares of all classes of stock which the
Corporation has authority to issue is fifteen million (15,000,000) shares,
consisting of ten million (10,000,000) shares of Common Stock, par value $.01
per share (the "Common Stock") and five million (5,000,000) shares of Preferred
Stock, par value $.01 per share, which shall have such designations as may be
authorized by the Board of Directors from time to time (the "Preferred Stock")."
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given unanimous written consent to said amendment in
accordance with the provisions of Section 228 of the General Corporation Law of
the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Sections 242 and 228 of the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed and attested by its duly authorized officers, this 21st day of May,
1997.
Media Metrix, Inc.
By: /s/ TOD JOHNSON
--------------------------------
Tod Johnson
Title: Chairman and CEO
<PAGE>
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
OF
MEDIA METRIX, INC.
MEDIA METRIX, INC., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify:
FIRST: That the Board of Directors of the Corporation (the "Board"), by
the written consent of the Board, adopted a resolution proposing and declaring
advisable the following amendment to the Certificate of Incorporation of the
Corporation:
"RESOLVED, the Certificate of Incorporation of the corporation
be amended by striking Section (1) of Article V in its entirety and
replacing therefor:
(1) CLASSES AND NUMBER OF SHARES
The total number of shares of all classes of stock which the
Corporation has authority to issue is twenty million
(20,000,000) shares, consisting of fifteen million
(15,000,000) shares of Common Stock, par value $.01 per share
(the "Common Stock") and five million (5,000,000) shares of
Preferred Stock, par value $.01 per share, which shall have
such designations as may be authorized by the Board of
Directors from time to time (the "Preferred Stock")."
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given unanimous written consent to said amendment in
accordance with the provisions of Section 228 of the General Corporation Law of
the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Sections 242 and 228 of the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to
be signed and attested by its duly authorized officers, this 30th day of
October, 1998.
Media Metrix, Inc.
By: /s/ TOD JOHNSON
--------------------------------
Tod Johnson
Chief Executive Officer
<PAGE>
CERTIFICATE OF ELIMINATION
OF
MEDIA METRIX, INC.
MEDIA METRIX, INC., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify:
FIRST: That on November 2, 1998, the Board of Directors of the
Corporation acting by unanimous written consent of its members, duly adopted
resolutions setting forth the proposed elimination of its classes of preferred
stock designated Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock as set forth herein:
RESOLVED, that no shares of the Series A Convertible Preferred
Stock and Series B Convertible Preferred Stock are outstanding
and none will be issued; and it is further
RESOLVED, that a Certificate of Elimination be executed, which
shall have the effect when filed with the Secretary of State
of the State of Delaware, of eliminating from the Certificate
of Designation of Rights and Preferences of Series A
Convertible Preferred Stock, Series B Convertible Preferred
Stock and Redeemable Preferred Stock of Media Metrix, Inc.
(the "Certificate of Designation") all reference to the Series
A Convertible Preferred Stock and Series B Convertible
Preferred Stock; and it is further
RESOLVED, that the provisions of the Certificate of
Designation relating to the Redeemable Preferred Stock of the
Company shall remain in full force and effect.
SECOND: None of the authorized share of the Series A Convertible
Preferred Stock and Series B Convertible Preferred Stock are outstanding and
none will be issued.
THIRD: In accordance with the provisions of Section 151(g) of the
General Corporation Law of the State of Delaware, the Certificate of Designation
is hereby amended to eliminate all reference to the Series A Convertible
Preferred Stock and Series B Convertible Preferred Stock.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed and attested by its duly authorized officers, this 3rd day of November,
1998.
MEDIA METRIX, INC.
By: /s/ TOD JOHNSON
--------------------------------
Tod Johnson
Chairman and Chief Executive Officer
<PAGE>
CERTIFICATE OF MERGER
OF
RELEVANTKNOWLEDGE, INC.
WITH AND INTO
MEDIA METRIX, INC.
(UNDER SECTION 251 OF THE GENERAL CORPORATION LAW)
It is hereby certified that:
1. The constituent business corporations participating in the
merger are:
(i) Media Metrix, Inc., which is incorporated
under the laws of the State of Delaware ("MMX"); and
(ii) RelevantKnowledge, Inc. which is incorporated
under the laws of the State of Delaware ("RKI").
2. An Agreement and Plan of Reorganization has been approved,
adopted, certified, executed, and acknowledged by each of the aforesaid
constituent corporations in accordance with the provisions of Section 251 of the
General Corporation Law of the State of Delaware.
3. The name of the surviving corporation in the merger herein
certified is Media Metrix, Inc., which will continue its existence as said
surviving corporation under its present name upon the effective date of said
merger pursuant to the provisions of the General Corporation Law of the State of
Delaware.
4. The Certificate of Incorporation of MMX, as now in force and
effect, shall continue to be the Certificate of Incorporation of said surviving
corporation until amended and changed pursuant to the provisions of the General
Corporation Law of the State of Delaware.
<PAGE>
5. The Agreement and Plan of Reorganization between the
aforesaid constituent corporations is on file at the principal place of business
of the aforesaid surviving corporation, the address of which is as follows:
Media Metrix, Inc.
900 West Shore Rd.
Port Washington, NY 11050
6. A copy of the aforesaid Agreement and Plan of Reorganization
will be furnished by the aforesaid surviving corporation, on request and without
cost, to any stockholder of each of the aforesaid constituent corporations.
IN WITNESS WHEREOF, the undersigned has subscribed this document on the
date set forth below and does hereby affirm that the statements contained herein
have been examined by him and are true and correct.
Dated: November 5, 1998
MEDIA METRIX, INC.
a Delaware corporation
By: /s/ TOD JOHNSON
--------------------------------
Name: Tod Johnson
Title: Chief Executive Officer
<PAGE>
CERTIFICATE OF CHANGE OF LOCATION OF
REGISTERED OFFICE AND REGISTERED AGENT
OF
MEDIA METRIX, INC.
The undersigned corporation hereby certifies as follows:
FIRST: The name of the corporation is
MEDIA METRIX, INC.
SECOND: The address of the new registered office shall be 15 East North
Street, in the City of Dover, County of Kent, State of Delaware 19901.
THIRD: The name of the new registered agent is United Corporate
Services, Inc.
FOURTH: The aforesaid changes were duly authorized by appropriate
resolutions adopted by the Board of Directors at a meeting thereof.
IN WITNESS WHEREOF, I have hereunto signed my name and affirm that the
statements made herein are true under the penalties of perjury, this tenth day
of December, 1998.
MEDIA METRIX, INC.
/s/ TOD JOHNSON
---------------------------
Tod Johnson, CEO
<PAGE>
Exhibit 3.3
BYLAWS
OF
MEDIA METRIX, INC.
Adopted on March 26, 1997
ARTICLE I
OFFICES
SECTION 1.01. REGISTERED OFFICE. The registered office of the
corporation in the State of Delaware shall be in the City of Wilmington, County
of New Castle, and the name of its registered agent shall be The Corporation
Trust Company.
SECTION 1.02. OTHER OFFICES. The corporation may also have
offices at such other places both within and without the State of Delaware as
the Board of Directors may from time to time determine or the business of the
corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.01. PLACE OF MEETING. All meetings of stockholders for
the election of directors shall be held at such place, either within or without
the State of Delaware, as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting.
SECTION 2.02. ANNUAL MEETING. The annual meeting of stockholders
shall be held at such date and time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting.
SECTION 2.03. VOTING LIST. The officer who has charge of the
stock ledger of the corporation shall prepare and make, at least 10 days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least 10 days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice,
or if not so specified, at the place where the meeting is to be held. The list
shall also be
1
<PAGE>
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
SECTION 2.04. SPECIAL MEETING. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise prescribed by
statute or by the Certificate of Incorporation, may be called by the Chairman of
the Board or by the President of the corporation or by the Board of Directors or
by written order of a majority of the directors and shall be called by the
President or the Secretary at the request in writing of stockholders owning a
majority in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purposes of the
proposed meeting. The Chairman of the Board or the President of the corporation
or directors so calling, or the stockholders so requesting, any such meeting
shall fix the time and any place, either within or without the State of
Delaware, as the place for holding such meeting.
SECTION 2.05. NOTICE OF MEETING. Written notice of the annual,
and each special meeting of stockholders, stating the time, place, and purpose
or purposes thereof, shall be given to each stockholder entitled to vote
thereat, not less than 10 nor more than 60 days before the meeting.
SECTION 2.06. QUORUM. The holders of a majority of the shares of
the corporation's capital stock issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall constitute a quorum at
any meeting of stockholders for the transaction of business, except as otherwise
provided by statute or by the Certificate of Incorporation. Notwithstanding the
other provisions of the Certificate of Incorporation or these bylaws, the
holders of a majority of the shares of the corporation's capital stock entitled
to vote thereat, present in person or represented by proxy, whether or not a
quorum is present, shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. If the adjournment is for more than 30 days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
SECTION 2.07. VOTING. When a quorum is present at any meeting of
the stockholders, the vote of the holders of a majority of the shares of the
corporation's capital stock having voting power present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which, by express provision of the statutes, of the
Certificate of Incorporation or of these bylaws, a different vote is required,
in which case such express provision shall govern and control the decision of
such question. Every stockholder having the right to vote shall be entitled to
vote in person, or by proxy appointed by an instrument in writing subscribed by
such stockholder, bearing a date not more than three years prior to voting,
unless such instrument provides for a longer period, and filed with the
Secretary of the corporation before, or at the time of, the meeting. If such
instrument shall designate two or more persons to act as proxies, unless such
instrument shall provide the contrary, a majority of such persons present at any
meeting at which their powers thereunder are to be exercised shall have and may
exercise all the powers of voting or giving consents thereby conferred, or if
only one be present, then such powers may be
2
<PAGE>
exercised by that one; or, if an even number attend and a majority do not agree
on any particular issue, each proxy so attending shall be entitled to exercise
such powers in respect of the same portion of the shares as he is of the proxies
representing such shares.
SECTION 2.08. CONSENT OF STOCKHOLDERS. Whenever the vote of
stockholders at a meeting thereof is required or permitted to be taken for or in
connection with any corporate action by any provision of the statutes, the
meeting and vote of stockholders may be dispensed with if all the stockholders
who would have been entitled to vote upon the action if such meeting were held
shall consent in writing to such corporate action being taken; or on the written
consent of the holders of shares of the corporation's capital stock having not
less than the minimum percentage of the vote required by statute for the
proposed corporate action, and provided that prompt notice must be given to all
stockholders of the taking of corporate action without a meeting and by less
than unanimous written consent.
SECTION 2.09. VOTING OF STOCK OF CERTAIN HOLDERS. Shares of the
corporation's capital stock standing in the name of another corporation,
domestic or foreign, may be voted by such officer, agent, or proxy as the bylaws
of such corporation may prescribe, or in the absence of such provision, as the
Board of Directors of such corporation may determine. Shares standing in the
name of a deceased person may be voted by the executor or administrator of such
deceased person, either in person or by proxy. Shares standing in the name of a
guardian, conservator, or trustee may be voted by such fiduciary, either in
person or by proxy, but no such fiduciary shall be entitled to vote shares held
in such fiduciary capacity without a transfer of such shares into the name of
such fiduciary. Shares standing in the name of a receiver may be voted by such
receiver. A stockholder whose shares are pledged shall be entitled to vote such
shares, unless in the transfer by the pledgor on the books of the corporation,
he has expressly empowered the pledgee to vote thereon, in which case only the
pledgee, or his proxy, may represent the stock and vote thereon.
SECTION 2.10. TREASURY STOCK. The corporation shall not vote,
directly or indirectly, shares of its own capital stock owned by it; and such
shares shall not be counted in determining the total number of outstanding
shares of the corporation's capital stock.
SECTION 2.11. FIXING RECORD DATE. The Board of Directors may fix
in advance a date, which shall not be more than 60 days nor less than 10 days
preceding the date of any meeting of stockholders, nor more than 60 days
preceding the date for payment of any dividend or distribution, or the date for
the allotment of rights, or the date when any change, or conversion or exchange
of capital stock shall go into effect, or a date in connection with obtaining a
consent, as a record date for the determination of the stockholders entitled to
notice of, and to vote at, any such meeting and any adjournment thereof, or
entitled to receive payment of any such dividend or distribution, or to receive
any such allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of capital stock, or to give such consent, and in
such case such stockholders and only such stockholders as shall be stockholders
of record on the date so fixed, shall be entitled to such notice of, and to vote
at, any such meeting and any adjournment thereof, or to receive payment of such
dividend or distribution, or to receive such allotment of rights, or to exercise
such rights, or to give such consent, as the case may be, notwithstanding any
transfer of any stock on the books of the corporation after any such record date
fixed as aforesaid.
3
<PAGE>
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.01. POWERS. The business and affairs of the
corporation shall be managed by its Board of Directors, which may exercise all
such powers of the corporation and do all such lawful acts and things as are not
by statute or by the Certificate of Incorporation or by these bylaws directed or
required to be exercised or done by the stockholders.
SECTION 3.02. NUMBER, ELECTION AND TERM. The number of directors
that shall constitute the whole Board of Directors shall be not less than one.
Such number of directors shall from time to time be fixed and determined by the
directors and shall be set forth in the notice of any meeting of stockholders
held for the purpose of electing directors. The directors shall be elected at
the annual meeting of stockholders, except as provided in Section 3.03, and each
director elected shall hold office until his successor shall be elected and
shall qualify. Directors need not be residents of Delaware or stockholders of
the corporation.
SECTION 3.03. VACANCIES, ADDITIONAL DIRECTORS, AND REMOVAL FROM
OFFICE. If any vacancy occurs in the Board of Directors caused by death,
resignation, retirement, disqualification, or removal from office of any
director, or otherwise, or if any new directorship is created by an increase in
the authorized number of directors, a majority of the directors then in office,
though less than a quorum, or a sole remaining director, may choose a successor
or fill the newly created directorship; and a director so chosen shall hold
office until the next election and until his successor shall be duly elected and
shall qualify, unless sooner displaced. Any director may be removed either for
or without cause at any special meeting of stockholders duly called and held for
such purpose.
SECTION 3.04. REGULAR MEETING. A regular meeting of the Board of
Directors shall be held each year, without other notice than this bylaw, at the
place of, and immediately following, the annual meeting of stockholders; and
other regular meetings of the Board of Directors shall be held each year, at
such time and place as the Board of Directors may provide, by resolution, either
within or without the State of Delaware, without other notice than such
resolution.
SECTION 3.05. SPECIAL MEETING. A special meeting of the Board of
Directors may be called by the Chairman of the Board of Directors or by the
President of the corporation and shall be called by the Secretary on the written
request of any two directors. The Chairman or President so calling, or the
directors so requesting, any such meeting shall fix the time and any place,
either within or without the State of Delaware, as the place for holding such
meeting.
SECTION 3.06. NOTICE OF SPECIAL MEETING. Written notice of
special meetings of the Board of Directors shall be given to each director at
least 48 hours prior to the time of such meeting. Any director may waive notice
of any meeting. The attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where a director attends a meeting for
the purpose of objecting to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such
4
<PAGE>
meeting, except that notice shall be given of any proposed amendment to the
bylaws if it is to be adopted at any special meeting or with respect to any
other matter where notice is required by statute.
SECTION 3.07. QUORUM. A majority of the Board of Directors shall
constitute a quorum for the transaction of business at any meeting of the Board
of Directors, and the act of a majority of the directors present at any meeting
at which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by statute, by the Certificate of
Incorporation or by these bylaws. If a quorum shall not be present at any
meeting of the Board of Directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
SECTION 3.08. ACTION WITHOUT MEETING. Unless otherwise
restricted by the Certificate of Incorporation or these bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof as provided in Article IV of these bylaws, may be taken
without a meeting, if a written consent thereto is signed by all members of the
Board of Directors or of such committee, as the case may be, and such written
consent is filed with the minutes of proceedings of the Board of Directors or
such committee.
SECTION 3.09. COMPENSATION. Directors, as such, shall not be
entitled to any stated salary for their services unless voted by the
stockholders or the Board of Directors; but by resolution of the Board of
Directors, a fixed sum and expenses of attendance, if any, may be allowed for
attendance at each regular or special meeting of the Board of Directors or any
meeting of a committee of directors. No provision of these bylaws shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
ARTICLE IV
COMMITTEE OF DIRECTORS
SECTION 4.01. DESIGNATION, POWERS AND NAME. The Board of
Directors may, by resolution passed by a majority of the whole Board of
Directors, designate one or more committees, including, if they shall so
determine, an Executive Committee, each such committee to consist of two or more
of the directors of the corporation. The committee shall have and may exercise
such of the powers of the Board of Directors in the management of the business
and affairs of the corporation as may be provided in such resolution. The
committee may authorize the seal of the corporation to be affixed to all papers
that may require it. The Board of Directors may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of such committee. In the absence or
disqualification of any member of such committee or committees, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any such absent or
disqualified member. Such committee or committees shall have such name or names
and such limitations of authority as may be determined from time to time by
resolution adopted by the Board of Directors.
5
<PAGE>
SECTION 4.02. MINUTES. Each committee of directors shall keep
regular minutes of its proceedings and report the same to the Board of Directors
when required.
SECTION 4.03. COMPENSATION. Members of special or standing
committees may be allowed compensation for attending committee meetings, if the
Board of Directors shall so determine.
ARTICLE V
NOTICE
SECTION 5.01. METHODS OF GIVING NOTICE. Whenever under the
provisions of applicable statutes, the Certificate of Incorporation or these
bylaws, notice is required to be given to any director, member of any committee,
or stockholder, such notice shall be in writing and delivered personally or
mailed to such director, member, or stockholder; provided that in the case of a
director or a member of any committee such notice may be given orally or by
telephone or telegram. If mailed, notice to a director, member of a committee,
or stockholder shall be deemed to be given when deposited in the United States
mail first class in a sealed envelope, with postage thereon prepaid, addressed,
in the case of a stockholder, to the stockholder at the stockholder's address as
it appears on the records of the corporation or, in the case of a director or a
member of a committee, to such person at his business address. If sent by
telegraph, notice to a director or member of a committee shall be deemed to be
given when the telegram, so addressed, is delivered to the telegraph company.
SECTION 5.02. WRITTEN WAIVER. Whenever any notice is required to
be given under the provisions of an applicable statute, the Certificate of
Incorporation, or these bylaws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
ARTICLE VI
OFFICERS
SECTION 6.01. OFFICERS. The officers of the corporation shall be
a Chairman of the Board and a Vice Chairman of the Board (if such offices are
created by the Board), a President, one or more Vice Presidents, any one or more
of which may be designated Executive Vice President or Senior Vice President, a
Secretary and a Treasurer. The Board of Directors may appoint such other
officers and agents, including Assistant Vice Presidents, Assistant Secretaries,
and Assistant Treasurers, in each case as the Board of Directors shall deem
necessary, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined by the Board. Any two or
more offices may be held by the same person. No officer shall execute,
acknowledge, verify or countersign any instrument on behalf of the corporation
in more than one capacity, if such instrument is required by law, by these
bylaws or by any act of the corporation to be executed, acknowledged, verified,
or countersigned by two or more officers. The Chairman and Vice Chairman of the
Board shall be elected from among the directors. With the foregoing
6
<PAGE>
exceptions, none of the other officers need be a director, and none of the
officers need be a stockholder of the corporation.
SECTION 6.02. ELECTION AND TERM OF OFFICE. The officers of the
corporation shall be elected annually by the Board of Directors at its first
regular meeting held after the annual meeting of stockholders or as soon
thereafter as conveniently possible. Each officer shall hold office until his
successor shall have been chosen and shall have qualified or until his death or
the effective date of his resignation or removal, or until he shall cease to be
a director in the case of the Chairman and the Vice Chairman.
SECTION 6.03. REMOVAL AND RESIGNATION. Any officer or agent
elected or appointed by the Board of Directors may be removed without cause by
the affirmative vote of a majority of the Board of Directors whenever, in its
judgment, the best interests of the corporation shall be served thereby, but
such removal shall be without prejudice to the contractual rights, if any, of
the person so removed. Any officer may resign at any time by giving written
notice to the corporation. Any such resignation shall take effect at the date of
the receipt of such notice or at any later time specified therein, and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 6.04. VACANCIES. Any vacancy occurring in any office of
the corporation by death, resignation, removal, or otherwise, may be filled by
the Board of Directors for the unexpired portion of the term.
SECTION 6.05. SALARIES. The salaries of all officers and agents
of the corporation shall be fixed by the Board of Directors or pursuant to its
direction; and no officer shall be prevented from receiving such salary by
reason of his also being a director.
SECTION 6.06. CHAIRMAN OF THE BOARD. The Chairman of the Board
(if such office is created by the Board) shall preside at all meetings of the
Board of Directors or of the stockholders of the corporation. The Chairman shall
formulate and submit to the Board of Directors or the Executive Committee
matters of general policy for the corporation and shall perform such other
duties as usually appertain to the office or as may be prescribed by the Board
of Directors or the Executive Committee.
SECTION 6.07. VICE CHAIRMAN OF THE BOARD. The Vice Chairman of
the Board (if such office is created by the Board) shall, in the absence or
disability of the Chairman of the Board, perform the duties and exercise the
powers of the Chairman of the Board. The Vice Chairman shall perform such other
duties as from time to time may be prescribed by the Board of Directors or the
Executive Committee or assigned by the Chairman of the Board.
SECTION 6.08. PRESIDENT. The President shall be the chief
executive officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control the business and affairs of
the corporation. In the absence of the Chairman of the Board or the Vice
Chairman of the Board (if such offices are created by the Board), the President
shall preside at all meetings of the Board of Directors and of the stockholders.
He may also preside at any such meeting attended by the Chairman or Vice
Chairman of the Board if he is so designated by the
7
<PAGE>
Chairman, or in the Chairman's absence by the Vice Chairman. He shall have the
power to appoint and remove subordinate officers, agents and employees, except
those elected or appointed by the Board of Directors. The President shall keep
the Board of Directors and the Executive Committee fully informed and shall
consult them concerning the business of the corporation. He may sign with the
Secretary or any other officer of the corporation thereunto authorized by the
Board of Directors, certificates for shares of the corporation and any deeds,
bonds, mortgages, contracts, checks, notes, drafts, or other instruments that
the Board of Directors has authorized to be executed, except in cases
where the signing and execution thereof has been expressly delegated by these
bylaws or by the Board of Directors to some other officer or agent of the
corporation, or shall be required by law to be otherwise executed. He shall
vote, or give a proxy to any other officer of the corporation to vote, all
shares of stock of any other corporation standing in the name of the corporation
and in general he shall perform all other duties normally incident to the office
of President and such other duties as may be prescribed by the stockholders, the
Board of Directors, or the Executive Committee from time to time.
SECTION 6.09. VICE PRESIDENTS. In the absence of the President,
or in the event of his inability or refusal to act, the Executive Vice President
(or in the event there shall be no Vice President designated Executive Vice
President, any Vice President designated by the Board) shall perform the duties
and exercise the powers of the President. Any Vice President may sign, with the
Secretary or Assistant Secretary, certificates for shares of the corporation.
The Vice Presidents shall perform such other duties as from time to time may be
assigned to them by the President, the Board of Directors or the Executive
Committee.
SECTION 6.10. SECRETARY. The Secretary shall (a) keep the
minutes of the meetings of the stockholders, the Board of Directors and
committees of directors; (b) see that all notices are duly given in accordance
with the provisions of these bylaws and as required by law; (c) be custodian of
the corporate records and of the seal of the corporation, and see that the seal
of the corporation or a facsimile thereof is affixed to all certificates for
shares prior to the issue thereof and to all documents, the execution of which
on behalf of the corporation under its seal is duly authorized in accordance
with the provisions of these bylaws; (d) keep or cause to be kept a register of
the post office address of each stockholder which shall be furnished by such
stockholder; (e) sign with the President, or an Executive Vice President or Vice
President, certificates for shares of the corporation, the issue of which shall
have been authorized by resolution of the Board of Directors; (f) have general
charge of the stock transfer books of the corporation; and (g) in general,
perform all duties normally incident to the office of Secretary and such other
duties as from time to time may be assigned to him by the President, the Board
of Directors or the Executive Committee.
SECTION 6.11. TREASURER. If required by the Board of Directors,
the Treasurer shall give a bond for the faithful discharge of his duties in such
sum and with such surety or sureties as the Board of Directors shall determine.
He shall (a) have charge and custody of and be responsible for all funds and
securities of the corporation; (b) receive and give receipts for moneys due and
payable to the corporation from any source whatsoever and deposit all such
moneys in the name of the corporation in such banks, trust companies, or other
depositories as shall be selected in accordance with the provisions of Section
7.03 of these bylaws; (c) prepare, or cause to be prepared, for submission at
each regular meeting of the Board of Directors, at each annual meeting of the
stockholders, and at such other times as may be required by the Board of
Directors, the President or
8
<PAGE>
the Executive Committee, a statement of financial condition of the corporation
in such detail as may be required; and (d) in general, perform all the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned to him by the President, the Board of Directors or the Executive
Committee.
SECTION 6.12. ASSISTANT SECRETARY AND TREASURER. The Assistant
Secretaries and Assistant Treasurers shall, in general, perform such duties as
shall be assigned to them by the Secretary or the Treasurer, respectively, or by
the President, the Board of Directors, or the Executive Committee. The Assistant
Secretaries and Assistant Treasurers shall, in the absence of the Secretary or
Treasurer, respectively, perform all functions and duties which such absent
officers may delegate, but such delegation shall not relieve the absent officer
from the responsibilities and liabilities of his office. The Assistant
Secretaries may sign, with the President or a Vice President, certificates for
shares of the corporation, the issue of which shall have been authorized by a
resolution of the Board of Directors. The Assistant Treasurers shall
respectively, if required by the Board of Directors, give bonds for the faithful
discharge of their duties in such sums and with such sureties as the Board of
Directors shall determine.
ARTICLE VII
CONTRACTS, CHECKS AND DEPOSITS
SECTION 7.01. CONTRACTS. Subject to the provisions of Section
6.01, the Board of Directors may authorize any officer, officers, agent, or
agents, to enter into any contract or execute and deliver any instrument in the
name of and on behalf of the corporation, and such authority may be general or
confined to specific instances.
SECTION 7.02. CHECKS. All checks, demands, drafts, or other
orders for the payment of money, notes, or other evidences of indebtedness
issued in the name of the corporation, shall be signed by such officer or
officers or such agent or agents of the corporation, and in such manner, as
shall be determined by the Board of Directors.
SECTION 7.03. DEPOSITS. All funds of the corporation not
otherwise employed shall be deposited from time to time to the credit of the
corporation in such banks, trust companies, or other depositories as the Board
of Directors may select.
ARTICLE VIII
CERTIFICATES OF STOCK
SECTION 8.01. ISSUANCE. Each stockholder of this corporation
shall be entitled to a certificate or certificates showing the number of shares
of capital stock registered in his name on the books of the corporation. The
certificates shall be in such form as may be determined by the Board of
Directors, shall be issued in numerical order and shall be entered in the books
of the corporation as they are issued. They shall exhibit the holder's name and
number of shares and shall be signed by the President or a Vice President and by
the Secretary or an Assistant Secretary. If any certificate is countersigned (1)
by a transfer agent other than the corporation or any employee of the
9
<PAGE>
corporation, or (2) by a registrar other than the corporation or any employee of
the corporation, any other signature on the certificate may be a facsimile. If
the corporation shall be authorized to issue more than one class of stock or
more than one series of any class, the designations, preferences, and relative
participating, optional, or other special rights of each class of stock or
series thereof and the qualifications, limitations, or restrictions of such
preferences and rights shall be set forth in full or summarized on the face or
back of the certificate which the corporation shall issue to represent such
class of stock; provided that, except as otherwise provided by statute, in lieu
of the foregoing requirements there may be set forth on the face or back of the
certificate which the corporation shall issue to represent such class or series
of stock, a statement that the corporation will furnish to each stockholder who
so requests the designations, preferences and relative, participating, optional
or other special rights of each class of stock or series thereof and the
qualifications, limitations, or restrictions of such preferences and rights. All
certificates surrendered to the corporation for transfer shall be canceled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and canceled, except that in the
case of a lost, stolen, destroyed, or mutilated certificate a new one may be
issued therefor upon such terms and with such indemnity, if any, to the
corporation as the Board of Directors may prescribe. Certificates shall not be
issued representing fractional shares of stock.
SECTION 8.02. LOST CERTIFICATES. The Board of Directors may
direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the corporation alleged to
have been lost, stolen, or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require (1) the owner of such lost, stolen, or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require, (2) such owner to give the corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the corporation with respect to the certificate or certificates
alleged to have been lost, stolen, or destroyed, or (3) both.
SECTION 8.03. TRANSFERS. Upon surrender to the corporation or
the transfer agent of the corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment, or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate, and record the
transaction upon its books. Transfers of shares shall be made only on the books
of the corporation by the registered holder thereof, or by his attorney
thereunto authorized by power of attorney and filed with the Secretary of the
corporation or the Transfer Agent.
SECTION 8.04. REGISTERED STOCKHOLDERS. The corporation shall be
entitled to treat the holder of record of any share or shares of the
corporation's capital stock as the holder in fact thereof and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of the State of Delaware.
10
<PAGE>
ARTICLE IX
DIVIDENDS
SECTION 9.01. DECLARATION. Dividends with respect to the shares
of the corporation's capital stock, subject to the provisions of the Certificate
of Incorporation, if any, may be declared by the Board of Directors at any
regular or special meeting, pursuant to applicable law. Dividends may be paid in
cash, in property, or in shares of capital stock, subject to the provisions of
the Certificate of Incorporation.
SECTION 9.02. RESERVE. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for dividends such
sum or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors shall think
conducive to the interest of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.
ARTICLE X
INDEMNIFICATION
SECTION 10.01. THIRD PARTY ACTIONS. The corporation shall
indemnify any director or officer of the corporation, and may indemnify any
other person, who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit, or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, or conviction, or
upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
SECTION 10.02. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION.
The corporation shall indemnify any director or officer and may indemnify any
other person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust, or other
enterprise against expenses (including attorneys' fees) actually and reasonably
11
<PAGE>
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue, or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses as
the Court of Chancery or such other court shall deem proper.
SECTION 10.03. MANDATORY INDEMNIFICATION. To the extent that a
director, officer, employee, or agent of the corporation has been successful on
the merits or otherwise in defense of any action, suit, or proceeding referred
to in Sections 10.01 and 10.02, or in defense of any claim, issue, or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
SECTION 10.04. DETERMINATION OF CONDUCT. Any indemnification
under Section 10.01 or 10.02 of this Article X (unless ordered by a court) shall
be made by the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 10.01 or 10.02 of this Article X. Such
determination shall be made (a) by a majority vote of directors who were not
parties to such action, suit or proceeding, even though less than a quorum, or
(b) if ther are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (c) by the stockholders.
SECTION 10.05. PAYMENT OF EXPENSES IN ADVANCE. Expenses incurred
in defending a civil or criminal action, suit, or proceeding shall be paid by
the corporation in advance of the final disposition of such action, suit, or
proceeding upon receipt of an undertaking by or on behalf of the director,
officer, employee, or agent to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this Article X.
SECTION 10.06. INDEMNITY NOT EXCLUSIVE. The indemnification and
advancement of expenses provided or granted hereunder shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under the Certificate of Incorporation,
any other bylaw, agreement, vote of stockholders, or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
SECTION 10.07. DEFINITIONS. For purposes of this Article X:
(a) "the corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger
that, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents,
so that any person who is or was a director, officer, employee, or agent
of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee, or agent
of another
12
<PAGE>
corporation, partnership, joint venture, trust, or other
enterprise, shall stand in the same position under this Article X with
respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had
continued;
(b) "other enterprises" shall include employee benefit
plans;
(c) "fines" shall include any excise taxes assessed on a person
with respect to any employee benefit plan;
(d) "serving at the request of the corporation" shall include
any service as a director, officer, employee, or agent of the
corporation that imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee
benefit plan, its participants or beneficiaries; and
(e) a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted
in a manner "not opposed to the best interests of the corporation" as
referred to in this Article X.
SECTION 10.08. CONTINUATION OF INDEMNITY. The indemnification
and advancement of expenses provided or granted hereunder shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee, or agent and shall inure to the
benefit of the heirs, executors, and administrators of such a person.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. SEAL. The corporate seal, if one is authorized by
the Board of Directors, shall have inscribed thereon the name of the
corporation, and the words "Corporate Seal, Delaware." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or otherwise
reproduced.
SECTION 11.02. BOOKS. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at the offices of the corporation, or at such other place or places as
may be designated from time to time by the Board of Directors.
13
<PAGE>
ARTICLE XII
AMENDMENT
These bylaws may be altered, amended, or repealed by a majority
of the number of directors then constituting the Board of Directors at any
regular meeting of the Board of Directors without prior notice, or at any
special meeting of the Board of Directors if notice of such alteration,
amendment, or repeal be contained in the notice of such special meeting.
14
<PAGE>
Exhibit 4.1
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement") made as of this 5th day of
November, 1998 by and among MEDIA METRIX, INC., a Delaware corporation (the
"Company"), and the securityholders of the Company set forth on Schedule I
hereto (the "Stockholders").
W I T N E S S E T H:
WHEREAS, the Company and RelevantKnowledge, Inc., a Delaware corporation
("RK"), have entered into an Agreement and Plan of Reorganization, dated as of
September 30, 1998 (the "Merger Agreement") pursuant to which RK will be merged
with and into the Company;
WHEREAS, the Stockholders who immediately prior to the Merger (as defined
in the Merger Agreement) were stockholders of RK were parties to the Third
Amended and Restated Investors' Rights Agreement of RK, dated as of July 9, 1998
(the "RK Investors' Rights Agreement") pursuant to which they had certain
registration rights with respect to their shares of common stock of RK;
WHEREAS, the Stockholders who immediately prior to the Merger were
stockholders of the Company were parties to the Series A Preferred Stock and
Warrant Purchase Agreement of the Company, dated as of April 14, 1997 (the "MMX
Purchase Agreement"), pursuant to which they had certain registration rights
with respect to their shares of Company's Common Stock (as defined below);
WHEREAS, the parties hereto desire to promote the interests of the Company
and the interests of the Stockholders by terminating the RK Investors' Rights
Agreement and the registration rights provisions of the MMX Purchase Agreement
and establishing herein certain terms and conditions upon which the Company will
register the shares of Common Stock owned by the Stockholders.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Certain Definitions. As used herein, the following terms shall have the
following respective meanings:
"Common Stock" means the common stock, par value $.01 per share, of
the Company.
-1-
<PAGE>
"Commission" shall mean the Securities and Exchange Commission or
any other Federal agency at the time administering the Securities Act of 1933,
as amended (the "Securities Act").
"Holder" shall mean any holder of the Registrable Securities.
"Initiating Holders" shall mean the Holders who in the aggregate
hold (i) in the event of a registration pursuant to Section 4.1 hereof, more
than twenty-five percent (25%) of the Registrable Securities and (ii) in the
event of a registration pursuant to Section 4.3 hereof, more than ten percent
(10%) of the Registrable Securities.
"Restricted Securities" shall mean the securities of the Company
required to bear or bearing the legend set forth in Section 2 hereof.
"Registrable Securities" shall mean shares of (i) the Common Stock
held by the Stockholders, (ii) the Common Stock issuable upon exercise of the
MMX Common Stock Warrants (as defined in the Merger Agreement) and the RKI
Common Stock Warrants (as defined in the Merger Agreement) and (iii) Common
Stock issued upon any stock split, stock dividend, merger, consolidation,
recapitalization or similar event, excluding all such shares which (x) have been
registered under the Securities Act and disposed of in accordance with the
registration statement covering them, (y) have been publicly sold pursuant to
Rule 144 (or any successor rule) under the Securities Act or (z) are eligible
for sale without restriction under Rule 144(k) (or any successor rule) under the
Securities Act.
The terms "register", "registered" and "registration" shall refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expenses incurred by the
Company in compliance with Sections 4, 5 and 6 hereof, including, without
limitation, all registration, qualification and filing fees, exchange listing
fees, printing expenses, escrow fees, fees and disbursements of counsel for the
Company, blue sky fees and expenses, the fees and expenses of one counsel for
all the selling Holders and other security holders and the expense of any
special audits incident to or required by any such registration (but excluding
the compensation of regular employees of the Company, which shall be paid in any
event by the Company).
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for any Holder (other than the fees and disbursements
of counsel included under Registration Expenses).
-2-
<PAGE>
"Stockholders' Agreement" means the Stockholders Agreement of even
date herewith among the Company and certain of its securityholders as such
agreement may be amended or modified from time to time.
2. Restrictive Legend. Each certificate representing the Common Stock or
any other securities issued upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event shall (unless otherwise
permitted or unless the securities evidenced by such certificate shall have been
registered under the Securities Act) be stamped or otherwise imprinted with a
legend in substantially the following form (in addition to any legend required
under applicable state securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR ANY STATE SECURITIES LAWS. NO TRANSFER OF
SAID SECURITIES SHALL BE PERMITTED IN THE ABSENCE OF (I) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS
COVERING THE SHARES PROPOSED TO BE TRANSFERRED OR (II) AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER WILL NOT REQUIRE
COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OF THE ACT AND OF ANY
APPLICABLE STATE LAWS.
Upon request of a holder of such a certificate, the Company shall
remove the foregoing legend from the certificate or issue to such holder a new
certificate therefor free of any transfer legend, if (x) with such request, the
Company shall have received either an opinion referred to in Section 3 to the
effect that any transfer by such holder of the securities evidenced by such
certificate will not violate the Securities Act and applicable state securities
laws, (y) in accordance with paragraph (k) of Rule 144, such holder is not and
has not during the last three months been an affiliate of the Company and such
holder has held the securities represented by such certificate for a period of
at least two years. The Company will use its best efforts to assist any holder
in complying with the provisions of this Section 2 for removal of the legend set
forth above.
3. Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Agreement. Prior to any proposed transfer
of any Restricted Securities (other than under circumstances described in
Sections 4, 5 and 6 hereof), the holder thereof shall give written notice to the
Company of such holder's intention to effect such transfer. Each such notice
shall describe the manner and circumstances of the proposed transfer in
sufficient detail, and shall be accompanied (except in transactions in
compliance with Rule 144) by a written opinion of legal counsel who shall be
satisfactory to the Company, addressed to the Company and reasonably
satisfactory in form and substance to the Company's counsel, to the effect that
the proposed
-3-
<PAGE>
transfer of the Restricted Securities may be effected without registration under
the Securities Act and applicable state securities laws whereupon the holder of
such Restricted Securities, subject to compliance with the Stockholders'
Agreement, shall be entitled to transfer such Restricted Securities in
accordance with the terms of the notice delivered by the holder to the Company.
Each certificate evidencing the Restricted Securities transferred as above
provided shall bear the appropriate restrictive legend set forth above unless
the opinion of counsel referred to above is to the further effect that no such
legend is required in order to establish compliance with any provisions of the
Securities Act or applicable state securities laws.
4. Registration Rights.
4.1 (a) Request for Registration. If at any time after 180 days after the
effective date of the Company's initial firm commitment underwritten public
offering of any of its Common Stock (an "Initial Public Offering"), the Company
shall receive from Initiating Holders a written request that the Company effect
any registration with respect to all or a part of the Registrable Securities,
the Company will:
(i) promptly within ten (10) days of receipt of such request give
written notice of the proposed registration to all other Holders; and
(ii) as soon as practicable, but in any event no later than ninety
(90) days after receipt of such request, use its best efforts to effect such
registration (including, without limitation, the execution of an undertaking to
file post-effective amendments, appropriate qualification under applicable blue
sky or other state securities laws (except that the Company shall not be
required to qualify the offering under the blue sky laws of any jurisdiction in
which the Company would be required to execute a general consent to service of
process unless the Company is already subject to service in such jurisdiction)
and appropriate compliance with applicable regulations issued under the
Securities Act) as may be so requested and as would permit or facilitate the
sale and distribution of all or such portion of such Registrable Securities as
are specified in such request, together with all or such portion of the
Registrable Securities of any Holder or Holders joining in such request as are
specified in a written request given within thirty (30) days after receipt of
such written notice from the Company; provided that the Company shall not be
obligated to effect, or to take any action to effect, any such registration
pursuant to this Section 4.1 after the Company has effected two such
registrations pursuant to this Section 4.1 and each such registration has been
declared or ordered effective by the Commission. Subject to the foregoing
limitation, the Company shall file a registration statement covering the
Registrable Securities so requested to be registered as soon as practicable
after receipt of the request of the Initiating Holders.
The registration statement filed pursuant to the request of the
Initiating Holders may, subject to the provisions of Section 4.1(b) below,
include other securities of the Company which are held by officers or directors
of the Company or which are held by persons who, by virtue of agreements with
the Company are entitled to include their securities in any such registration
(collectively, "Other Stockholders") and may include securities of the Company
-4-
<PAGE>
being sold for the account of the Company. The Company shall promptly give
notice of any registration proposed under this Section 4.1 to such Other
Stockholders.
(b) Underwriting. If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
Section 4.1(a) above and the Company shall include any information that it shall
have received as to the nature of the underwriting in the written notice of the
Company referred to in Section 4.1(a) above including the name of the
underwriter or representative thereof selected for such underwriting. The right
of any Holder to registration pursuant to Section 4 shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder with
respect to such participation and inclusion) to the extent provided herein. A
Holder may elect to include in such underwriting all or a part of the
Registrable Securities held by him. Any underwriter selected by the Initiating
Holders shall be subject to the Company's approval, which approval shall not be
unreasonably withheld.
If the Company shall request inclusion in any registration pursuant
to Section 4.1 of securities being sold for its own account, or if the Other
Stockholders shall request inclusion in any registration pursuant to Section
4.1, the Initiating Holders may, on behalf of all Holders, offer to include the
securities of the Company and such Other Stockholders in the underwriting and
may condition such offer on their acceptance of the further applicable
provisions of this Agreement. The Company shall (together with all Holders and
Other Stockholders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or representative of the underwriters selected for such underwriting
by the Company, which underwriter(s) shall be reasonably acceptable to a
majority in interest of the Initiating Holders. Notwithstanding any other
provision of this Section 4.1, if the representative of the underwriters advises
the Initiating Holders in writing that, in its opinion, marketing factors
require a limitation on the number of shares to be underwritten, the Company
shall so advise all Holders of Registrable Securities whose securities would
otherwise be underwritten pursuant hereto, and the number of shares of
Registrable Securities and other securities that may be included in the
registration and underwriting shall be allocated in the following manner: (i)
the securities being sold for the account of the Company shall be excluded from
such registration and underwriting to the extent required by such limitation,
and (ii) if a limitation on the number of shares is still required, the
securities held by Other Stockholders of the Company shall be excluded from such
registration and underwriting to the extent required by such limitation in
proportion, as nearly as practicable, to the respective amounts of securities
requested to be registered by such Other Stockholders, and (iii) if a limitation
on the number of shares is still required, the securities being sold for the
account of the Holders shall be excluded from such registration and underwriting
to the extent required by such limitation, in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities and other
securities which they had requested to be included in such registration. If the
Company or any Holder of Registrable Securities or Other Stockholder who has
requested inclusion in such registration as provided above disapproves of the
terms of the underwriting, such person may elect to withdraw
-5-
<PAGE>
therefrom by written notice to the Company, the underwriter and the Initiating
Holders. The securities so withdrawn shall also be withdrawn from registration.
(c) The Company shall have the right to defer the request of the
Initiating Holders to effect a registration for up to one hundred and twenty
(120) calendar days if, in the Company's judgment, effecting a registration
would not be in the Company's best interest.
4.2 Company Registration.
(a) If, at any time following an Initial Public Offering, the
Company shall determine to register any of its securities either for its own
account or the account of a security holder or holders exercising their
respective demand registration rights, other than a registration relating solely
to employee benefit plans, a registration relating solely to a Commission Rule
145 transaction or a registration on any registration form which does not permit
secondary sales, the Company will:
(i) promptly within ten (10) days of such determination give
to each Holder written notice thereof; and
(ii) include in such registration and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made by any Holder within twenty (20) days after receipt of the
written notice from the Company described in clause (i) above, except as set
forth in Section 4.2(b) below. Such written request may specify all or a part of
a Holder's Registrable Securities.
(b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders by written notice. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company distributing its securities for its own account through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected by the Company. Notwithstanding any other
provision of this Section 4.2, if the representative of the underwriters advises
the Company in writing that, in its opinion, marketing factors require a
limitation on the number of shares to be underwritten, the Company shall so
advise all Holders of securities requesting registration, and the number of
shares that may be included in the registration and underwriting shall be
allocated first to the Company for securities being sold for its account and
then in the following manner: (i) the securities requested to be registered by
officers or directors of the Company shall be excluded from such registration
and underwriting to the extent required by such limitation in proportion, as
nearly as practicable, to the respective amounts of securities requested to be
registered by such officers and directors, and (ii) if a limitation on the
number of shares is still required, the securities being sold for the account of
the Holders and Other Stockholders shall be excluded from such registration and
underwriting to the extent required by such limitation in proportion, as nearly
as practicable, to the respective amounts of Registrable Securities and other
securities which they had requested to be included in such registration. If any
Holder of Registrable Securities or Other Stockholder
-6-
<PAGE>
who has requested inclusion in such registration as provided above disapproves
of the terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company and the underwriter.
4.3 Subsequent Demand Registrations and Registration on Form S-3.
(a) In addition to the rights contained in the foregoing provisions
of this Section 4, the Initiating Holders shall have unlimited rights to request
from time to time registrations on Form S-3 which are anticipated at the time of
such demand to result in aggregate gross proceeds to the Holders of at least
$2,000,000. Such requests shall be in writing, shall state the number of shares
of Registrable Securities to be disposed of and the intended methods of
disposition of such shares by the Holders.
(b) The Company shall use its best efforts to qualify for
registration on Form S-3 or any comparable or successor form; and to that end
the Company shall register (whether or not required by law to do so) the Common
Stock under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
in accordance with the provisions of the Exchange Act following the effective
date of the Initial Public Offering.
The registration statement filed pursuant to the request of the
Initiating Holders may, subject to the allocation priority set forth in Section
4.1(b) above, include other securities of the Company which are held by Other
Stockholders and may include securities of the Company being sold for the
account of the Company. The Company shall promptly give notice of any
registration proposed under this Section 4.3 to such Other Stockholders.
4.4 Expenses of Registration.
(a) The Company shall bear all Registration Expenses and the selling
securityholders shall bear all Selling Expenses (in proportion, as nearly as
practicable, to the securities of each securityholder being registered) incurred
in connection with any registration, qualification or compliance pursuant to the
provisions of Section 4.1 or 4.2.
(b) The Company shall bear all Registration Expenses for two (2)
registrations pursuant to Section 4.3 and the selling securityholders shall bear
all Selling Expenses in connection therewith (in proportion, as nearly as
practicable, to the securities of each securityholder then being registered).
Thereafter, selling securityholders shall bear all Selling and Registration
Expenses (in proportion, as nearly as practicable, to the securities of each
securityholder then being registered).
4.5 Registration Procedures. In the case of each registration effected by
the Company pursuant to this Agreement, the Company will keep each Holder
advised in writing as to the initiation of each registration and as to the
completion thereof. At its expense, the Company will:
-7-
<PAGE>
(a) Keep such registration effective for a period of one hundred
twenty (120) days or until the Holder or Holders have completed the distribution
described in the registration statement relating thereto, whichever first
occurs; provided, however, that in the case of any registration of Registrable
Securities on Form S-3 which are intended to be offered on a continuous or
delayed basis, such 120-day period shall be extended, if necessary, to keep the
registration statement effective until all such Registrable Securities are sold,
provided that if Rule 415, or any successor rule under the Securities Act,
permits an offering on a continuous or delayed basis, and provided further that
if applicable rules under the Securities Act governing the obligation to file a
post-effective amendment permit, in lieu of filing a post-effective amendment
which (y) includes any prospectus required by Section 10(a)(3) of the Securities
Act or (z) reflects facts or events representing a material or fundamental
change in the information set forth in the registration statement, the
incorporation by reference of information required to be included in (y) and (z)
above to be contained in periodic reports filed pursuant to Section 13 or 15(d)
of the Exchange Act in the registration statement;
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of securities
covered by such registration statement;
(c) Furnish such number of prospectuses and other documents incident
thereto, including any term sheet or any amendment of or supplement to the
prospectus, as a selling Holder from time to time may reasonably request;
(d) Notify each seller, at its last known addresses as set forth in
the Company's books and records, of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing, and at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchaser of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing;
(e) Cause all such Registrable Securities to be listed on each, if
any, securities exchange on which similar securities issued by the Company are
then listed;
(f) Provide a transfer agent and registrar for all Registrable
Securities and a CUSIP number for all such Registrable Securities, in each case
not later than the effective date of such registration;
-8-
<PAGE>
(g) Make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement, and any attorney or accountant retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers and
directors to supply all information reasonably requested by any such seller,
underwriter, attorney or accountant in connection with such registration
statement; provided, however, that such seller, underwriter, attorney or
accountant shall agree to hold in confidence and trust all information so
provided;
(h) Furnish to each selling Holder a signed counterpart, addressed
to the selling Holder, of an opinion of counsel for the Company, dated the
effective date of the registration statement, and "comfort" letters signed by
the Company's independent public accountants who have examined and reported on
the Company's financial statements included in the registration statement, to
the extent permitted by the standards of the AICPA or other relevant
authorities, covering substantially the same matters with respect to the
registration statement (and the prospectus included therein) and (in the case of
the accountants' "comfort" letters) with respect to events subsequent to the
date of the financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' "comfort" letters delivered to the
underwriters in underwritten public offerings of securities; and
(i) Otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve months, but not more than eighteen months, beginning
with the first month after the effective date of the Registration Statement,
which earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act.
5. Indemnification.
(a) The Company will indemnify each Holder, each of its officers,
directors and partners, and each person controlling such Holder, with respect to
which registration, qualification or compliance has been effected pursuant to
Section 4 hereof, and each underwriter, if any, and each person who controls any
underwriter, against all claims, losses, damages and liabilities (or actions,
proceedings or settlements in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus or other document (including any related registration statement)
incident to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each such Holder, each of its officers, directors and partners,
and each person controlling such Holder, each such underwriter and each person
who controls any such underwriter, for any legal and any other expenses as they
are reasonably incurred in connection with investigating and defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission
-9-
<PAGE>
based upon written information furnished to the Company by such Holder or
underwriter and stated to be specifically for use therein or to the extent due
to the failure of such Holder or underwriter to provide an updated prospectus or
other document to a purchaser at a time when the Company has informed such
Holder or underwriter of a material misstatement or omission in a prospectus or
other document and has provided updated prospectuses or other documents
correcting such misstatement or omission.
(b) Each Holder will, if Registrable Securities held by it are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers and each underwriter, if any, of the Company's securities covered by
such a registration statement, each person who controls the Company or such
underwriter within the meaning of the Securities Act and the rules and
regulations thereunder, each other Holder and each of their officers, directors
and partners, and each person controlling such Holder, against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus or other document,
or any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company and such Holders, directors, officers, partners,
persons, underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus or other document in reliance upon and in conformity with written
information furnished to the Company by such Holder and stated to be
specifically for use therein; provided, however, that the obligations of such
Holders hereunder shall be limited to an amount equal to the proceeds to each
such Holder of securities sold as contemplated herein.
(c) Each party entitled to indemnification under this Section 5 (the
"Indemnified Party") shall give notice in writing to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified Party
may participate in such defense at such Indemnified Party's expense; provided,
however, that the Indemnifying Parties shall pay the expense of one counsel for
all similarly situated Indemnified Parties if representation of such Indemnified
Parties by the counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential differing interests between the Indemnified Parties
and any other party represented by such counsel in such proceeding, and provided
further that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Section 5, unless such failure prejudices the ability of the Indemnifying Party
to defend against the claims asserted against the Indemnified Party. No
Indemnifying Party, in the defense of any
-10-
<PAGE>
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation and no Indemnified Party shall consent to entry of
any judgment or settle such claim or litigation without the prior written
consent of the Indemnifying Party. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 5 is
unavailable to an Indemnified Party in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the Company on the one hand and the stockholders offering securities in the
offering (the "Selling Stockholders") on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and the Selling Stockholders on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or by the Selling Stockholders and the parties' relevant intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Selling Stockholders agree that it would not be
just and equitable if contribution pursuant to this Section 5(d) were based
solely upon the number of entities from whom contribution was requested or by
any other method of allocation which does not take account of the equitable
considerations referred to above in this Section 5(d). The amount paid or
payable by an Indemnified Party as a result of the losses, claims, damages and
liabilities referred to above in this Section 5(d) shall be deemed to include
any legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim, subject to
the provisions of Section 5(d) hereof. Notwithstanding the provisions of this
Section 5(d), no Selling Stockholder shall be required to contribute any amount
or make any other payments under this Agreement which in the aggregate exceed
the net proceeds received by such Selling Stockholder. No person guilty of
fraudulent misrepresentation (within the meaning of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
6. Information by Holder. Each Holder of Registrable Securities shall
furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may reasonably request in
writing and as shall be reasonably required in connection with any registration,
qualification or compliance referred to in this Agreement.
7. "Lock-Up" Agreement. Each Stockholder, if requested by the Company and
the managing underwriter of an offering by the Company of Common Stock or other
securities of the Company pursuant to a Registration Statement, shall agree not
to sell publicly or otherwise
-11-
<PAGE>
transfer or dispose of any Registrable Shares or other securities of the Company
held by such Stockholder for a specified period of time (not to exceed one
hundred eighty (180) days) following the effective date of such Registration
Statement; provided, that all executive officers and directors of the Company
enter into similar agreements.
8. Limitations on Registration of Issues of Securities. From and after the
date of this Agreement, the Company shall not enter into any agreement with any
holder or prospective holder of any securities of the Company giving such holder
or prospective holder a right to require the Company to initiate any
registration of any securities of the Company or to require the Company, upon
any registration of any of its securities, to include, among the securities
which the Company is then registering, securities owned by such holder which is
superior to the rights granted hereunder, except with the prior written consent
of the holders of a majority of the Registrable Securities.
9. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of the
Restricted Securities to the public without registration, the Company agrees to:
(a) use its best efforts to make and keep public information
available as those terms are understood and defined in Rule 144 under the
Securities Act at all times from and after ninety (90) days following the
effective date of the first registration under the Securities Act filed by the
Company for an offering of its securities to the general public;
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act at any time after it has become subject to
such reporting requirements; and
(c) so long as the Holders own any Restricted Securities, furnish to
the Holders forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 (at any time from and
after ninety (90) days following the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
so filed as the Holders may reasonably request in availing themselves of any
rule or regulation of the Commission allowing the Holders to sell any such
securities without registration.
10. Transfer or Assignment of Registration Rights. The rights to cause the
Company to register securities granted to the Holders by the Company under
Section 4 may be transferred or assigned, provided that the Company is given
written notice at the time of or within a reasonable time after said transfer or
assignment, stating the name and address of said transferee or assignee and
identifying the Registrable Securities with respect to which such registration
rights are being transferred or assigned, and provided further that the
transferee or assignee of such rights assumes the obligations of the Holders
under this Agreement, and
-12-
<PAGE>
provided further that said transferee or assignee is not a Competitor or an
affiliate of a Competitor of the Company. A "Competitor" shall mean any of the
following: AC Nielsen, Ceridian, Nielsen Media Research, Inc., Forrester
Research, IntelliQuest, Odessey, Reuters, Site-Centric measurement systems
(e.g. Internet Profiles Corporation), Consumer-Centric measurement systems (e.g.
NetRatings and PC Data), International Data Corporation, Gartner Group, @Plan,
United News and Media, VNU, WPP and any others which, now or in the future,
compete directly with the Company.
11. Termination. The provisions of Sections 4.1, 4.2 and 4.3 of this
Agreement shall terminate on the third anniversary of the Company's Initial
Public Offering.
12. Amendment; Waiver. No amendment, alteration or modification of this
Agreement shall be valid unless in each instance such amendment, alteration or
modification is expressed in a written instrument executed by the Holders of at
least sixty-six and two-thirds percent (66-2/3%) of the shares of the
Registrable Securities. No waiver of any provision of this Agreement shall be
valid unless it is expressed in a written instrument duly executed by the party
or parties making such waiver. The failure of any party to insist, in any one or
more instances, on performance of any of the terms and conditions of this
Agreement shall not be construed as a waiver or relinquishment of any rights
granted hereunder or of the future performance of any such term, covenant or
condition but the obligation of any party with respect thereto shall continue in
full force and effect.
13. Specific Performance. The parties hereby declare that it is impossible
to measure in money the damages which will accrue to a party hereto by reason of
a failure to perform any of the obligations under this Agreement. Therefore, all
parties hereto shall have the right to specific performance of the obligations
of the other parties under this Agreement, and if any party hereto shall
institute an action or proceeding to enforce the provisions hereof, any person
(including the Company) against whom such action or proceeding is brought hereby
waives the claim or defense therein that such party has an adequate remedy at
law, and such person shall not urge in any such action or proceeding the claim
or defense that such remedy at law exists.
14. Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by first-class mail, postage
prepaid, return receipt requested, or transmitted by facsimile or delivered
either by hand, by messenger or by nationally recognized overnight courier,
addressed:
(a) if to the holders of the Registrable Securities, at the
addresses set forth on the Schedule I attached hereto or at such other
address as they shall have furnished to the Company in writing.
(b) if to any other holder of securities of the Company at such
address as such holder shall have furnished the Company in writing, or,
until any such holder so furnishes
-13-
<PAGE>
an address to the Company, then to and at the address of the last holder
thereof who has so furnished an address to the Company, and
(c) if to the Company, to the following address, or at such other
address as the Company shall have furnished to the Holders,
Media Metrix, Inc.
900 West Shore Road
Port Washington, NY 11050
Attention: Tod Johnson
Fax: (516) 625-4888
with a copy to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Attention: Richard H. Gilden, Esq.
Fax: (212) 752-5958
Alternatively, to such other address as a party hereto supplies to each
other party in writing.
15. Successors and Assigns. All the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective permitted transferees, successors and assigns of the parties hereto,
whether so expressed or not.
16. Governing Law. This Agreement is to be governed by and interpreted
under the laws of the State of New York without giving effect to the principles
of conflicts of laws thereof.
17. Titles and Subtitles. The titles of the sections of this Agreement are
for the convenience of reference only and are not to be considered in construing
this Agreement.
18. Severability. The invalidity or unenforceability of any provisions of
this Agreement shall not be deemed to affect the validity or enforceability of
any other provision of this Agreement.
19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
20. Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with respect to the subject
matter hereof and supersedes all previous agreements, arrangements and
understandings, whether written or oral, with respect to the subject matter
hereof.
-14-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
MEDIA METRIX, INC.
By: /s/ Tod Johnson
----------------------------------------------
Name: Tod Johnson
Title: CEO
HOLDERS:
THE NPD GROUP, INC.
By: /s/ Tod Johnson
----------------------------------------------
Name: Tod Johnson
Title: Chairman and Chief Executive Officer
THE 1995 STACEY JOHNSON TRUST
By:
----------------------------------------------
Name: Franklin L. Green
Title: Trustee
THE 1995 SCOTT JOHNSON TRUST
By:
----------------------------------------------
Name: Franklin L. Green
Title: Trustee
GREYLOCK IX LIMITED PARTNERSHIP
By: Greylock IX GP Limited Partnership
By:
----------------------------------------------
Name: William W. Helman
Title: General Partner
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
MEDIA METRIX, INC.
By:
----------------------------------------------
Name: Tod Johnson
Title: CEO
HOLDERS:
THE NPD GROUP, INC.
By:
----------------------------------------------
Name: Tod Johnson
Title: Chairman and Chief Executive Officer
THE 1995 STACEY JOHNSON TRUST
By: /s/ Franklin L. Green
----------------------------------------------
Name: Franklin L. Green
Title: Trustee
THE 1995 SCOTT JOHNSON TRUST
By: /s/ Franklin L. Green
----------------------------------------------
Name: Franklin L. Green
Title: Trustee
GREYLOCK IX LIMITED PARTNERSHIP
By: Greylock IX GP Limited Partnership
By:
----------------------------------------------
Name: William W. Helman
Title: General Partner
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
MEDIA METRIX, INC.
By:
----------------------------------------------
Name: Tod Johnson
Title: CEO
HOLDERS:
THE NPD GROUP, INC.
By:
----------------------------------------------
Name: Tod Johnson
Title: Chairman and Chief Executive Officer
THE 1995 STACEY JOHNSON TRUST
By:
----------------------------------------------
Name: Franklin L. Green
Title: Trustee
THE 1995 SCOTT JOHNSON TRUST
By:
----------------------------------------------
Name: Franklin L. Green
Title: Trustee
GREYLOCK IX LIMITED PARTNERSHIP
By: Greylock IX GP Limited Partnership
By: /s/ William W. Helman
----------------------------------------------
Name: William W. Helman
Title: General Partner
<PAGE>
OAK INVESTMENT PARTNERS VI, LIMITED PARTNERSHIP
By: Oak Associates VI, LLC, its General Partner
MANAGING MEMBER OF OAK
ASSOCIATES VI, LLC, By: /s/ Ed Glassmeyer
THE GENERAL PARTNER OF ----------------------------------------------
OAK INVESTMENT PARTNERS VI, Name: Ed Glassmeyer
LIMITED PARTNERSHIP Title: Managing Member of Oak Associates VI, LLC
OAK VI AFFILIATES FUND, LIMITED PARTNERSHIP
By: Oak VI Affiliates, LLC, its General Partner
MANAGING MEMBER OF OAK
OAK VI AFFILIATES LLC, By: /s/ Ed Glassmeyer
THE GENERAL PARTNER OF ----------------------------------------------
OAK VI AFFILIATES FUND, Name: Ed Glassmeyer
LIMITED PARTNERSHIP Title: Managing Member of Oak Associates VI, LLC
VENROCK ASSOCIATES II, L.P.
By:
----------------------------------------------
Name: David Hathaway
Title: General Partner
VENROCK ASSOCIATES
By:
----------------------------------------------
Name: David Hathaway
Title: General Partner
<PAGE>
OAK INVESTMENT PARTNERS VI, LIMITED PARTNERSHIP
By: Oak Associates VI, LLC, its General Partner
By:
----------------------------------------------
Name: Ed Glassmeyer
Title: Managing Member of Oak Associates VI, LLC
OAK VI AFFILIATES FUND, LIMITED PARTNERSHIP
By: Oak VI Affiliates, LLC, its General Partner
By:
----------------------------------------------
Name: Ed Glassmeyer
Title: Managing Member of Oak Associates VI, LLC
VENROCK ASSOCIATES II, L.P.
By: /s/ David Hathaway
----------------------------------------------
Name: David Hathaway
Title: General Partner
VENROCK ASSOCIATES
By: /s/ David Hathaway
----------------------------------------------
Name: David Hathaway
Title: General Partner
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Timothy F.S. Cobb
--------------------------------------------------
Timothy F.S. Cobb
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
THE TIMOTHY FITZGERALD STEVENS COBB
1996 CHILDREN'S TRUST
Signature: /s/ David A. Crichlow
---------------------------------------
By:
----------------------------------------------
Trustee
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
WHITNEY EQUITY PARTNERS, L.P.
J.H. Whitney Equity Partners LLC,
Its General Partner
By: /s/ Daniel J. O'Brien
----------------------------------------------
Daniel J. O'Brien, Managing Member
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Gibson Thomas
--------------------------------------------------
Gibson Thomas
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Robert W. Ross
--------------------------------------------------
Robert W. Ross
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Onuoha O. Odim
--------------------------------------------------
Onuoha O. Odim
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ William Hartman
--------------------------------------------------
William Hartman
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
UNTERBERG HARRIS PRIVATE
EQUITY PARTNERS, C.V.
Signature: /s/ John Dexheimer
---------------------------------------
By: John Dexheimer
----------------------------------------------
Member of its Investment General Partner,
Unterberg Harris LLC
UNTERBERG HARRIS PRIVATE
EQUITY PARTNERS, L.P.
Signature: /s/ John Dexheimer
---------------------------------------
By: John Dexheimer
----------------------------------------------
Member of its Investment General Partner,
Unterberg Harris LLC
C.E. UNTERBERG, TOWBIN
Signature: /s/ John Dexheimer
---------------------------------------
By: John Dexheimer
----------------------------------------------
Title: Managing Director
-------------------------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
INVESTMENT A.B. BURE
Signature: /s/ Kurt Leman
---------------------------------------
By: Kurt Leman
----------------------------------------------
Title:
-------------------------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
INTIMIDATOR INVESTMENT GROUP, LLC
Signature: /s/ Michael D. Easterly
---------------------------------------
By: Michael D. Easterly
----------------------------------------------
Title: Chief Manager
-------------------------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
INTIMIDATOR INVESTMENT GROUP, LLC
Signature: /s/ Michael D. Easterly
---------------------------------------
By: Michael D. Easterly
----------------------------------------------
Title: Chief Manager
-------------------------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Peter B. Kupferberg
--------------------------------------------------
Peter B. Kupferberg
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Jann H. Adams
--------------------------------------------------
Jann H. Adams
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
TRUSTEE, WSGR RETIREMENT PLAN
FBO HENRY V. BARRY
Signature: /s/ [ILLEGIBLE]
---------------------------------------
By:
----------------------------------------------
Title:
-------------------------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
BAYVIEW INVESTORS, LTD.
Signature: /s/ [ILLEGIBLE]
---------------------------------------
By:
----------------------------------------------
Title: Authorized Signatory
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
BEAN REALTY PARTNERS, L.P.
Signature: /s/ Mark McDonald
---------------------------------------
By: Mark McDonald
----------------------------------------------
Title: G.P.
-------------------------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Gene S. Brandt
--------------------------------------------------
Gene S. Brandt
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ David Braunschvig
--------------------------------------------------
David Braunschvig
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
ROGER BRIGGS JR. TRUST DTD 11/12/90
Signature: /s/ ROGER BRIGGS, JR.
---------------------------------------
By: Roger Briggs, Jr.
----------------------------------------------
Trustee
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
BRISCO-DAVIS INVESTMENTS, L.L.C
Signature: /s/ Brice R. Smith, III
---------------------------------------
By: BRICE R. SMITH, III
----------------------------------------------
Title: MANAGER
-------------------------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
CF&G PARTNERS I
Signature: /s/ Maria Lisa Caldwell
---------------------------------------
By: Maria Lisa Caldwell
----------------------------------------------
Title: Managing Partner
-------------------------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Kip R. Caffey
--------------------------------------------------
Kip R. Caffey
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Meredith Caldwell, III
--------------------------------------------------
Meredith Caldwell, III
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
MICHAEL J. COCHRAN AND
REBECCA DIMLING COCHRAN
/s/ Michael J. Cochran
--------------------------------------------------
Michael J. Cochran
/s/ Rebecca Dimling Cochran
--------------------------------------------------
Rebecca Dimling Cochran
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
W. ROBERT AND LESLIE A. DAHL
/s/ W. Robert Dahl
--------------------------------------------------
W. Robert Dahl
/s/ Leslie A. Dahl
--------------------------------------------------
Leslie A. Dahl
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
DOROTHY DAVIS SMITH, TRUSTEE UA DATED
7/14/80, THE DDS REVOCABLE TRUST
Signature: /s/ Dorothy Davis Smith
---------------------------------------
By:
----------------------------------------------
Dorothy Davis Smith, Trustee
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
EQUITABLE SECURITIES CORP.
FBO RAYMOND H. PIRTLE, JR.
401(k) PLAN DTD 12/14/89
Signature: /s/ Raymond H. Pirtle, Jr.
---------------------------------------
By:
----------------------------------------------
Title:
-------------------------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Robert B. Friedman
--------------------------------------------------
Robert B. Friedman
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
FXI DEALERS LIMITED
Signature: /s/ [ILLEGIBLE]
---------------------------------------
By: [ILLEGIBLE]
----------------------------------------------
Title: Director
-------------------------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Robert J. Garry
--------------------------------------------------
Robert J. Garry
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
GFKK LLC
Signature: /s/ Gregg [ILLEGIBLE]
---------------------------------------
By: Gregg [ILLEGIBLE]
----------------------------------------------
Title: Member
-------------------------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Kathy Harris
--------------------------------------------------
Kathy Harris
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ William H. Hess
--------------------------------------------------
William H. Hess
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Elizabeth A. Holland
--------------------------------------------------
Elizabeth A. Holland
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Thomas A. Hunter IV
--------------------------------------------------
Thomas A. Hunter IV
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
INTELLIGENT SYSTEMS CORPORATION
Signature: /s/ [ILLEGIBLE]
---------------------------------------
By: [ILLEGIBLE]
----------------------------------------------
Title: [ILLEGIBLE]
-------------------------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
INVESTOR INTERNATIONAL (CAYMAN) LIMITED
Signature: /s/ Edouard Stern
---------------------------------------
By: Edouard Stern
----------------------------------------------
Title: Director
-------------------------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
JEDFAM INVESTMENTS, L.L.C.
Signature: /s/ Brice R. Smith, III
---------------------------------------
By: Brice R. Smith, III
----------------------------------------------
Title: Manager
-------------------------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Boland Jones
--------------------------------------------------
Boland Jones
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ William D. Kelly
--------------------------------------------------
William D. Kelly
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Deborah R. Levy
--------------------------------------------------
Deborah R. Levy
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Linda R. Levy
--------------------------------------------------
Linda R. Levy
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Paul Levy
--------------------------------------------------
Paul Levy
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Timothy Levy
--------------------------------------------------
Timothy Levy
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Craig Macnab
--------------------------------------------------
Craig Macnab
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Andrew L. May
--------------------------------------------------
Andrew L. May
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Cade McDonald
--------------------------------------------------
Cade McDonald
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ George M. Miller, II
--------------------------------------------------
George M. Miller, II
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Edward A. Montag
--------------------------------------------------
Edward A. Montag
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Charles Gregory Nicholson
--------------------------------------------------
Charles Gregory Nicholson
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Raymond H. Pirtle, Jr.
--------------------------------------------------
Raymond H. Pirtle, Jr.
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Brent G. Ray
--------------------------------------------------
Brent G. Ray
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Jan B. Riven
--------------------------------------------------
Jan B. Riven
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Richardson M. Roberts
--------------------------------------------------
Richardson M. Roberts
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Julius Rosenwald III
--------------------------------------------------
Julius Rosenwald III
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
RANDOLPH W. AND JULIE D. SALISBURY
/s/ Randolph W. Salisbury
--------------------------------------------------
Randolph W. Salisbury
/s/ Julie D. Salisbury
--------------------------------------------------
Julie D. Salisbury
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
SIRROM CAPITAL CORPORATION 401(k) PLAN
FBO JOHN DYSLIN
Signature: /s/ Mana Lisa Caldwell
---------------------------------------
By: Mana Lisa Caldwell
----------------------------------------------
Title: Trustee
-------------------------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Karen Chase Smith
--------------------------------------------------
Karen Chase Smith
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Karen Chase Smith
--------------------------------------------------
Karen Chase Smith
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
ELLIOTT AND PAULA SOLOMON
/s/ Elliott Solomon
--------------------------------------------------
Elliott Solomon
/s/ Paula Solomon
--------------------------------------------------
Paula Solomon
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Harvey A. Wagner
--------------------------------------------------
Harvey A. Wagner
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ William A. Williamson, III
--------------------------------------------------
William A. Williamson, III
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Lloyd Winawer
--------------------------------------------------
Lloyd Winawer
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
WS INVESTMENT COMPANY 97A
Signature: /s/ James A. Terranova
---------------------------------------
By: James A. Terranova
----------------------------------------------
Title:
-------------------------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
BRIAN AND CAROL K. YOUNG
/s/ Brian S. Young
--------------------------------------------------
Brian S. Young
/s/ Carol K. Young
--------------------------------------------------
Carol K. Young
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
/s/ Jeffrey C. Levy
--------------------------------------------------
Jeffrey C. Levy
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
THE JEFFREY C. LEVY 1996 CHILDREN'S TRUST
Signature: /s/ Paul G. Levy
---------------------------------------
By: Paul G. Levy
----------------------------------------------
Trustee
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HOLDERS:
SIRROM CAPITAL CORPORATION
Signature: /s/ Kathy Harris
---------------------------------------
By: Kathy Harris
----------------------------------------------
Title: Vice President
-------------------------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
Schedule I
STOCKHOLDERS
Jann H. Adams
2200 High Point Trail
Atlanta, GA 30331
Trustee, WSGR Retirement Plan
FBO Henry V. Barry
650 Page Mill Road
Palo Alto, CA 94304-1050
Bayview Investors, Ltd.
Attn: George R. Hecht
Robertson Stephens & Co.
555 California Street
San Francisco, CA 94104
Bean Realty Partners, L.P.
200 31st Avenue, N., Suite 200
Nashville, TN 37203
Gene S. Brandt
2854 Wesley Heath, NW
Atlanta, GA 30327
David Braunschvig
875 Fifth Avenue
New York, NY 10021
Roger Briggs Jr. Trust dtd 11/12/90
c/o Equitable Trust Company, Agent
511 Union Street, Suite 800
Nashville, TN 37219-1743
Brisco-Davis/Investments LLC
13801 Riverport Drive #301
Maryland Heights, MO 63043
Investment A.B. Bure
Box 5419
402 29 Goteburg,
SWEDEN
Kip R. Caffey
3820 Castlegate Drive NW
Atlanta, GA 30327
Meredith Caldwell III
200 Hillwood Blvd.
Nashville, TN 37205
CF&G Partners I
Attn: Maria Lisa Caldwell
4013 Harding Place
Nashville, TN 37215
Timothy F.S. Cobb
373 Angier Court
Atlanta, GA 30312
The Timothy Fitzgerald Stevens Cobb
1996 Children's Trust
373 Angier Court
Atlanta, GA 30312
Michael J. Cochran and
Rebecca Dimling Cochran
1101 W. Nancy Creek Drive
Atlanta, GA 30319
Robert and Leslie Dahl
46 Quail Road
Greenwich, CT 06831
<PAGE>
Dorothy Davis Smith, Trustee UA 7/14/80,
The DDS Revocable Trust
1016 Fort Mason Drive
Eustis, FL 32726
Sirrom Capital Corporation 401(k) Plan
FBO John Dyslin
500 Church Street, Suite 200
Nashville, TN 37219
Robert B. Friedman
19 Fairbanks Boulevard
Woodbury, NY 11797
FXI Dealers Limited
P.O. Box 274, Hugo Chambers
36 Hilgrove Street
St. Helier, Jersey, JE4 8TZ
Channel Islands (UK)
Robert J. Garry
7 Meadow Place
Larchmont, NY 10538
GFKK LLC
3399 Peachtree Road, NE
Suite 600
Atlanta, GA 30326
Kathy Harris
c/o Sirrom Capital Corporation
500 Church Street, Suite 200
Nashville, TN 37219
William Hartman
480 Park Avenue, Apt. 10-C
New York, NY 10022
William H. Hess
King & Spalding
191 Peachtree Street
Atlanta, GA 30303-1763
Elizabeth A. Holland
c/o Gene S. Brandt 2854
Wesley Heath, NW
Atlanta, GA 30327
Thomas A. Hunter IV
39 Hemlock Road
Short Hills, NJ 07078
Intelligent Systems Corporation
Attn: Leland Strange or Bonnie Herron
4355 Shackleford Road
Norcross, GA 30093
Intimidator Investment Group, LLC
Attn: Mike Easterly
3384 Peachtree Street, NE, #300
Atlanta, GA 30326
International Real Returns LLC
Attn: Zohar Yardeni
30 Rockefeller Plaza
59th Floor
New York, NY 10112
JedFam Investments, LLC
Attn: Brice R. Smith III
13801 Riverport Drive #301
Maryland Heights, MO 63043
Boland Jones
229 The Prado
Atlanta, GA 30309
<PAGE>
William D. Kelly
2 Glenageary Hall
Glenageary
Co. Dublin
Ireland
Milton Kramer
2660 Peachtree Road, Apt. 13E
Atlanta, GA 30305
Peter B. Kupferberg
399 W. Fullerton Pkwy.
Chicago, IL 60614
Deborah R. Levy
444 Central Park West, Apt. 9-B
New York, NY 10025
Jeffrey C. Levy
120 The Prado
Atlanta, GA 30309
Linda R. Levy
19 Greenwood Avenue
Lawrenceville, NJ 08648
Paul Levy
19 Greenwood Avenue
Lawrenceville, NJ 08648
Timothy Levy
1804 N. Quinn Street, Apt. 206
Arlington, VA 22209
The Jeffrey C. Levy 1996 Children's Trust
120 The Prado
Atlanta, GA 30309
Craig Macnab
428 Westview Avenue
Nashville, TN 37205
Andrew L. May
309 Walnut Drive
Nashville, TN 37205
Cade McDonald
2059 Northside Drive
Atlanta, GA 30305
George M. Miller II
515 Park Center Drive
Nashville, TN 37205
Edward A. Montag
3132 Argonne Drive, NW
Atlanta, GA 30305
Charles Gregory Nicholson
2105 Fairhaven Circle
Atlanta, GA 30305
Onuoha O. Odim
31 Grace Court
Brooklyn, NY 11201
Raymond H. Pirtle, Jr.
215 Lynwood Blvd.
Nashville, TN 37205
Equitable Securities Corp.
FBO Raymond H. Pirtle, Jr.
401(k) Plan dtd 12/14/89
Equitable Securities Corp.
511 Union Street
Nashville, TN 37219
Brent G. Ray
196 Kenner Avenue
Nashville, TN 37205
Jan B. Riven
111 Hardingwoods Place
Nashville, TN 37205
Richardson M. Roberts
2048 Timberwood Drive
Nashville, TN 37215
Julius Rosenwald III
RD 1
Carpenter Hill Road, RFD
Bennington, VT 05201
Robert W. Ross
1766 Corners Court
Atlanta, GA 30338
Sirrom Capital Corporation
Attn: Kathy Harris
500 Church Street, Suite 200
Nashville, TN 37219
Karen Chase Smith
441 Way Avenue
St. Louis, MO 63122
Elliott and Paula Solomon
34844 Indian Camp Trail
Scottsdale, AZ 85262
Gibson Thomas
2471 Chestnut Street
San Francisco, CA 94123
Unterberg Harris Equity Partners, L.P.
C.E. Unterberg, Towbin
Attn: John Dexheimer
Maria Magida
Swiss Bank Tower
10 E. 50th Street, 22nd Floor
New York, NY 10022
Unterberg Harris Equity Partners, C.V.
C.E. Unterberg, Towbin
Attn: John Dexheimer
Maria Magida
Swiss Bank Tower
10 E. 50th Street, 22nd Floor
New York, NY 10022
C.E. Unterberg, Towbin
Attn: John Dexheimer
Marty Magida
Swiss Bank Tower
10 E. 50th Street, 22nd Floor
New York, NY 10022
Harvey A. Wagner
2660 Peachtree Road, NW
Atlanta, GA 30305
Whitney Equity Partners, L.P.
J.H. Whitney & Company
Attn: Anthony Abate
177 Broad Street
Stamford, CT 06901
William A. Williamson, III
423 Sunnyside Drive
Nashville, TN 37205
Lloyd Winawer
650 Page Mill Road
Palo Alto, CA 94304-1050
<PAGE>
WS Investment Company 97A
650 Page Mill Road
Palo Alto, CA 94304-1050
Attention: James Terranova
Greylock IX Limited Partnership
One Federal Street
Boston, MA 02110
Oak Investment Partners VI, Limited
Partnership
One Gorham Island
Westport, CT 06880
Oak VI Affiliates Fund,
Limited Partnership
One Gorham Island
Westport, CT 06880
Venrock Associates II, L.P.
30 Rockefeller Plaza
Room 5508
New York, NY 10112
Venrock Associates
30 Rockefeller Plaza
Room 5508
New York, NY 10112
The NPD Group, Inc.
900 West Shore Road
Port Washington, NY 11050
The 1995 Scott Johnson Trust
c/o Fried, Frank, Harris, Shriver & Jacobson
1 New York Plaza
New York, NY 10004
The 1995 Stacey Johnson Trust
c/o Fried, Frank, Harris, Shriver & Jacobson
1 New York Plaza
New York, NY 10004
<PAGE>
Exhibit 4.2
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT (the "Agreement") made as of this 5th day of
November, 1998 by and among MEDIA METRIX, INC., a Delaware corporation (the
"Company"), and the holders of the Company's common stock, par value $.01 per
share (the "Common Stock"), set forth on Schedule I hereto (the "Stockholders").
W I T N E S S E T H:
WHEREAS, the Company and Relevant Knowledge, Inc., a Delaware corporation
("RK"), have entered into an Agreement and Plan of Reorganization, dated as of
September 30, 1998 (the "Merger Agreement") pursuant to which RK merged with and
into the Company;
WHEREAS, the parties hereto desire to promote the interests of the Company
and the interests of the Stockholders by establishing herein certain terms and
conditions upon which the Common Stock will be held and voted by the
Stockholders, including certain provisions relating to the election of directors
and the sale or other disposition of the Common Stock.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements herein contained and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Voting for Directors. For the term of this Agreement, the Stockholders
shall vote their shares of the Company's voting capital stock and utilize all
other voting rights to which they may become entitled at any annual or special
meeting called for the purpose of electing directors, and the respective
transferees of each of such Stockholder shall so vote such voting capital stock
or such other voting rights, so as to cause the Board of Directors of the
Company to consist of eight (8) persons and the election of five (5) directors
designated by the MMX Stockholders or their representatives (acting by a
majority in interest) (who shall initially consist of Tod Johnson, William H.
Helman, Stig Kry, James Mortensen and David Hathaway) and the election of three
(3) directors designated by the RK Stockholders or their representatives (acting
by a majority in interest) (who shall initially consist of Timothy Cobb, Jeffrey
Levy and Michael Brooks (the "RK Designees")); provided, however, that upon the
death, resignation, retirement, disqualification or removal from office of any
director in accordance with this Agreement or the Company's Bylaws, the
remaining directors nominated by the Stockholders who nominated the director so
removed from the Board of Directors shall nominate a replacement to serve until
the next annual or special meeting held for the purpose of electing directors.
Each of Timothy Cobb, Jeffrey Levy and Michael Brooks shall remain an RK
Designee until such time as he resigns, dies, or becomes disabled. There shall
be no obligation on the part of the Stockholders to vote for Messrs. Cobb or
Levy if the employment by the Company of such individual is terminated for
"justifiable cause" pursuant to his respective employment agreement with the
Company or at such time that either of them ceases to own,
<PAGE>
directly or indirectly, at least 70% of the shares of Common Stock held by him
on the date hereof. For purposes of this Agreement, the term "MMX Stockholders"
shall mean those Stockholders who held MMX Common Stock, warrants to purchase
MMX Common Stock or preferred stock that was converted into Common Stock, in
each case immediately prior to the Merger, and the term "RK Stockholders" shall
mean those Stockholders who held RK common stock, warrants to purchase RK common
stock or preferred stock that was converted into RK common stock immediately
prior to the Merger.
2. Certain Corporate Actions. During the term of this Agreement, the
Company shall not, without the approval of seventy-five percent (75%) of the
full Board of Directors, issue shares of any class of capital stock of the
Company or rights to acquire any shares of capital stock of the Company
(excluding options to purchase Common Stock granted pursuant to the Company's
1998 Equity Incentive Plan) which issuance would have the effect of decreasing
any Stockholder's outstanding interest in the Common Stock (on a fully diluted
basis) by greater than five percent (5%). In the event that the Company proposes
to issue shares of its capital stock in connection with an acquisition, merger
or other business combination (a "Transaction"), any director having an interest
in the acquired entity or business shall not be entitled to vote on such
Transaction at any meeting of the Board of Directors of the Company at which
such Transaction is considered, and the approval of 75% of the directors who do
not have an interest in such Transaction shall be required.
3. Affirmative Covenants. The Company hereby covenants and agrees with the
Stockholders that it shall maintain, and cause each of its subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
conformity with generally accepted accounting principles consistently applied
("GAAP") (it being understood that monthly financial statements are not required
to have footnote disclosures). The Company further covenants that it shall
deliver to each of the Stockholders holding at least an aggregate of 125,000
shares (as adjusted for stock splits, recapitalizations, and the like) of Common
Stock (each, a "Major Stockholder") each of the financial statements and other
reports described below:
(a) Quarterly Financial Statements. As soon as available and in any
event within forty-five (45) days after the end of each fiscal quarter, the
Company shall deliver (i) consolidated balance sheets of the Company and its
subsidiaries, as of the end of such quarter, (ii) the related consolidated
statements of income, stockholders' equity and cash flow for such quarter and
for the period from the beginning of the then current fiscal year of the Company
to the end of such quarter, (iii) a schedule of the outstanding indebtedness for
borrowed money of the Company and its subsidiaries for any liability greater
than $75,000, describing in reasonable detail each such debt issue or loan
outstanding and the principal amount and amount of accrued and unpaid interest
with respect to each such debt issue or loan, and (iv) the monthly financial
statements prepared by the Company for each month in the preceding quarter in
whatever form the Company prepared those financial statements for its internal
use.
-2-
<PAGE>
(b) Year-End Financial Statements. As soon as available and in any
event within ninety (90) days after the end of the fiscal year of the Company,
the Company shall deliver (i) the consolidated balance sheets of the Company and
its subsidiaries as of the end of such year and the related consolidated
statements of income, stockholders' equity and cash flow for such fiscal year,
(ii) a schedule of the outstanding indebtedness for borrowed money of the
Company and its subsidiaries for any liability greater than $75,000, describing
in reasonable detail each such debt issue or loan outstanding and the principal
amount and amount of accrued and unpaid interest with respect to each such debt
issue or loan, and (iii) a report with respect to the financial statements from
Ernst & Young LLP or another comparable firm of certified public accountants
selected by the Company, which report shall be prepared in accordance with
Statement of Auditing Standards No. 58 (the "Statement") entitled "Reports on
Audited Financial Statements" and such report shall be "Unqualified" (as such
term is defined in such Statement).
(c) Accountants' Reports. Promptly upon receipt thereof, the Company
shall deliver copies of all significant reports submitted by the Company's firm
of certified public accountants in connection with each annual, interim or
special audit or review of any type of the financial statements or related
internal control systems of the Company and its subsidiaries made by such
accountants, including any comment letter submitted by such accountants to
management in connection with their services.
(d) Management Reports. Together with each delivery of financial
statements of the Company and its subsidiaries pursuant to subsections 3(a) and
3(b), the Company will deliver a management report (i) describing the operations
and financial condition of the Company and its subsidiaries for the quarter then
ended and the portion of the current fiscal year then elapsed (or for the fiscal
year then ended in the case of year-end financial), (ii) setting forth in
comparative form the corresponding figures for the corresponding periods of the
previous fiscal year and the corresponding figures from the most recent
projections for the current fiscal year delivered pursuant to subsection 3(e)
and (iii) discussing the reasons for any significant variations. The information
above shall be presented in reasonable detail and shall be certified by the
chief financial officer of the Company to the effect that such information
fairly presents the results of operations and financial condition of the Company
and its subsidiaries as at the dates and for the periods indicated.
4. Transfer of Shares.
(a) Shares of the Company's Common Stock ("Shares") are transferable
(i) pursuant to public offerings registered under the Securities Act of 1933, as
amended (the "Securities Act"), (ii) pursuant to a public sale under Rule 144
under the Securities Act (except pursuant to Rule 144(k) if the Company's shares
have not become publicly traded) if such rule is available, and (iii) subject to
the conditions specified in paragraphs (b), (c) and (d) below.
(b) In connection with the transfer of any Shares (other than a
transfer described in subparagraph (a)(i) or (ii) above), the transferor will
deliver written notice to the
-3-
<PAGE>
Company describing in reasonable detail the transfer or proposed transfer,
together with an opinion of counsel which (to the Company's reasonable
satisfaction) is knowledgeable in securities law matters to the effect that such
transfer of Shares may be affected without registration under the Securities Act
or any applicable state securities laws, and with written confirmation from the
prospective transferee of its agreement to be bound by the conditions contained
in this Agreement and the other restrictions on transfer imposed by the
Securities Act or any applicable state securities laws.
(c) It shall be a condition to the transfer of any Shares that the
transferee thereof agrees to be bound by the provisions of this Agreement as if
originally a party hereto. The transferee (even if a member of another voting
group, pursuant to Section 1 above, immediately prior to such transfer) shall
become a member of the voting group, if any, to which his transferor belongs or
belonged under this agreement with respect to the Shares transferred and shall
be entitled to participate, to the extent of the Shares transferred, with the
other members of such voting group in selecting candidates for the Board of
Directors, if permitted to do so under this Agreement.
(d) Notwithstanding the above: (i) Shares may not be transferred or
assigned to a Competitor or any affiliate of a Competitor of the Company, other
than pursuant to a transaction approved by the Board of Directors. For purposes
of this Agreement, the term "Competitor" shall mean any of the following: AC
Nielsen, Ceridian, Nielsen Media Research, Inc., Forrester Research,
IntelliQuest, Odessey, Reuters, Site-Centric measurement systems (e.g. Internet
Profiles Corporation), Consumer-Centric measurement systems (e.g. NetRatings and
PC Data), International Data Corporation, Gartner Group, @Plan, United News and
Media, VNU, WPP and any others which, now or in the future, compete directly
with the Company; and (ii) Shares may not be transferred or assigned during such
period of time that the Board of Directors of the Company has approved any
offering of equity securities of the Company unless the Board of Directors has
approved such transfer or assignment as not materially impairing the ability of
the Company to complete such offering on the anticipated terms and conditions.
5. Termination of this Agreement. This Agreement shall terminate upon the
earlier to occur of (i) the written agreement of all of the parties hereto or
(ii) the closing of an underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, covering
the offer and sale of Common Stock for the account of the Company to the public.
6. Amendment; Waiver. No amendment, modification, waiver or termination of
any provision of this Agreement shall be valid unless in writing and signed by
the Company and the Stockholders holding a majority of the voting power of the
Shares held by all of the Stockholders. Any amendment or waiver effected in
accordance with this Section 6 shall be binding upon each holder of any shares,
each future holder of all such securities and the Company. No waivers of or
exceptions to any term, condition or provision of this Agreement, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
-4-
<PAGE>
7. Specific Performance. The parties hereby declare that it is impossible
to measure in money the damages which will accrue to a party hereto by reason of
a failure to perform any of the obligations under this Agreement. Therefore, all
parties hereto shall have the right to specific performance of the obligations
of the other parties under this Agreement, and if any party hereto shall
institute an action or proceeding to enforce the provisions hereof, any person
(including the Company) against whom such action or proceeding is brought hereby
waives the claim or defense therein that such party has an adequate remedy at
law, and such person shall not urge in any such action or proceeding the claim
or defense that such remedy at law exists.
8. Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by first-class mail, postage
prepaid, return receipt requested, or transmitted by facsimile or delivered
either by hand, by messenger or by nationally recognized overnight courier,
addressed:
(a) if to the Stockholders, at the addresses set forth on the
Schedule I attached hereto or at such other address as they shall have
furnished to the Company in writing.
(b) if to any other holder of securities of the Company at such
address as such holder shall have furnished the Company in writing, or,
until any such holder so furnishes an address to the Company, then to and
at the address of the last holder thereof who has so furnished an address
to the Company, and
(c) if to the Company, to the following address, or at such other
address as the Company shall have furnished to the Stockholders,
Media Metrix, Inc.
900 West Shore Road
Port Washington, NY 11050
Attention: Tod Johnson
Fax: (516) 625-4888
with a copy to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Attention: Richard H. Gilden, Esq.
Fax: (212) 752-5958
Alternatively, to such other address as a party hereto supplies to each
other party in writing.
-5-
<PAGE>
9. Successors and Assigns. All the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective permitted transferees, successors and assigns of the parties hereto,
whether so expressed or not.
10. Governing Law. This Agreement is to be governed by and interpreted
under the laws of the State of New York without giving effect to the principles
of conflicts of laws thereof.
11. Titles and Subtitles. The titles of the sections of this Agreement are
for the convenience of reference only and are not to be considered in construing
this Agreement.
12. Severability. The invalidity or unenforceability of any provisions of
this Agreement shall not be deemed to affect the validity or enforceability of
any other provision of this Agreement.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
14. Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with respect to the subject
matter hereof and supersedes all previous agreements, arrangements and
understandings, whether written or oral, with respect to the subject matter
hereof.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement as of the date first above written.
MEDIA METRIX, INC.
By: /s/ Tod Johnson
----------------------------------------------
Name: Tod Johnson
Title: Chief Executive Officer
STOCKHOLDERS:
THE NPD GROUP, INC.
By: /s/ Tod Johnson
----------------------------------------------
Name: Tod Johnson
Title: Chairman and Chief Executive Officer
THE 1995 STACEY JOHNSON TRUST
By: /s/ Franklin L. Green
----------------------------------------------
Name: Franklin L. Green
Title: Trustee
THE 1995 SCOTT JOHNSON TRUST
By: /s/ Franklin L. Green
----------------------------------------------
Name: Franklin L. Green
Title: Trustee
<PAGE>
GREYLOCK IX LIMITED PARTNERSHIP
By: Greylock IX GP Limited Partnership
By: /s/ William W. Helman
----------------------------------------------
Name: William W. Helman
Title: General Partner
OAK INVESTMENT PARTNERS VI, LIMITED PARTNERSHIP
By: Oak Associates VI, LLC, its General Partner
MANAGING MEMBER OF OAK
ASSOCIATES VI, LLC, By: /s/ Ed Glassmeyer
THE GENERAL PARTNER OF ----------------------------------------------
OAK INVESTMENT PARTNERS VI, Name: Ed Glassmeyer
LIMITED PARTNERSHIP Title: Managing Member of Oak Associates VI, LLC
OAK VI AFFILIATES FUND, LIMITED PARTNERSHIP
By: Oak VI Affiliates, LLC, its General Partner
MANAGING MEMBER OF OAK
VI AFFILIATES, LLC, By: /s/ Ed Glassmeyer
THE GENERAL PARTNER OF ----------------------------------------------
OAK VI AFFILIATES FUND, Name: Ed Glassmeyer
LIMITED PARTNERSHIP Title: Managing Member of Oak Associates VI, LLC
VENROCK ASSOCIATES II, L.P.
By: /s/ David Hathaway
----------------------------------------------
Name: David Hathaway
Title: General Partner
VENROCK ASSOCIATES
By: /s/ David Hathaway
----------------------------------------------
Name: David Hathaway
Title: General Partner
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement as of the date first above written.
STOCKHOLDERS:
WHITNEY EQUITY PARTNERS, L.P.
J.H. Whitney Equity Partners LLC,
Its General Partner
By: /s/ Daniel J. O'Brien
----------------------------------------------
Daniel J. O'Brien, Managing Member
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement as of the date first above written.
STOCKHOLDERS:
INVESTMENT A.B. BURE
Signature: /s/ Knut Leman
---------------------------------------
By: Knut Leman
----------------------------------------------
Title:
-------------------------------------------
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement as of the date first above written.
STOCKHOLDERS:
INTIMIDATOR INVESTMENT GROUP, L.L.C.
Signature: /s/ Michael D. Easterly
---------------------------------------
By: Michael D. Easterly
----------------------------------------------
Title: Chief Manager
-------------------------------------------
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement as of the date first above written.
STOCKHOLDERS:
UNTERBERG HARRIS PRIVATE
EQUITY PARTNERS, C.V.
Signature: /s/ John Dexheimer
---------------------------------------
By: John Dexheimer
----------------------------------------------
Member of its Investment General Partner,
Unterberg Harris LLC
UNTERBERG HARRIS PRIVATE
EQUITY PARTNERS, L.P.
Signature: /s/ John Dexheimer
---------------------------------------
By: John Dexheimer
----------------------------------------------
Member of its Investment General Partner,
Unterberg Harris LLC
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement as of the date first above written.
STOCKHOLDERS:
SIRROM CAPITAL CORPORATION
Signature: /s/ Kathy Harris
---------------------------------------
By: Kathy Harris
----------------------------------------------
Title: Vice President
-------------------------------------------
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement as of the date first above written.
STOCKHOLDERS:
JEDFAM INVESTMENTS, L.L.C.
Signature: /s/ Brice R. Smith, III
---------------------------------------
By: BRICE R. SMITH, III
----------------------------------------------
Title: MANAGER
-------------------------------------------
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement as of the date first above written.
STOCKHOLDERS:
BAYVIEW INVESTORS, LTD.
Signature: /s/ [ILLEGIBLE]
---------------------------------------
By:
----------------------------------------------
Title: Authorized Signatory
-------------------------------------------
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement as of the date first above written.
STOCKHOLDERS:
DOROTHY DAVIS SMITH, TRUSTEE UA DATED
7/14/80, THE DDS REVOCABLE TRUST
Signature: /s/ Dorothy Davis Smith
---------------------------------------
By:
----------------------------------------------
Dorothy Davis Smith, Trustee
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement as of the date first above written.
STOCKHOLDERS:
BRISCO-DAVIS INVESTMENTS, L.L.C
Signature: /s/ Brice R. Smith, III
---------------------------------------
By: BRICE R. SMITH, III
----------------------------------------------
Title: MANAGER
-------------------------------------------
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement as of the date first above written.
STOCKHOLDERS:
/s/ Jeffrey C. Levy
--------------------------------------------------
Jeffrey C. Levy
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement as of the date first above written.
STOCKHOLDERS:
/s/ Timothy F.S. Cobb
--------------------------------------------------
Timothy F.S. Cobb
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement as of the date first above written.
STOCKHOLDERS:
THE JEFFREY C. LEVY 1996 CHILDREN'S TRUST
Signature: /s/ Paul G. Levy
---------------------------------------
By: Paul G. Levy
----------------------------------------------
Trustee
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement as of the date first above written.
STOCKHOLDERS:
THE TIMOTHY FITZGERALD STEVENS COBB
1996 CHILDREN'S TRUST
Signature: /s/ David A. Crichlow
---------------------------------------
By:
----------------------------------------------
Trustee
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement as of the date first above written.
STOCKHOLDERS:
/s/ Karen Chase Smith
--------------------------------------------------
Karen Chase Smith
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement as of the date first above written.
STOCKHOLDERS:
--------------------------------------------------
(Name of Stockholder)
Signature: /s/ Madelyn Adams Cobb
---------------------------------------
By: Madelyn Adams Cobb
----------------------------------------------
Title:
-------------------------------------------
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement as of the date first above written.
STOCKHOLDERS:
/s/ Karen Chase Smith
--------------------------------------------------
Karen Chase Smith
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement as of the date first above written.
STOCKHOLDERS:
/s/ Onuoha O. Odim
--------------------------------------------------
Onuoha O. Odim
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
Schedule I
STOCKHOLDERS
The NPD Group, Inc.
The 1995 Stacey Johnson Trust
The 1995 Scott Johnson Trust
Greylock IX Limited Partnership
Oak Investment Partners VI, Limited Partnership
Oak VI Affiliates Fund, Limited Partnership
Venrock Associates II, L.P.
Venrock Associates
Whitney Equity Partners, L.P.
Investment A.B. Bure
Intimidator Investment Group, LLC
Unterberg Harris Private Equity Partners, C.V.
Underberg Harris Private Equity Partners, LP
Sirrom Capital Corporation
JedFam Investments, LLC
Bayview Investors, Ltd.
Dorothy Davis Smith, Trustee UA 7/14/80, The DDS Revocable Trust
Brisco-Davis Investments LLC
Jeffrey C. Levy
Timothy F.S. Cobb
Jeffrey C. Levy 1996 Children's Trust
Timothy Fitzgerald Stevens Cobb 1996 Children's Trust
Madelyn Adams Cobb
Karen Chase Smith
Onuoha O. Odim
<PAGE>
Exhibit 4.3
CO-SALE AGREEMENT
Agreement dated as of November 5, 1998, by and among (i) The NPD Group,
Inc., a New York corporation, ("NPD"), (ii) The 1995 Stacey Johnson Trust and
The 1995 Scott Johnson Trust (the "Trusts" and with NPD, the "Founders"), (iii)
Media Metrix, Inc., a Delaware corporation (the "Company"), and (iv) the
securityholders of the Company set forth on Schedule I hereto (the
"Stockholders").
W I T N E S S E T H:
WHEREAS, the Company and RelevantKnowledge, Inc., a Delaware corporation
("RK"), have entered into an Agreement and Plan of Reorganization, dated as of
September 30, 1998 (the "Merger Agreement") pursuant to which RK has merged with
and into the Company;
WHEREAS, the Stockholders who immediately prior to the Merger (as defined
in the Merger Agreement) were stockholders of RK were parties to the Amended and
Restated Right of First Refusal and Co-Sale Agreement of RK, dated as of July 9,
1998 (the "RK Co-Sale Agreement") pursuant to which they had certain co-sale and
other rights with respect to their shares of common stock of RK;
WHEREAS, the Stockholders who immediately prior to the Merger were
stockholders of the Company were parties to the Right of First Refusal and
Co-Sale Agreement of the Company, dated as of April 14, 1997 (the "MMX Co-Sale
Agreement"), pursuant to which they had certain co-sale rights with respect to
their shares of Company's common stock, par value $.01 per share (the "Shares");
and
WHEREAS, the parties hereto desire to promote the interests of the
Founders, the Company and the Stockholders by terminating the RK Co-Sale
Agreement and the MMX Co-Sale Agreement and establishing herein certain terms
and conditions to assist the Stockholders in selling their Shares if they so
desire.
NOW, THEREFORE, for valuable consideration, it is agreed as follows.
1. Restrictions on Transfer.
1.1 Any sale, assignment, transfer or other disposition, whether
voluntarily or by operation of law (collectively, "Transfer"), of any of the
Shares by a Founder, other than according to the terms of this Agreement, shall
be void and transfer no right, title, or interest in or to any of such Shares to
the purported transferee.
<PAGE>
1.2 An original copy of this Agreement, duly executed by each of the
parties hereto, shall be delivered to the Secretary of the Company and
maintained at the principal executive office of the Company and made available
for inspection by any person requesting it.
1.3 Each Founder agrees to present the certificates representing the
Shares presently owned or hereafter acquired by it to the Secretary of the
Company and cause the Secretary to stamp on the certificate in a prominent
manner the following legend:
"The sale, transfer or other disposition of any of the shares represented
by this certificate is restricted by a Co-Sale Agreement, dated as of
November 5, 1998, among certain of the shareholders of this corporation
and this corporation (the "Agreement"). A copy of the Agreement is
available for inspection during normal business hours at the principal
executive office of this corporation."
2. Transfers Not Subject to Restrictions.
Any Founder may Transfer any or all of its Shares to a wholly owned
subsidiary, to any other Founder, to Tod Johnson or to a charity or charitable
organization without compliance with Sections 3 through 5 hereof; provided in
the case of each such Transfer that the transferee delivers a written instrument
to the other parties hereto agreeing to be bound by the terms hereof as if it
were a Founder.
3. Offer of Transfer; Notice of Proposed Transfer.
If any Founder desires to Transfer any of its Shares, or any
interest in such Shares, in any transaction other than pursuant to Section 2 of
this Agreement, such Founder (the "Selling Founder") shall first deliver written
notice of its desire to do so (the "Notice") to the Company and each of the
Stockholders and the other Founders (the "Other Founders"), in the manner
prescribed in Section 8.4 of this Agreement. The Notice must specify: (i) the
name and address of the party to which the Selling Founder proposes to Transfer
the Shares or an interest in the Shares (the "Offeror"), (ii) the number of
Shares the Selling Founder proposes to Transfer (the "Offered Shares"), (iii)
the consideration per Share to be delivered to the Selling Founder for the
proposed Transfer and (iv) all other material terms and conditions of the
proposed transaction.
4. Stockholders' and Founders' Option to Sell.
For a period of 15 days from the date of delivery of the Notice (the
"Option Period"), each Stockholder and Other Founder may notify the Secretary of
the Company of its desire to participate in the sale of the Shares in accordance
with Section 5 hereof on the terms set forth in the Notice, and of the number of
Shares it wishes to sell.
-2-
<PAGE>
5. Co-Sale.
5.1 Each Stockholder and Other Founder which has, pursuant to
Section 4, expressed a desire to sell Shares in the transaction (a
"Participating Party") shall be entitled to do so pursuant to this Section 5.
The Secretary of the Company shall promptly, on expiration of the Option Period,
notify the Selling Founder of the aggregate number of Shares the Participating
Parties wish to sell. The Selling Founder shall use its reasonable efforts to
interest the Offeror in purchasing, in addition to the Offered Shares, the
Shares the Participating Parties wish to sell. If the Offeror does not wish to
purchase all of the Shares made available by the Selling Founder and the
Participating Parties, then each Participating Party and the Selling Founder
shall be entitled to sell, at the price and on the terms and conditions set
forth in the Notice, a portion of the Shares being sold to the Offeror, in the
same proportion as the Selling Founder or such Participating Party's ownership
of Shares bears to the aggregate number of Shares owned by the Selling Founder
and the Participating Parties. The transaction contemplated by the Notice shall
be consummated not later than 60 days after the expiration of the Option Period.
5.2 If the Participating Parties do not elect to sell the full
number of Shares which they are entitled to sell pursuant to Section 5.1, the
Selling Founder shall be entitled to sell to the Offeror, according to the terms
set forth in the Notice, that number of its own Shares which equals the
difference between the number of Shares desired to be purchased by the Offeror
and the number of Shares the Participating Parties wish to sell. If the Selling
Founder wishes to sell, transfer or otherwise dispose of any such Shares at a
price per Share which differs from that set forth in the Notice, upon terms
different from those set forth in the Notice, or more than 60 days after the
expiration of the Option Period, as a condition precedent to such transaction,
the Selling Founder must first offer the Stockholders the opportunity to sell
Shares on the same terms and conditions as given the Offeror, and in accordance
with the procedures and time periods set forth above.
5.3 The proceeds of any sale made by the Selling Founder without
compliance with the provisions of this Section 5 shall be deemed to be held in
constructive trust in such amount as would have been due the Participating
Parties if the Selling Founder had complied with this Agreement.
6. Termination of Agreement.
6.1 This Agreement shall terminate upon the earliest of the
following events:
(a) The written agreement of the Company, NPD, the Trusts and
the Stockholders holding a majority of the voting power of the shares held
by all of the Stockholders to terminate the Agreement;
(b) The sale of all or substantially all of the assets or
business of the Company, by merger, sale of assets or otherwise; or
-3-
<PAGE>
(c) The closing of the Company's initial public offering of
shares of Common Stock pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "Act").
6.2 The provisions of Sections 3 and 4 hereof shall not apply to any
sale of Shares pursuant to a transaction referred to in Sections 6.1(b) or
6.1(c) above.
7. Transfers of Rights. This Agreement, and the rights and obligations of
each Stockholder hereunder, may be assigned by such Stockholder to any person or
entity to which Shares are transferred by such Stockholder, and such transferee
shall be deemed a "Stockholder" for purposes of this Agreement; provided that
the transferee provides written notice of such assignment to the Company. The
Agreement, and the rights and obligations of each Founder hereunder, shall not
be assignable by such Founder except as set forth in Section 2.
8. General.
8.1 Severability. The provisions of this Agreement are severable, so
that the invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other term or provision of this
Agreement, which shall remain in full force and effect.
8.2 Specific Performance. In addition to any and all other remedies
that may be available at law in the event of any breach of this Agreement, each
Stockholder shall be entitled to specific performance of the agreements and
obligations of the Company and the Founders hereunder and to such other
injunctive or other equitable relief as may be granted by a court of competent
jurisdiction.
8.3 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York.
8.4 Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be delivered
by hand or mailed by first class certified or registered mail, return receipt
requested, postage prepaid:
If to the Company, at Media Metrix, Inc., 900 West Shore Road, Port
Washington, New York 11050, Attention: Chief Executive Officer or at such other
address or addresses as may have been furnished in writing by the Company to the
Stockholders, with a copy to Fulbright & Jaworski L.L.P., 666 Fifth Avenue, 31st
Floor, New York, NY 10103-3198, Attention: Richard H. Gilden, Esquire; or
If to a Stockholder, at the address set forth on the signature pages
hereto, or at such other address or addresses as may have been furnished to the
Company in writing by such Stockholder; or
-4-
<PAGE>
If to NPD, at 900 West Shore Road, Port Washington, New York 11050,
Attention: Chief Executive Officer, or at such other address or addresses as may
have been furnished to the Company in writing by NPD; or
If to a Trust, at the address set forth on the signature pages hereto, or
at such other address or addresses as may have been furnished to the Company in
writing by such Trust.
Notices provided in accordance with this Section 8.4 shall be deemed
delivered upon personal delivery or two business days after deposit in the mail.
8.5 Complete Agreement; Amendments and Waivers. This Agreement
constitutes the full and complete agreement of the parties hereto with respect
to the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter. No amendment, modification,
waiver or termination of any provision of this Agreement shall be valid unless
in writing and signed by (i) the Company, (ii) NPD, (iii) the Trusts, and (iv)
the Stockholders holding a majority of the voting power of the Shares held by
all of the Stockholders. Any amendment or waiver effected in accordance with
this Section 8.5 shall be binding upon each holder of any Shares, each future
holder of all such securities and the Company. No waivers of or exceptions to
any term, condition or provision of this Agreement, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
8.6 Pronouns. Whenever the content may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.
8.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute one Agreement binding on all the
parties hereto.
8.8 Captions. Captions of sections have been added only for
convenience and shall not be deemed to be a part of this Agreement.
-5-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
MEDIA METRIX, INC.
By: /s/ Tod Johnson
----------------------------------------------
Name: Tod Johnson
Title: Chief Executive Officer
Address: 900 West Shore Road
Port Washington, NY 11050
THE NPD GROUP, INC.
By: /s/ Tod Johnson
----------------------------------------------
Name: Tod Johnson
Title: Chairman & Chief Executive Officer
Address: 900 West Shore Road
Port Washington, NY 11050
TRUSTS
THE 1995 STACEY JOHNSON TRUST
By: /s/ Franklin L. Green
----------------------------------------------
Name: Franklin L. Green
Title: Trustee
Address: c/o Fried, Frank, Harris,
Shriver & Jacobson
1 New York Plaza
New York, NY 10004
THE 1995 SCOTT JOHNSON TRUST
By: /s/ Franklin L. Green
----------------------------------------------
Name: Franklin L. Green
Title: Trustee
Address: c/o Fried, Frank, Harris,
Shriver & Jacobson
1 New York Plaza
New York, NY 10004
<PAGE>
STOCKHOLDERS
GREYLOCK IX LIMITED PARTNERSHIP
By: Greylock IX GP Limited Partnership, its
General Partner
By: /s/ William W. Helman
----------------------------------------------
Name: William W. Helman
Title: General Partner
OAK INVESTMENT PARTNERS VI, LIMITED PARTNERSHIP
MANAGING MEMBER OF OAK By: Oak Associates VI, LLC, its General Partner
ASSOCIATES VI, LLC,
THE GENERAL PARTNER OF By: /s/ Ed Glassmeyer
OAK INVESTMENT PARTNERS VI, ----------------------------------------------
LIMITED PARTNERSHIP Name: Ed Glassmeyer
Title: Managing Member of Oak Associates VI, LLC
OAK VI AFFILIATES FUND, LIMITED PARTNERSHIP
MANAGING MEMBER OF OAK By: Oak VI Affiliates, LLC, its General Partner
VI AFFILIATES, LLC,
THE GENERAL PARTNER OF By: /s/ Ed Glassmeyer
OAK VI AFFILIATES FUND, ----------------------------------------------
LIMITED PARTNERSHIP Name: Ed Glassmeyer
Title: Managing Member of Oak Associates VI, LLC
VENROCK ASSOCIATES II, L.P.
By: /s/ David Hathaway
----------------------------------------------
Name: David Hathaway
Title: General Partner
<PAGE>
VENROCK ASSOCIATES
By: /s/ David Hathaway
----------------------------------------------
Name: David Hathaway
Title: General Partner
--------------------------------------------------
Timothy F.S. Cobb, individually and as
Trustee for the Timothy F.S. Cobb 1996 Children's
Trust
--------------------------------------------------
Jeffrey C. Levy, individually and as
Trustee for the Jeffrey C. Levy 1996 Children's
Trust
--------------------------------------------------
Madelyn Adams Cobb
WHITNEY EQUITY PARTNERS, L.P.
By: J.H. Whitney Equity Partners LLC,
its General Partner
By:
----------------------------------------------
Name: Michael C. Brooks
Title:
SIRROM CAPITAL CORPORATION
By:
----------------------------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
STOCKHOLDERS:
/s/ Timothy F.S. Cobb
--------------------------------------------------
Timothy F.S. Cobb
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
STOCKHOLDERS:
THE TIMOTHY FITZGERALD STEVENS COBB
1996 CHILDREN'S TRUST
Signature: /s/ David A. Crichlow
---------------------------------------
By:
----------------------------------------------
Trustee
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
STOCKHOLDERS:
/s/ Jeffrey C. Levy
--------------------------------------------------
Jeffrey C. Levy
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
STOCKHOLDERS:
THE JEFFREY C. LEVY 1996 CHILDREN'S TRUST
Signature: /s/ Paul G. Levy
---------------------------------------
By: Paul G. Levy
----------------------------------------------
Trustee
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
STOCKHOLDERS:
/s/ Madelyn Adams Cobb
--------------------------------------------------
Madelyn Adams Cobb
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
STOCKHOLDERS:
WHITNEY EQUITY PARTNERS, L.P.
J.H. Whitney Equity Partners LLC
Its General Partner
By: /s/ Daniel J. O'Brien
----------------------------------------------
Daniel J. O'Brien, Managing Member
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
STOCKHOLDERS:
SIRROM CAPITAL CORPORATION
Signature: /s/ Kathy Harris
---------------------------------------
By: Kathy Harris
----------------------------------------------
Title: Vice President
-------------------------------------------
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
STOCKHOLDERS:
JEDFAM INVESTMENTS, L.L.C.
Signature: /s/ Brice R. Smith, III
---------------------------------------
By: BRICE R. SMITH, III
----------------------------------------------
Title: MANAGER
-------------------------------------------
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
STOCKHOLDERS:
INVESTMENT A.B. BURE
Signature: /s/ Knut Leman
---------------------------------------
By: Knut Leman
----------------------------------------------
Title:
-------------------------------------------
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
STOCKHOLDERS:
DOROTHY DAVIS SMITH, TRUSTEE UA DATED
7/14/80, THE DDS REVOCABLE TRUST
Signature: /s/ Dorothy Davis Smith
---------------------------------------
By:
----------------------------------------------
Dorothy Davis Smith, Trustee
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
STOCKHOLDERS:
BRISCO-DAVIS INVESTMENTS, L.L.C
Signature: /s/ Brice R. Smith, III
---------------------------------------
By: BRICE R. SMITH, III
----------------------------------------------
Title: MANAGER
-------------------------------------------
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
STOCKHOLDERS:
INTIMIDATOR INVESTMENT GROUP, L.L.C.
Signature: /s/ Michael D. Easterly
---------------------------------------
By: Michael D. Easterly
----------------------------------------------
Title: Chief Manager
-------------------------------------------
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
STOCKHOLDERS:
UNTERBERG HARRIS PRIVATE
EQUITY PARTNERS, C.V.
Signature: /s/ John Dexheimer
---------------------------------------
By: John Dexheimer
----------------------------------------------
Member of its Investment General Partner,
Unterberg Harris LLC
UNTERBERG HARRIS PRIVATE
EQUITY PARTNERS, L.P.
Signature: /s/ John Dexheimer
---------------------------------------
By: John Dexheimer
----------------------------------------------
Member of its Investment General Partner,
Unterberg Harris LLC
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
STOCKHOLDERS:
/s/ Karen Chase Smith
--------------------------------------------------
Karen Chase Smith
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
STOCKHOLDERS:
BAYVIEW INVESTORS, LTD.
Signature: /s/ [ILLEGIBLE]
---------------------------------------
By:
----------------------------------------------
Title: Authorized Signatory
-------------------------------------------
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
STOCKHOLDERS:
/s/ Onuoha O. Odim
--------------------------------------------------
Onuoha O. Odim
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
<PAGE>
Schedule I
GREYLOCK IX LIMITED PARTNERSHIP
One Federal Street
Boston, MA 02110
OAK INVESTMENT PARTNERS VI
One Gorham Island
Westport, CT 06880
OAK VI AFFILIATES FUND,
LIMITED PARTNERSHIP
One Gorham Island
Westport, CT 06880
VENROCK ASSOCIATES II, L.P.
30 Rockefeller Plaza
Room 5508
New York, NY 10112
VENROCK ASSOCIATES
30 Rockefeller Plaza
Room 5508
New York, NY 10112
Timothy F.S. Cobb
373 Angier Court
Atlanta, GA 30312
The Timothy Fitzgerald Stevens Cobb
1996 Children's Trust
c/o Timothy F.S. Cobb
373 Angier Court
Atlanta, GA 30312
Jeffrey C. Levy
120 The Prado
Atlanta, GA 30309
<PAGE>
The Jeffrey C. Levy 1996 Children's Trust
c/o Jeffrey C. Levy
120 The Prado
Atlanta, GA 30309
Madelyn Adams Cobb
373 Angier Court
Atlanta, GA 30312
Whitney Equity Partners, L.P.
J.H. Whitney & Company
Attn: Anthony Abate
177 Broad Street
Stamford, CT 06901
Sirrom Capital Corporation
500 Church Street, Suite 200
Nashville, TN 37219
JedFam Investments, LLC
13801 Riverport Drive #301
Maryland Heights, MO 63043
Investment A.B. Bure
Box 5419
402 29 Goteburg,
SWEDEN
Dorothy Davis Smith, Trustee UA 7/14/80,
The DDS Revocable Trust
1016 Fort Mason Drive
Eustis, FL 32726
Brisco-Davis/Investments LLC
13801 Riverport Drive #301
Maryland Heights, MO 63043
Intimidator Investment Group, LLC
Attn: Mike Easterly
3384 Peachtree Street, NE, #300
Atlanta, GA 30326
<PAGE>
Unterberg Harris Equity Partners, L.P.
C.E. Unterberg, Towbin
Swiss Bank Tower
10 E. 50th Street, 22nd Floor
New York, NY 10022
Unterberg Harris Equity Partners, C.V.
C.E. Unterberg, Towbin
Swiss Bank Tower
10 E. 50th Street, 22nd Floor
New York, NY 10022
Karen Chase Smith
441 Way Avenue
St. Louis, MO 63122
Bayview Investors, Ltd.
Robertson Stephens & Co.
555 California Street
San Francisco, CA 94104
Onuoha Odion
c/o Merrill World Financial Center
North Tower
5th Floor
New York, NY 10281
<PAGE>
Exhibit 4.4
MEDIA METRIX, INC.
STOCK OPTION PLAN
1. Purpose. The purpose of the Media Metrix, Inc. Stock Option Plan
(the "Plan") is to enable Media Metrix, Inc. (the "Company") to secure the
benefits of equity ownership by key personnel of the Company. The Board of
Directors of the Company (the "Board") believes that the granting of options
under the Plan will foster the Company's ability to attract, retain and motivate
those individuals who will be largely responsible for the profitability and
long-term future growth of the Company.
2. Stock Subject to the Plan. Subject to the Provisions of Section
6, the Company may issue and sell a total of 119,400 shares of its common stock,
$.01 par value (the "Common Stock") pursuant to the Plan. Such shares may be
either authorized and unissued or held by the Company in its treasury. New
options may be granted under the Plan with respect to shares of Common Stock
that are covered by the unexercised portion of an option that has terminated or
expired by its terms, by cancellation or otherwise.
3. Administration. The Plan will be administered by the Board.
Subject to the provisions of the Plan, the Board, acting in its sole and
absolute discretion, will have full power and authority to grant options under
the Plan, to interpret the provisions of the Plan, to fix and interpret the
provisions of option agreements made under the Plan, to supervise the
administration of the Plan,
<PAGE>
and to take such other action as may be necessary or desirable in order to carry
out the provisions of the Plan. The decision of the Board as to any disputed
question, including questions of construction, interpretation and
administration, will be final and conclusive on all persons. The Board will keep
such books and records as may be necessary in connection with the proper
administration of the Plan. The Company shall indemnify and hold harmless any
employee of the Company to whom any duty or power relating to the administration
or interpretation of the Plan is delegated from and against any loss, cost,
liability (including any sum paid in settlement of a claim with the approval of
the Board), damage and expense (including legal and other expenses incident
thereto) arising out of or incurred in connection with the Plan, unless and
except to the extent attributable to such person's fraud or willful misconduct.
4. Eligibility. Options may be granted under the Plan to present or
future employees of the Company and to consultants and to directors of the
Company who are not Company employees. Subject to the provisions of the Plan,
the Board may from time to time select the persons to whom options will be
granted, and will fix the number of shares covered by each such option and
establish the terms and conditions thereof, including, without limitation,
exercise price and restrictions on exercisability of the option or on the shares
of Common Stock issued upon exercise thereof and whether or not the option is to
be treated as an incentive stock option within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (an "Incentive Stock Option").
5. Terms and Conditions of Options. Each option granted under the
Plan will be evidenced by a written agreement (the "Agreement") in a form
approved by the Board. Each such
2
<PAGE>
option will be subject to the terms and conditions set forth in the Agreement,
which shall contain such additional terms and conditions not inconsistent with
the Plan as the Board deems appropriate.
(a) Option Exercise Price. In the case of an option that is
not treated as an Incentive Stock Option, the exercise price per share may not
be less than the par value of a share of Common Stock on the date the option is
granted; and, in the case of an Incentive Stock Option, the exercise price per
share may not be less than 100% of the fair market value of a share of Common
Stock on the date the option is granted (110% in the case of an optionee who, at
the time the option is granted, is a ten percent shareholder described in
Section 422(b)(6) of the Internal Revenue Code of 1986). For purposes hereof,
the fair market value of a share of Common Stock on any date will be equal to
the closing sale price per share as published by a national securities exchange
on which shares of the Common Stock are traded on such date or, if there is no
sale of Common Stock on such date, the average of the bid and asked prices on
such exchange at the closing of trading on such date or, if shares of the Common
Stock are not listed on a national securities exchange on such date, the closing
price or, if none, the average of the bid and asked prices in the over the
counter market at the close of trading on such date, or if the Common Stock is
not traded on a national securities exchange or the over the counter market, the
fair market value of a share of the Common Stock on such date as determined in
good faith by the Board.
(b) Option Period. The period during which an option may be
exercised will be fixed by the Board and will not exceed ten years from the date
the option is granted (five years in the case of an Incentive Stock Option
granted to a "ten percent shareholder").
(c) Vesting. Except as otherwise specified in an Agreement,
options granted to any individual under the Plan shall vest in accordance with
the following schedule based
3
<PAGE>
upon the individual's period of continuous employment or service with the
Company following the date an award is granted:
Period of Continuous Incremental Vesting Cumulative Vesting
Employment/Service Percentage Percentage
- ------------------ ---------- ----------
Less than 1 Year 0% 0%
1 Year 20% 20%
2 Years 20% 40%
3 Years 20% 60%
4 Years 20% 80%
5 Years or more 20% 100%
(d) Exercise of Options. Options that have not vested may not
be exercised. The Board may determine and set forth in the option agreement any
vesting or other restrictions on the exercisability of an option, subject to
earlier termination of the option as provided herein. All or part of the
exercisable portion of an option may be exercised at any time during the option
period. An option may be exercised in whole or in part by transmitting to the
Company (1) a written notice specifying the number of shares to be purchased,
and (2) payment of the exercise price (or, if applicable, delivery of a secured
obligation therefor), together with the amount, if any, deemed necessary by the
Company to enable it to satisfy its tax withholding obligations with respect to
such exercise (unless other arrangements acceptable to the Company are made with
respect to the satisfaction of such withholding obligations).
4
<PAGE>
(e) Payment of Exercise Price. The purchase price of shares of
Common Stock acquired pursuant to the exercise of an option granted under the
Plan may be paid in cash and/or such other form or method of payment as may be
permitted under the Agreement including, without limitation, payment of
previously-owned shares of Common Stock and/or payment of all or a portion of
the purchase price in installments (together with interest) over a period of not
more than five years.
(f) Rights as a Stockholder. No shares of Common Stock shall
be used in respect of an exercise of an option granted under the Plan until full
payment therefor has been made (and/or provided for where all or a portion of
the purchase price is being paid in installments). An optionee shall have no
rights as a stockholder with respect to any shares covered by the option until a
stock certificate for such shares is issued to the optionee. Except as otherwise
provided herein, no adjustment shall be made for dividends or distributions of
other rights for which the record date is prior to the date such stock
certificate is issued.
(g) Nontransferability of Options. No option shall be
assignable or transferrable except upon the optionee's death to a beneficiary
designated by the optionee in accordance with procedures established by the
Board or, if no designated beneficiary shall survive the optionee, pursuant to
the optionee's will or by the laws of descent and distribution. During an
optionee's lifetime, options may be exercised only by the optionee or the
optionee's guardian or legal representative.
(h) Termination of Employment or Other Service. Unless
otherwise determined by the Board, if an optionee's employment or service with
the Company is terminated for any reason other than death or disability (as
defined below), then each outstanding option granted to
5
<PAGE>
him or her under the Plan will terminate on the date three months after the date
of such termination of employment or service, provided, however, that, if the
optionee's employment or service is terminated by the Company for cause (defined
below), then the option will terminate upon the date of such termination of
employment or service. If an optionee's employment or service is terminated by
reason of the optionee's death or disability, then each outstanding option
granted to the optionee under the Plan that is not then vested shall terminate
immediately and each option that is then vested will terminate on the date one
year after the date of such termination of employment or service. If an
optionee's employment or service is terminated by reason of his or her
disability and the optionee dies within one year after such termination of
employment or service, then each option that is vested on the date of
termination will terminate on the first anniversary of the later death of the
disabled optionee. For purposes hereof, the term "disability" means the
inability of an optionee to perform the customary duties of his or her
employment or other service for the Company by reason of a physical or mental
incapacity that is expected to result in death or be of indefinite duration; and
the term "cause" means (1) failure or refusal by the optionee to perform the
duties of his or her employment with the Company, (2) commission by the optionee
of a crime involving moral turpitude, (3) the optionee's conviction for
commission of a felony, (4) any attempt by the optionee to improperly secure any
personal profit in connection with the business of the Company or (5) the
optionee's dishonesty or willful engagement in conduct which is injurious to the
business or reputation of the Company, all as determined by the Board in its
sole discretion.
(i) Other Provisions. The Board may impose such other
conditions with respect to the exercise of options, including, without
limitation, any conditions relating to the application of federal or state
securities laws, as it may deem necessary or advisable. As a condition
6
<PAGE>
to the grant of options hereunder, each optionee shall represent to the Company
that he or she is acquiring the option and any stock upon the exercise thereof,
for investment only and not with a view toward the distribution thereof.
6. Capital Changes, Reorganization, Sale.
(a) Adjustments upon Changes in Capitalization. In the event
of a Recapitalization (as defined below), the aggregate number and class of
shares of stock for which options may be granted under the Plan, the number and
class of shares and the exercise price per share of stock covered by each
outstanding option shall all be proportionately adjusted to reflect such
Recapitalization, in each case as determined by the Board in its sole
discretion. If by reason of a Recapitalization, an optionee becomes entitled to
exercise an option with respect to new, additional or different shares of stock
or other securities, the option and such new, additional or different shares or
other securities shall be subject to all of the conditions which were applicable
prior to such Recapitalization. "Recapitalization" means any increase or
reduction in the number of shares of Common Stock or securities of the Company
or the exchange or conversion of Common Stock or securities of the Company for a
different number or kind of shares of stock or other securities, in any case, by
reason of a reclassification, recapitalization, merger, consolidation,
reorganization, distribution, split or reverse split, combination or exchange of
shares or securities or other similar event.
(b) Fractional Shares or Units. In the event of any adjustment
in the number of shares covered by any option pursuant to the provisions hereof,
any fractional shares
7
<PAGE>
resulting from such adjustment will be disregarded and each such option will
cover only the number of full shares resulting from the adjustment.
(c) Determination of Board to be Final. All adjustments under
this paragraph 6 shall be made by the Board, and its determination as to what
adjustments shall be made, and the extent thereof, shall be final, binding and
conclusive.
7. Amendment and Termination of the Plan. Except as may otherwise be
required by law, the Board, acting in its sole discretion and without further
action on the part of the stockholders of the Company, may amend the Plan at any
time and from time to time and may terminate the Plan at any time. No amendment
or termination may affect adversely any outstanding option without the written
consent of the optionee.
8. No Rights Conferred. Nothing contained herein will be deemed to
give any individual any right to receive an option under the Plan or to be
retained in the employ or service of the Company.
9. Governing Law. The Plan and each option agreement shall be
governed by the laws of the State of New York.
10. Term of the Plan. The Plan shall be effective on the date on
which it is adopted by the Board, subject to the approval of the stockholders of
the Company. Unless sooner terminated by the Board, the Plan will terminate on
the date ten years after the date of adoption by the Board.
8
<PAGE>
Exhibit 4.5
MEDIA METRIX, INC./RELEVANTKNOWLEDGE, INC.
1998 EQUITY INCENTIVE PLAN
Section 1. Purpose and Duration
1.1 Purposes. The purposes of the Plan are to attract, retain and motivate
employees and consultants of the Company and any present or future Subsidiaries
and to enable them to participate in the growth of the Company by providing for
or increasing the proprietary interests of such persons in the Company.
1.2 Effective Date. The Plan is effective as of the date it is approved by
the Board.
1.3 Expiration Date. The Plan shall expire one day less than ten years
from the date of the adoption of the Plan by the Board. In no event shall any
Awards be made under the Plan after such expiration date, but Awards previously
granted may extend beyond such date.
Section 2. Definitions
As used in the Plan, the following capitalized words shall have the
meanings indicated below:
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Award" means, individually or collectively, a grant under the Plan of
Options, SARs, Performance Shares, Restricted Stock or Stock Units.
"Award Agreement" means the written agreement setting forth the terms and
provisions applicable to an Award granted under the Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenues Code of 1986, as amended.
"Committee" means the committee of the Board appointed by the Board to
administer the Plan in accordance with Section 3.1.
"Company" means Media Metrix, Inc., a Delaware corporation, or any
successor thereto.
"Director" means any individual who is a member of the Board.
<PAGE>
"Fair Market Value" means, with respect to a Share, the fair market
thereof as of the relevant date of determination, as determined in accordance
with a valuation methodology approved by the Board in good faith but in no event
less than, in the case of newly issued stock, the par value per Share; provided
that if the Board does not adopt or employ any such valuation methodology and
Shares are traded on an exchange or quoted on The Nasdaq National Market, fair
market value shall mean, on the relevant date of determination, the closing
price of a Share traded on the principal exchange for the Shares or, if the
Shares are so traded, the closing or last price quoted on The Nasdaq National
Market.
"Grant Date" means the effective date of an Award as specified by the
Board and set forth in the applicable Award Agreement.
"Incentive Stock Option" or "ISO" means an option to purchase Shares
awarded to a Participant under Section 6 of the Plan that is intended to meet
the requirements of Section 422 of the Code.
"Non-Employee Director" means a "non-employee director" as that term is
defined in Rule 16b-3 promulgated under the 1934 Act.
"Nonqualified Stock Option" or "NQO" means an option to purchase Shares
awarded to a Participant under Section 6 of the Plan that is not intended to be
an ISO.
"Option" means an ISO or an NQO.
"Participant" means an individual who has been selected by the Board to
receive an Award under the Plan.
"Performance Cycle" means the period of time selected by the Board during
which performance is measured for the purpose of determining the extent to which
an Award of Performance Shares has been earned. More than one Performance Cycle
may be in progress at any one time and the duration of Performance Cycles may
differ.
"Performance Share" means a Share awarded to a Participant under Section 8
of the Plan that entitles the Participant to acquire Shares upon the attainment
of specified performance goals.
"Plan" means the 1998 Equity Incentive Plan set forth in this document and
as hereafter amended from time to time in accordance with Section 13.
"Restricted Period" means the period of time selected by the Board during
which Shares of Restricted Stock are subject to forfeiture and restrictions on
transferability.
-2-
<PAGE>
"Restricted Stock" means Shares awarded to a Participant under Section 9
of the Plan pursuant to an Award that entitles the Participant to acquire Shares
for a purchase price, subject to such conditions, including a Company right
during a specified period or periods to repurchase the Shares at their original
purchase price upon the Participant's termination of employment.
"SAR" or "Stock Appreciation Right" means an Award that is designated as
an SAR pursuant to Section 7 of the Plan, granted alone or in connection with a
related Award, entitling a Participant to receive an amount in cash or Shares or
a combination thereof having a value equal to (or if the Board shall so
determine at time of grant, less than) the excess of the Fair Market Value of a
Share on the date of exercise over the Fair Market Value of a Share on the Grant
Date (or over the Option exercise price, if the Stock Appreciation Right was
granted in tandem with an Option) multiplied by the number of Shares with
respect to which the Stock Appreciation Right is exercised.
"Shares" means shares of the Company's common stock, par value $0.01 per
share.
"Stock Unit" means an Award of a Share or a unit valued in whole or in
part by reference to, or otherwise based on, the value of a Share, granted to a
Participant under Section 10 of the Plan.
"Subsidiary" means a "subsidiary corporation" as that term is defined in
Section 424 of the Code.
Section 3. Administration of the Plan
3.1 The Board. The Plan shall be administered by the Board. The Board may,
in its discretion, delegate some or all of its powers with respect to the Plan
to the Committee, in which event all references in the Plan to the Board (except
references in Section 13.1) shall be deemed to refer to the Committee. The
Committee, if one is appointed, shall consist of at least two Non-Employee
Directors.
3.2 Authority of the Board. The Board shall have the authority to adopt,
alter and repeal such administrative rules, guidelines and practices governing
the operation of the Plan as it shall consider advisable from time to time, to
interpret the provisions of the Plan and any Award, and to decide all disputes
arising in connection with the Plan. The Board's decisions and interpretations
shall be final and binding.
Section 4. Eligibility of Participants
The persons eligible to receive Awards under the Plan shall be all
executive officers of the Company and any Subsidiaries, and other employees,
consultants and advisers who, in the opinion of the Board, are in a position to
make a significant contribution to the success of the Company and any
Subsidiaries. Directors, including directors who are not employees, of the
Company and
-3-
<PAGE>
any Subsidiaries, shall be eligible to receive Awards under the Plan.
Section 5. Stock Available for Awards
5.1 Number of Shares. Awards may be made under the Plan for up to 500,000
Shares. Shares issued under the Plan may consist in whole or in part of
authorized but unissued Shares or treasury Shares.
5.2 Lapsed, Forfeited or Expired Awards. If any Award in respect of Shares
expires or is terminated before exercise or is forfeited for any reason, the
Shares subject to such Award, to the extent of such expiration, termination, or
forfeiture, shall again be available for award under the Plan.
5.3 Maximum Number of Shares to a Single Participant in any Calendar Year.
In no event shall any Participant receive in any calendar year Awards under the
Plan and any other grants for more than 100,000 Shares.
Section 6. Stock Options
6.1 Grant of Options. Subject to the terms and provisions of the Plan, the
Board may award Options and determine the number of shares to be covered by each
Option, the exercise price therefor, the term of the Option, and any other
conditions and limitations applicable to the exercise of the Option. The Board
may grant ISOs, NQOs or a combination thereof.
6.2 Exercise Price. Subject to the provisions of this Section 6, the
exercise price for each Option shall be determined by the Board in its sole
discretion.
6.3 Restrictions on Option Transferability and Exercisability. No Option
shall be transferable by the Participant other than by will or the laws of
descent and distribution, and all Options shall be exercisable, during the
Participant's lifetime, only by the Participant; provided, however, that the
Board may provide that an Option is transferable by the Participant and
exercisable by persons other than the Participant upon such terms and conditions
as the Board shall determine.
6.4 Certain Additional Provisions for Incentive Stock Options
6.4.1 Exercise Price. In the case of an ISO, the exercise price
shall be not less than one hundred percent (100%) of the Fair Market Value on
the Grant Date of the Shares subject to the Option; provided, however, that if
on the Grant Date the Participant (together with persons whose stock ownership
is attributed to the Participant pursuant to Section 424(d) of the Code) owns
stock
-4-
<PAGE>
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any Subsidiaries, the exercise price shall be
not less than one hundred and ten percent (110%) of the Fair Market Value on the
Grant Date of the Shares subject to the Option.
6.4.2 Exercisability. Subject to Section 12.3 and 12.4, the
aggregate Fair Market Value (determined on the Grant Date(s)) of the Shares with
respect to which ISOs are exercisable for the first time by any Participant
during any calendar year (under all plans of the Company and any Subsidiaries)
shall not exceed $100,000.
6.4.3 Eligibility. ISOs may be granted only to persons who are
employees of the Company or any Subsidiaries on the Grant Date.
6.4.4 Expiration. No ISO may be exercised later than ten (10) years
from the Grant Date; provided, however, that if the Option is granted to a
Participant who, together with persons whose stock ownership is attributed to
the Participant pursuant to Section 424(d) of the Code, owns stock possessing
more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Subsidiaries, the ISO may not be exercised later
than five (5) years from the Grant Date.
6.4.5 Compliance with Section 422 of the Code. The terms and
conditions of ISOs shall be subject to and comply with Section 422 of the Code
or any successor provision.
6.4.6 Notice to Company of Disqualifying Disposition. Each
Participant who receives an ISO agrees to notify the Company in writing
immediately after the Participant makes a Disqualifying Disposition of any
Shares received pursuant to the exercise of an ISO. The term "Disqualifying
Disposition" means any disposition (including any sale) of Shares before the
later of (a) two years after the Participant was granted the ISO under which the
Participant acquired such Shares, or (b) one year after the Participant acquired
the Shares by exercising the ISO.
6.4.7 Substitute Options. Notwithstanding the provisions of Section
6.4.1, in the event that the Company or any Subsidiary consummates a transaction
described in Section 424(a) of the Code (relating to the acquisition of property
or stock from an unrelated corporation), individuals who become employees or
consultants of the Company or any Subsidiary on account of such transaction may
be granted ISOs in substitution for options granted by their former employer.
The Board, in its sole discretion and consistent with Section 424(a) of the
Code, shall determine the exercise price of such substitute Options.
6.5 NQO Presumption. Options granted pursuant to the Plan shall be
presumed to be NQOs unless expressly designated ISOs in the Award Agreement.
-5-
<PAGE>
Section 7. Grant of Stock Appreciation Rights
Subject to the terms and provisions of the Plan, the Board may award SARs
in tandem with another Award (at or after the Grant Date of the other Award), or
alone and unrelated to another Award, and may determine the terms and conditions
applicable thereto, including the form of payment.
Section 8. Performance Shares
8.1 Grant of Performance Shares. The Board may award Performance Shares to
Participants and determine the performance goals applicable to each such Award,
the number of Shares for each Performance Cycle, the duration of each
Performance Cycle and all other limitations and conditions applicable to the
awarded Performance Shares. The payment value of each Performance Share shall be
equal to the Fair Market Value of one Share on the date the Performance Share is
earned or, in the discretion of the Board, on the date the Board determines that
the Performance Share has been earned.
8.2 Adjustment of Performance Goals. Except as provided in an Award,
during any Performance Cycle, the Board may adjust the performance goals for the
Performance Cycle as it deems equitable in recognition of unusual or
non-recurring events affecting the Company or its Shares, changes in applicable
tax laws or accounting principles, or such other factors as the Board shall
determine.
8.3 Written Certification. As soon as practical after the end of a
Performance Cycle, the Board shall certify in writing the extent to which the
performance goals applicable to each Participant for the Performance Cycle were
achieved or exceeded and the number of Performance Shares which have been earned
on the basis of performance in relation to the established performance goals.
Section 9. Restricted Stock
9.1 Grant of Restricted Stock. The Board may award Shares of Restricted
Stock and determine the purchase price, if any, therefor, the duration of the
Restricted Period, the conditions under which the Shares may be forfeited to or
repurchased by the Company and any other terms and conditions of the Awards. The
Board may modify or waive any restrictions, terms and conditions with respect to
any Restricted Stock. Shares of Restricted Stock may be issued for whatever
consideration is determined by the Board, subject to applicable law.
9.2 Transferability. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as permitted by the Board,
during the Restricted Period.
-6-
<PAGE>
9.3 Evidence of Award. Shares of Restricted Stock shall be evidenced in
such manner as the Board may determine. Any certificates issued in respect of
Shares of Restricted Stock shall be registered in the name of the Participant
and unless otherwise determined by the Board, deposited by the Participant,
together with a stock power endorsed in blank, with the Company. At the
expiration of the Restricted Period, the Company shall deliver the certificates
and stock power to the Participant.
9.4 Shareholder Rights. A Participant shall have all the rights of a
shareholder with respect to Restricted Stock awarded, including voting and
dividend rights, unless otherwise provided in the Award Agreement.
Section 10. Stock Units
10.1 Grant of Stock Units. Subject to the terms and provisions of the
Plan, the Board may award Stock Units subject to such terms, restrictions,
conditions, performance criteria, vesting requirements and payment rules as the
Board shall determine.
10.2 Consideration. Shares awarded in connection with a Stock Unit shall
be issued for whatever consideration is determined by the Board, subject to
applicable law.
Section 11. Other Awards
The Board shall have the authority to specify the terms and provisions of
other forms of equity-based or equity-related Awards not described above which
the Board determines to be consistent with the purposes of the Plan and the
interests of the Company, which Awards may provide for cash payments based in
whole or in part on the value or future value of Shares, for the acquisition or
future acquisition of Shares, or any combination thereof. Other Awards may also
include cash payments (including the cash payment of dividend equivalents) under
the Plan which may be based on one or more criteria determined by the Board that
are unrelated to the value of the Shares and that may be granted in tandem with,
or independent of, other Awards under the Plan.
Section 12. General Provisions Applicable to Awards
12.1 Legal and Regulatory Matters. The delivery of Shares shall be subject
to compliance with (i) applicable federal and state laws and regulations, (ii)
if the outstanding Shares are listed at the time on any stock exchange or
automated quotation system, the listing requirements of such exchange or system,
and (iii) the Company's counsel's approval of all other legal matters in
connection with the issuance and delivery of the Shares. If the sale of the
Shares has not been
-7-
<PAGE>
registered under the 1933 Act, the Company may require, as a condition to
delivery of the Shares, such representations or agreements as counsel for the
Company may consider appropriate to avoid violation of such Act and may require
that the certificates evidencing the Shares bear an appropriate legend
restriction transfer.
12.2 Award Agreement. The terms and provisions of an Award shall be set
forth in an Award Agreement approved by the Board and delivered or made
available to the Participant as soon as practicable following the Grant Date.
12.3 Determination of Restrictions on the Award. The vesting,
exercisability, payment and other restrictions applicable to an Award (which may
include, without limitation, restrictions on transferability or provision for
mandatory resale to the Company) shall be determined by the Board and set forth
in the applicable Award Agreement. Notwithstanding the foregoing, the Board may
accelerate (i) the vesting or payment of any Award (including an ISO), (ii) the
lapse of restrictions on any Award (including an Award of Restricted Stock) and
(iii) the date on which any Option or SAR first becomes exercisable.
12.4 Mergers, etc. Notwithstanding any other provision of the Plan, in the
event of a consolidation or merger in which the Company is not the surviving
corporation or which results in the acquisition of substantially all the
Company's outstanding shares by a single person or entity or by a group of
persons and/or entities acting in concert, or in the event of the sale or
transfer of substantially all the Company's assets, all outstanding Awards shall
become exercisable on the day prior to the consummation of such merger,
consolidation or sale of assets.
12.5 Termination of Employment. For purposes of the Plan, the following
events shall not be deemed a termination of employment of a Participant: (i) a
transfer to the employment of the Company from a Subsidiary, or from the Company
to a Subsidiary, from one Subsidiary to another; or (ii) an approved leave of
absence for military service or sickness, or for any other purpose approved by
the Company, if the Participant's right to employment is guaranteed either by a
statute or by contract or under the policy pursuant to which the leave of
absence was granted or if the Board otherwise so provides in writing. For
purposes of the Plan, employees of a Subsidiary shall be deemed to have
terminated their employment on the date on which such Subsidiary ceases to be a
Subsidiary of the Company.
12.6 Date of and Effect of Termination of Employment. The date of a
Participant's termination of employment for any reason shall be determined in
the sole discretion of the Board. The Board shall have full authority to
determine and specify in the applicable Award Agreement the effect, if any, that
a Participant's termination of employment for any reason will have on the
vesting, exercisability, payment or lapse of restrictions applicable to an
outstanding Award.
-8-
<PAGE>
12.7 Grant of Awards. Each Award may be made alone, in addition to or in
relation to any other Award. The terms of each Award need not be identical, and
the Board need not treat Participants uniformly.
12.8 Settlement of Awards. No Shares shall be delivered pursuant to any
exercise of an Award until payment in full of the price therefor, if any, is
received by the Company. Such payment may be made in whole or in part in cash or
by certified or bank check or, to the extent permitted by the Board at or after
the Grant Date, by delivery of a note or Shares, including Restricted Stock
valued at their Fair Market Value on the date of delivery, or such other lawful
consideration as the Board shall determine.
12.9 Withholding Requirements and Arrangements. The Participant shall pay
to the Company or make provision satisfactory to the Board for payment of any
taxes required by law to be withheld in respect of Awards under the Plan no
later than the date of the event creating the tax liability. In the Board's
discretion, such tax obligations may be paid in whole or in part in Shares,
including Shares retained from the Award creating the tax obligation, valued at
their Fair Market Value on the date of delivery. The Company may, to the extent
permitted by law, deduct any such tax obligations from any payment of any kind
otherwise due to the Participant.
12.10 No Effect on Employment. The Plan shall not give rise to any right
on the part of any Participant to continue in the employ of the Company or any
Subsidiary. The loss of existing or potential profit in Awards Granted under the
Plan shall not constitute an element of damages in the event of termination of
the relationship of a Participant event if the termination is in violation of an
obligation of the Company to the Participant by contract or otherwise.
12.11 No Rights as Shareholder. Subject to the provisions of the Plan and
the applicable Award Agreement, no Participant shall have any rights as a
shareholder with respect to any Shares to be distributed under the Plan until he
or she becomes the holder thereof.
12.12 Adjustments. Upon the happening of any of the following described
events, a Participant's rights with respect to Awards granted hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in the
Award Agreement.
12.12.1 Stock Splits and Recapitalizations. In the event the Company
issues any of its Shares as a stock dividend upon or with respect to the Shares,
or in the event Shares shall be subdivided or combined into a greater or smaller
number of shares, or if, upon a merger or consolidation (except those described
in Section 12.4), reorganization, split-up, liquidation, combination,
recapitalization or the like of the Company, Shares shall be exchanged for other
securities of the Company, securities of another entity, cash or other property,
each Participant upon exercising an Award (for the aggregate purchase price to
be paid under the Award) shall be entitled to purchase such number of Shares,
other securities of the Company, securities of such other entity, cash or other
property as the Participant would have received if the Participant had been the
holder
-9-
<PAGE>
of the Shares with respect to which the Award is exercised at all times between
the Grant Date of the Award and the date of its exercise, and appropriate
adjustments shall be made in the purchase price per Share.
12.12.2 Restricted Stock. If any person owning Restricted Stock
receives new or additional or different shares or securities ("New Securities")
in connection with a corporate transaction described in Section 12.12.1 as a
result of owning such Restricted Stock, the New Securities shall be subject to
all of the conditions and restrictions applicable to the Restricted Stock with
respect to which such New Securities were issued.
12.12.3 Board Determination. Notwithstanding any provision to the
contrary, no adjustments shall be made pursuant to this Section 12.12 with
respect to ISOs unless (i) the Board, after consulting with counsel for the
Company, determines that such adjustments would not constitute a "modification,"
"extension" or "renewal" of such ISOs as such terms are defined in Section 424
of the Code, (ii) would cause any adverse tax consequences for the holders of
such ISOs or (iii) the holders of such ISOs consent to the adjustment. No
adjustments to ISOs shall be made for dividends paid in cash or in property
other than securities of the Company.
12.12.4 Fractional Shares. No fractional Shares shall be issued
under the Plan. Any fractional Shares which, but for this Section, would have
been issued shall be deemed to have been issued and immediately sold to the
Company for their Fair Market Value, and the Participant shall receive from the
Company cash in lieu of such fractional Shares.
12.12.5 Other Distributions. The Board may adjust the number of
Shares subject to outstanding Awards and the exercise price and the terms of
outstanding Awards to take into consideration material changes in accounting
practices or principles, extraordinary dividends, acquisitions or dispositions
of stock or property, or any other event if it is determined by Board that such
adjustment is appropriate to avoid distortion in the operation of the Plan.
12.12.6 Further Adjustment. Upon the happening of any of the events
described in Sections 12.12.1 or 12.12.5, the class and aggregate number of
Shares set forth in Sections 5.1 and 5.3 hereof that are subject to Awards which
previously have been or subsequently may be granted under the Plan shall be
appropriately adjusted to reflect to the events described in such Sections. The
Board shall determine the specific adjustments to be made under this Section
12.12.6.
Section 13. Amendment and Termination
13.1 Amendment, Suspension, Termination of the Plan. The Board may modify,
amend, suspend, or terminate the Plan in whole or in part at any time; provided,
however, that no modification, amendment, suspension or termination of the Plan
shall be made without shareholder
-10-
<PAGE>
approval if such approval is necessary to comply with any applicable tax or
regulatory requirement; and provided, further, that such modification,
amendment, suspension or termination shall not, without a Participant's consent,
affect adversely the rights of such Participant with respect to any Award
previously made.
13.2 Amendment, Suspension, Termination of an Award. The Board may modify,
amend or terminate any outstanding Award, including, without limitation,
substituting therefor another Award of the same or a different type, changing
the date of exercise or realization and converting an ISO to a NQO; provided,
however, that the Participant's consent to such action shall be required unless
the Board determines that the action, taking into account any related action,
would not materially and adversely affect the Participant.
Section 14. Legal Construction
14.1 Captions. The captions provided herein are included solely for
convenience of reference and shall not affect the meaning of any of the
provisions of the Plan or serve as a basis for interpretation or construction of
the Plan.
14.2 Severability. In the event any provision of the Plan is held invalid
or illegal for any reason, the illegality or invalidity shall not affect the
remaining provisions of the Plan, and the Plan shall be construed and enforced
as if the illegal or invalid provision had not been included.
14.3 Governing Law. The Plan and all rights under the Plan shall be
construed in accordance with and governed by the internal laws of the State of
Delaware.
-11-
<PAGE>
Exhibit 4.6
THIS WARRANT AND THE SHARES OF COMMON STOCK WHICH MAY BE PURCHASED UPON THE
EXERCISE OF THIS WARRANT HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE, OFFER,
PLEDGE OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS UNLESS SOLD
PURSUANT TO RULE 144 OF THE ACT.
Void after_____________
MEDIA METRIX, INC.
WARRANT TO PURCHASE ______ SHARES OF COMMON STOCK
THIS CERTIFIES THAT, for value received, _____________________ or its permitted
successors or assigns (the "Holder") is entitled to subscribe for and purchase
___________________ (_____) shares (as adjusted pursuant to Section 3 hereof) of
the fully paid and nonassessable Common Stock (the "Shares"), of Media Metrix,
Inc., a Delaware corporation (the "Company"), at the price (the "Exercise
Price") of _______ ($____) per share (as adjusted pursuant to Section 3 hereof).
This Warrant is issued pursuant to a Note and Warrant Purchase Agreement of even
date herewith (as amended and in effect from time to time, the "Purchase
Agreement") by and among the Company, the Holder and certain other lenders named
in Exhibit A thereto, and is subject thereto. The Holder is entitled to the
rights and subject to the obligations contained in the Purchase Agreement." All
capitalized terms used herein without definition shall have the respective
meanings given to them in the Purchase Agreement.
1. Method of Exercise, Payment.
(a) Cash Exercise. Subject to the provisions of Section 10 hereof,
the purchase rights represented by this Warrant may be exercised by the Holder,
in whole or in part, at any time or from time to time, by the surrender of this
Warrant (with the notice of exercise form attached hereto as Exhibit D-1 duly
executed) at the principal office of the Company, and by the payment to the
Company, by certified, cashier's or other check acceptable to the Company, of an
amount equal to the aggregate Exercise Price of the shares being purchased.
(b) Net Issue Exercise.
(i) In lieu of exercising this Warrant, the Holder may elect
to receive shares equal to the value of this Warrant (or the portion thereof
being canceled) by surrender of this Warrant at the principal office of the
Company together with notice of such election, in which event
<PAGE>
the Company shall issue to the Holder a number of shares of the Company's Common
Stock computed using the following formula:
X = (Y (A-B))/A
Where X = the number of shares of Common Stock to be issued to the Holder.
Y = the number of shares of Common Stock purchasable under this Warrant.
A = the Fair Market Value of one share of the Company's Common Stock.
B = the Exercise Price (as adjusted to the date of such calculation).
(c) Fair Market Value. For purposes of this Section 1, the Fair
Market Value of the Company's Common Stock shall mean: (i) The average of the
closing bid and ask prices of the Company's Common Stock quoted in the
Over-the-Counter Market Summary or the closing price quoted on any exchange on
which the Common Stock is listed, whichever is applicable, as published in The
Wall Street Journal for the ten trading days prior to the date of determination
of fair market value; or (ii) If the Company's Common Stock is not traded
over-the-counter or on an exchange, Fair Market Value of the Common Stock per
share shall be determined in good faith by the Board of Directors of the
Company.
(d) Stock Certificates. In the event of any exercise of the rights
represented by this Warrant, certificates for the shares of Common Stock so
purchased shall be delivered to the Holder within a reasonable time and, unless
this Warrant has been fully exercised or has expired, a new Warrant representing
the shares with respect to which this Warrant shall not have been exercised
shall also be issued to the Holder within such time.
2. Representations of the Company.
(a) Stock Fully Paid; Reservation of Shares. All of the Shares
issuable upon the exercise of the rights represented by this Warrant will, upon
issuance and receipt of the Exercise Price therefor, be fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof. During the period within which the rights represented by this
Warrant may be exercised, the Company shall at all times have authorized and
reserved for issuance sufficient shares of its Common Stock to provide for the
exercise of the rights represented by this Warrant.
(b) Corporate Action. The Company represents that all corporate
actions on the part of the Company, its officers, directors and shareholders
necessary for the sale and issuance of the Shares pursuant hereto and the
performance of the Company's obligations hereunder were taken prior to and are
effective as of the effective date of this Warrant.
-2-
<PAGE>
3. Adjustment of Exercise Price and Number of Shares. The number and kind
of securities purchasable upon the exercise of this Warrant and the Exercise
Price therefor shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
(a) Reclassification. Consolidation or Merger. In case of any
reclassification or change of the Common Stock (other than a change in par
value, or as a result of a subdivision or combination), or in case of any
consolidation or merger of the Company with or into another corporation (other
than a merger with another corporation in which the Company is a continuing
corporation and which does not result in any reclassification or change of
outstanding securities issuable upon exercise of this Warrant), or in case of
any sale of all or substantially all of the assets of the Company, the Company,
or such successor or purchasing corporation as the case may be, shall execute a
new Warrant, providing that Holder shall have the right to exercise such new
Warrant, and procure upon such exercise and payment of the same aggregate
Exercise Price, in lieu of the shares of Common Stock theretofore issuable upon
exercise of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification, change,
consolidation, sale of all or substantially all of the Company's assets or
merger by a holder of an equivalent number of shares of Common Stock. Such new
Warrant shall provide for adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Section 3. If such
successor or purchasing corporation does not assume the obligations of this
Warrant and Holder has not otherwise exercised this Warrant in full, then the
unexercised portion of this Warrant shall be deemed to have been automatically
converted pursuant to Section 1, and thereafter Holder shall participate in the
acquisition on the same terms as other holders of the same class of securities
of the Company.
(b) Stock Splits, Dividends and Combinations. In the event that the
Company shall at any time subdivide the outstanding shares of Common Stock or
shall issue a stock dividend on its outstanding shares of Common Stock the
number of Shares issuable upon exercise of this Warrant immediately prior to
such subdivision or to the issuance of such stock dividend shall be
proportionately increased, and the Exercise Price shall be proportionately
decreased, and in the event that the Company shall at any time combine the
outstanding shares of Common Stock the number of Shares issuable upon exercise
of this Warrant immediately prior to such combination shall be proportionately
decreased, and the Exercise Price shall be proportionately increased, effective
at the close of business on the date of such subdivision, stock dividend or
combination, as the case may be.
(c) Dilutive Issuance Adjustment. In the event of a Dilutive
Issuance, as defined in the Purchase Agreement, the number of shares issuable
upon exercise of this Warrant shall be increased by multiplying the number of
shares issuable upon exercise of this Warrant immediately prior to the closing
of the Dilutive Issuance by a number equal to $1.75 (subject to appropriate
adjustment for subdivisions, combinations, reclassifications, recapitalizations
and like events) divided by the price per share of Common Stock applicable to
the Dilutive Issuance. For example, if this Warrant were exercisable for 100,000
shares and the shares issued in the Dilutive Issuance were issued at a price per
share of $1.25, this Warrant would thereafter be exercisable for: 100,000 x
-3-
<PAGE>
1.75/1.25 = 140,000 shares of Common Stock. The Exercise Price shall not be
adjusted in the event of a Dilutive Issuance.
4. Notice of Adjustments. Whenever the number of Shares purchasable
hereunder or the Exercise Price thereof shall be adjusted pursuant to Section 3
hereof, the Company shall provide notice by first class mail to the holder of
this Warrant setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the number of Shares which may be purchased and the Exercise
Price therefor after giving effect to such adjustment.
5. Fractional Shares. No fractional shares of Common Stock will be issued
in connection with any exercise hereunder. In lieu of such fractional shares the
Company shall make a cash payment therefor based upon the Exercise Price then in
effect.
6. Investment Representations. In connection with the purchase of the
Shares, Holder represents to the Company the following:
(a) Holder is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Shares. Holder is purchasing
the Shares for investment for Holder's own account only and not with a view to,
or for resale in connection with, any "distribution" thereof within the meaning
of the Securities Act of 1933, as amended (the "Securities Act").
(b) Holder understands that the Shares have not been registered
under the Securities Act by reason of a specific exemption therefrom, which
exemption depends upon, among other things, the bonafide nature of Holder's
investment intent as expressed herein. In this connection, Holder understands
that, in view of the Securities and Exchange Commission ("Commission"), the
statutory basis for such exemption may not be present if Holder's present
intention is to hold the Shares for a minimum capital gains period under
applicable tax statutes, for a deferred sale, for a market rise, for a sale if
the market does not rise, or for a year or any other fixed period in the future.
(c) Holder further acknowledges and understands that the Shares must
be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. Holder
further acknowledges and understands that the Company is under no obligation to
register the Shares. Holder understands that the certificate evidencing the
Shares will be imprinted with a legend which prohibits the transfer of the
Shares unless they are registered or such registration is not required in the
opinion of counsel satisfactory to the Company.
7. Stock Certificate Legends. The share certificate evidencing the Shares
issued hereunder shall be endorsed with the following legends:
-4-
<PAGE>
(a) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933.
(b) THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED
ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND
THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
(c) Any legend required by any applicable state securities laws.
8. Restrictions Upon Transfer.
(a) So long as the Note issued to the Investor pursuant to the
Purchase Agreement is outstanding, this Warrant may not be transferred unless
such transfer is made together with a permitted transfer of such Note pursuant
to the Purchase Agreement.
(b) The Company need not register a transfer of Shares bearing the
restrictive legend set forth in Section 7 hereof, unless the conditions
specified in such legend are satisfied. The Company may also instruct its
transfer agent not to register the transfer of the Shares, unless one of the
conditions specified in the legend referred to in Section 7 hereof is satisfied.
(c) Notwithstanding the provisions of paragraph (a) above, no
opinion of counsel or "no-action" letter shall be necessary for a transfer
without consideration by any holder (i) to an affiliate of the holder, (ii) if
such holder is a partnership, to a partner or retired partner of such
partnership who retires after the date hereof or to the estate of any such
partner or retired partner, (iii) if such holder is a corporation, to a
shareholder of such corporation, or to any other corporation under common
control, direct or indirect, with such holder, or (iv) by gift, will or
intestate succession of any individual holder to his spouse or siblings, or to
the lineal descendants or ancestors of such holder or his spouse, if the
transferee agrees in writing to be subject to the terms hereof to the same
extent as if such transferee were the original holder hereunder.
9. Rights of Shareholders. No holder of this Warrant shall be entitled, as
a Warrant holder, to vote or receive dividends or be deemed the holder of Common
Stock or any other securities of the Company which may at any time be issuable
on the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of
-5-
<PAGE>
stock, change of par value, consolidation, merger, conveyance, or otherwise) or
to receive notice of meetings, or to receive dividends or subscription rights or
otherwise until the Warrant shall have been exercised and the Shares purchasable
upon the exercise hereof shall have become deliverable, as provided herein.
10. Term of Warrant.
(a) This Warrant may not be exercised, in whole or in part, until
the earlier of: (i) January 1, 1999, (ii) the consummation of the Next
Financing, or (iii) the occurrence of a Liquidity Event. For purposes hereof,
the term "Liquidity Event" shall mean (a) a consolidation or merger of the
Company resulting in the holders of the issued and outstanding voting securities
of the Company immediately prior to such transaction owning or controlling less
than a majority of the voting securities of the continuing or surviving entity
immediately following such transaction, (b) a sale, lease, exchange, transfer or
other disposition of all or substantially all of the Company's assets to a
person or group of persons, or (c) an initial public offering of the Common
Stock of the Company. Upon the consummation by the Company of an initial public
offering of the Common Stock of the Company pursuant to a registration statement
filed with the Securities and Exchange Commission (other than a Form S-8 or Form
S-4) this warrant shall be canceled to the extent not exercised. The Company
shall provide the Holder with at least ten days' prior written notice of the
consummation of a Liquidity Event.
(b) This Warrant may not be exercised, in whole or in part, at any
time after ___________.
11. Notices. All notices and other communications from the Company to the
Holder shall be mailed by overnight courier or by first-class, registered or
certified mail, postage prepaid, to the address furnished to the Company in
writing by the last Holder who has furnished an address to the Company in
writing, with a copy to Holder's counsel if requested by Holder and such
counsel's address is provided to Company in writing. Notice shall be deemed
given one (1) day after deposit with an overnight courier service, three (3)
days after deposit in the mails as aforesaid or upon delivery if personally
delivered.
12. Change; Waiver. Neither this Warrant nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
13. Governing Law. This Warrant is being delivered in the State of
Delaware, without regard to conflicts of law.
-6-
<PAGE>
Issued this ____ day of _____ 199_.
MEDIA METRIX, INC.
By:
----------------------------------
<PAGE>
Exhibit D-1
NOTICE OF EXERCISE
TO: Media Metrix, Inc.
900 West Shore Road
Port Washington, NY11050
1. The undersigned hereby elects to purchase shares of Common Stock of
Media Metrix, Inc. pursuant to the terms of the attached Warrant.
2. Method of Exercise (Please initial the applicable blank):
___ The undersigned elects to exercise the attached Warrant by
means of a cash payment, and tenders herewith payment in full
for the purchase price of the shares being purchased, together
with all applicable transfer taxes, if any.
___ The undersigned elects to exercise the attached Warrant by
means of the net exercise provisions of Section 1(b) of the
Warrant.
3. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
---------------------------------
(Name)
---------------------------------
---------------------------------
(Address)
4. The undersigned hereby represents and warrants that the aforesaid
shares of Common Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection with, the
distribution thereof, and that the undersigned has no present intention of
distributing or reselling such shares and all representations and warranties of
the undersigned set forth in Section 6 of the attached Warrant are true and
correct as of the date hereof. In support thereof, the undersigned hereby
delivers an Investment Representation Statement in a form substantially similar
to the form attached to the Warrant as Exhibit D-2.
----------------------------------
(Signature)
Title:
---------------------------
Date:
---------------------------
<PAGE>
Exhibit D-2
INVESTMENT REPRESENTATION STATEMENT
PURCHASER: __________________
COMPANY: MEDIA METRIX, INC.
SECURITY: COMMON STOCK ISSUED UPON EXERCISE OF THE STOCK
PURCHASE WARRANT ISSUED ON __________, 1998
AMOUNT: ___________ SHARES
DATE: ___________
In connection with the purchase of the above-listed Securities, the Purchaser
represents to the Company the following:
(a) Purchaser is aware of the Company's business affairs and
financial condition, and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the Securities.
Purchaser is purchasing these Securities for its own account for investment
purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Securities Act of 1933, as amended
(the "Securities Act").
(b) Purchaser understands that the Securities have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of its investment intent as expressed herein. In this connection,
Purchaser understands that, in the view of the Securities and Exchange
Commission (the "SEC"), the statutory basis for such exemption may be
unavailable if its representation was predicated solely upon a present intention
to hold these Securities for the minimum capital gains period specified under
tax statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future.
(c) Purchaser further understands that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from registration is otherwise available. Moreover, Purchaser
understands that the Company is under no obligation to register the Securities.
In addition, Purchaser understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel for the Company.
(d) Purchaser is familiar with the provisions of Rule 144,
promulgated under the Securities Act, which, in substance, permits limited
public resale of "restricted securities" acquired, directly or indirectly, from
the issuer thereof, in a non-public offering subject to the satisfaction of
certain conditions.
<PAGE>
The Securities may be resold in certain limited circumstances subject to
the provisions of Rule 144, which requires among other things: (1) the
availability of certain public information about the Company, (2) the resale
occurring not less than one year after the party has purchased, and made full
payment for, within the meaning of Rule 144, the securities to be sold; and, in
the case of an affiliate, or of a non-affiliate who has held the securities less
than two years, (3) the sale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934) and the amount of
securities being sold during any three month period not exceeding the specified
limitations stated therein, if applicable.
(e) Purchaser agrees, in connection with the Company's initial
underwritten public offering of the Company's securities, (1) not to sell, make
short sale of, loan, grant any options for the purchase of, or otherwise dispose
of any shares of Common Stock of the Company held by me (other than those shares
included in the registration) without the prior written consent of the Company
or the underwriters managing such initial underwritten public offering of the
Company's securities for one hundred eighty (180) days from the effective date
of such registration, and (2) Purchaser further agrees to execute any Agreement
reflecting (1) above as may be requested by the underwriters at the time of the
public offering; provided however that the officers and directors of the Company
who own the stock of the Company also agree to such restrictions.
(f) Purchaser further understands that in the event all of the
applicable requirements of Rule 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rule 144 are
not exclusive, the Staff of the SEC has expressed its opinion that persons
proposing to sell private placement securities other than in a registered
offering and otherwise than pursuant to Rule 144 will have a substantial burden
of proof in establishing that an exemption from registration is available for
such offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.
----------------------------------
Date:
---------------
<PAGE>
Exhibit D-3
FORM OF TRANSFER
(To be signed only upon transfer of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________________________the right represented by the
attached Warrant to purchase _____________* shares of Common Stock of Media
Metrix, Inc., to which the attached Warrant relates, and appoints
__________________Attorney to transfer such right on the books of Media Metrix,
Inc., with full power of substitution in the premises.
Dated: _____________
--------------------------------------
(Signature must conform in all
respects to name of Holder as
specified on the face of the Warrant)
--------------------------------------
--------------------------------------
(Address)
Signed in the presence of:
- --------------------------------
* Insert here the number of shares without making any adjustment for additional
shares of Common Stock or any other stock or other securities or property or
cash which, pursuant to the adjustment provisions of the Warrant, may be
deliverable upon exercise.
<PAGE>
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS
EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 4 OF THIS WARRANT
Warrant No. ________ Number of Shares: _________
(subject to adjustment)
Date of Issuance: __________
Media Metrix, Inc.
Common Stock Purchase Warrant
(Void after_______)
Media Metrix, Inc., a Delaware corporation (the "Company"), for value
received, hereby certifies that __________________________, or its
registered assigns (the "Registered Holder"), is entitled, subject to the terms
set forth below, to purchase from the Company, at any time or from time to time
on or after the date of issuance and on or before October 14, 1999 at not later
than 5:00 p.m. (New York City time), ______ shares of Common Stock, $.01 par
value per share, of the Company, at a purchase price of $_____ per share. The
shares purchasable upon exercise of this Warrant, and the purchase price per
share, each as adjusted from time to time pursuant to the provisions of this
Warrant, are hereinafter referred to as the "Warrant Shares" and the "Purchase
Price," respectively.
1. Exercise.
(a) This Warrant may be exercised by the Registered Holder, in whole
or in part, by surrendering this Warrant, with the purchase form appended hereto
as Exhibit I duly executed by such Registered Holder or by such Registered
Holder's duly authorized attorney, at the principal office of the Company, or at
such other office or agency as the Company may designate, accompanied by payment
in full, in lawful money of the United States, of the Purchase Price payable in
respect of the number of Warrant Shares purchased upon such exercise.
(b) The Registered Holder may, at its option, elect to pay some of
the Purchase Price payable upon an exercise of this Warrant by cancelling a
portion of this Warrant exercisable for such number of Warrant Shares as is
determined by dividing (i) the total Purchase Price payable in respect of the
number of Warrant Shares being purchased upon such exercise by (ii) the excess
of the Fair Market Value per share of Common Stock as of the effective date of
exercise, as determined pursuant to subsection 1(c) below (the "Exercise Date")
over the Purchase Price per share. If the Registered Holder wishes to exercise
this Warrant pursuant to this method of payment with respect to the maximum
number of Warrant Shares purchasable pursuant to this method, then the number of
Warrant Shares so purchasable shall be equal to the total number of Warrant
Shares, minus the product obtained by multiplying (x) the total number of
Warrant Shares by (y) a fraction, the
<PAGE>
numerator of which shall be the Purchase Price per share and the denominator of
which shall be the Fair Market Value per share of Common Stock as of the
Exercise Date. The Fair Market Value per share of Common Stock shall be
determined as follows:
(i) If the Common Stock is listed on a national securities
exchange, or the NASDAQ system as of the Exercise Date, the Fair Market Value
per share of Common Stock shall be deemed to be the last reported sale price per
share of Common Stock thereon on the Exercise Date; or, if no such price is
reported on such date, such price on the next preceding business day (provided
that if no such price is reported on the next preceding business day, the Fair
Market Value per share of Common Stock shall be determined pursuant to clause
(ii)).
(ii) If the Common Stock is not listed on a national
securities exchange, or the NASDAQ system as of the Exercise Date, the Fair
Market Value per share of Common Stock shall be deemed to be the amount most
recently determined by the Board of Directors to represent the fair market value
per share of the Common Stock (including without limitation a determination for
purposes of granting Common Stock options or issuing Common Stock under an
employee benefit plan of the Company); and, upon request of the Registered
Holder, the Board of Directors (or a representative thereof) shall promptly
notify the Registered Holder of the Fair Market Value per share of Common Stock.
Notwithstanding the foregoing, if the Board of Directors has not made such a
determination within the three-month period prior to the Exercise Date, then (A)
the Fair Market Value per share of Common Stock shall be the amount next
determined by the Board of Directors to represent the fair market value per
share of the Common Stock (including without limitation a determination for
purposes of granting Common Stock options or issuing Common Stock under an
employee benefit plan of the Company), (B) the Board of Directors shall make
such a determination within 15 days of a request by the Registered Holder that
it do so, and (C) the exercise of this Warrant pursuant to this subsection 1(b)
shall be delayed until such determination is made.
(c) Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which this
Warrant shall have been surrendered to the Company as provided in subsection
1(a) above. At such time, the person or persons in whose name or names any
certificates for Warrant Shares shall be issuable upon such exercise as provided
in subsection 1(d) below shall be deemed to have become the holder or holders of
record of the Warrant Shares represented by such certificates.
(d) As soon as practicable after the exercise of this Warrant in
full or in part, and in any event within 10 days thereafter, the Company, at its
expense, will cause to be issued in the name of, and delivered to, the
Registered Holder, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of full
Warrant Shares to which such Registered Holder shall be entitled upon such
exercise plus, in lieu of any fractional share to which such Registered Holder
would otherwise be entitled, cash in an amount determined pursuant to Section 3
hereof; and
-2-
<PAGE>
(ii) in case such exercise is in part only, a new warrant or
warrants (dated the date hereof) of like tenor, calling in the aggregate on the
face or faces thereof for the number of Warrant Shares equal (without giving
effect to any adjustment therein) to the number of such shares called for on the
face of this Warrant minus the sum of (a) the number of such shares purchased by
the Registered Holder upon such exercise plus (b) the number of Warrant Shares
(if any) covered by the portion of this Warrant cancelled in payment of the
Purchase Price payable upon such exercise pursuant to subsection 1(b) above.
2. Adjustments.
(a) Recapitalizations. If outstanding shares of the Company's Common
Stock shall be subdivided into a greater number of shares or a dividend in
Common Stock shall be paid in respect of Common Stock, the Purchase Price in
effect immediately prior to such subdivision or at the record date of such
dividend shall simultaneously with the effectiveness of such subdivision or
immediately after the record date of such dividend be proportionately reduced.
If outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Purchase Price in effect immediately prior to such combination
shall, simultaneously with the effectiveness of such combination, be
proportionately increased.
(b) Mergers, etc. If there shall occur any capital reorganization or
reclassification of the Company's Common Stock (other than a change in par value
or a subdivision or combination as provided for in subsection 2(a) above), or
any consolidation or merger of the Company with or into another corporation, or
a transfer of all or substantially all of the assets of the Company, then, as
part of any such reorganization, reclassification, consolidation, merger or
sale, as the case may be, lawful provision shall be made so that the Registered
Holder of this Warrant shall have the right thereafter to receive upon the
exercise hereof the kind and amount of shares of stock or other securities or
property which such Registered Holder would have been entitled to receive if,
immediately prior to any such reorganization, reclassification, consolidation,
merger or sale, as the case may be, such Registered Holder had held the number
of shares of Common Stock which were then purchasable upon the exercise of this
Warrant. In any such case, appropriate adjustment (as reasonably determined in
good faith by the Board of Directors of the Company) shall be made in the
application of the provisions set forth herein with respect to the rights and
interests thereafter of the Registered Holder of this Warrant, such that the
provisions set forth in this Section 2 (including provisions with respect to
adjustment of the Purchase Price) shall thereafter be applicable, as nearly as
is reasonably practicable, in relation to any shares of stock or other
securities or property thereafter deliverable upon the exercise of this Warrant.
(c) Adjustment in Number of Warrant Shares. When any adjustment is
required to be made in the Purchase Price, the number of Warrant Shares
purchasable upon the exercise of this Warrant shall be changed to the number
determined by dividing (i) an amount equal to the number of shares issuable upon
the exercise of this Warrant immediately prior to such adjustment, multiplied by
the Purchase Price in effect immediately prior to such adjustment, by (ii) the
Purchase Price in effect immediately after such adjustment.
-3-
<PAGE>
(d) Certificate of Adjustment. When any adjustment is required to be
made in the Purchase Price pursuant to this Section 2, the Company shall
promptly mail to the Registered Holder a certificate setting forth the Purchase
Price after such adjustment and setting forth a brief statement of the facts
requiring such adjustment. Such certificate shall also set forth the kind and
amount of stock or other securities or property into which this Warrant shall be
exercisable following such adjustment.
3. Fractional Shares. The Company shall not be required upon the exercise
of this Warrant to issue any fractional shares, but shall make an adjustment
therefor in cash on the basis of the Fair Market Value per share of Common
Stock, as determined pursuant to subsection 1(b) above.
4. Requirements for Transfer.
(a) This Warrant and the Warrant Shares shall not be sold or
transferred unless either (i) they first shall have been registered under the
Securities Act of 1933, as amended (the "Act"), and registered or qualified
under applicable state securities laws or (ii) the Company first shall have been
furnished with an opinion of legal counsel, reasonably satisfactory to the
Company, to the effect that such sale or transfer is exempt from the
registration requirements of the Act and applicable state securities laws.
(b) Notwithstanding the foregoing, no registration or opinion of
counsel shall be required for (i) a transfer by a Registered Holder which is a
partnership to a partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such
partner or retired partner, if the transferee agrees in writing to be subject to
the terms of this Section 4, or (ii) a transfer made in accordance with Rule 144
under the Act.
(c) (i) If a Registered Holder desires to transfer this Warrant or
any Warrant Shares other than pursuant to subsection 4(b) above, such Registered
Holder (the "Selling Holder") shall first deliver written notice of its desire
to do so (the "Notice") to the Company and The NPD Group, Inc., a New York
corporation ("NPD"), in the manner prescribed in Section 12 of this Warrant. The
Notice must specify: (i) the name and address of the party to which the Selling
Holder proposes to transfer this Warrant or any Warrant Shares (the "Offeror"),
(ii) the number of Warrants or Warrant Shares the Selling Holder proposes to
transfer (the "Offered Securities"), (iii) the consideration per share to be
delivered to the Selling Holder for the proposed transfer and (iv) all other
material terms and conditions of the proposed transaction.
(ii) The Company shall have the first option to purchase all
or any part of the Offered Securities for the consideration and on the terms and
conditions specified in the Notice. The Company must exercise such option, no
later than 15 days after such Notice is deemed under Section 12 hereof to have
been delivered to it, by written notice to the Selling Holder.
(iii) In the event the Company does not exercise its option
within such 15-day period with respect to all of the Offered Securities, the
Secretary of the Company shall, by
-4-
<PAGE>
the last day of such period, give written notice of that fact to NPD (the "NPD
Notice"). The NPD Notice shall specify the number of Offered Securities not
purchased by the Company (the "Remaining Securities").
(iv) In the event the Company duly exercises its option to
purchase all or part of the Offered Securities, the closing of such purchase
shall take place at the offices of the Company on the later of (A) the date five
days after the expiration of such 15-day period or (B) the date that NPD
consummates its purchase of Offered Securities under subsection (vii) below.
(v) To the extent that the consideration proposed to be paid
by the Offeror for the Offered Securities consists of property other than cash
or a promissory note, the consideration required to be paid by the Company
and/or NPD may consist of cash or property equal to the value of such property,
as determined in good faith by agreement of the Selling Holder and the Company
and/or NPD.
(vi) Notwithstanding anything to the contrary herein, neither
the Company nor NPD shall have any right to purchase any of the Offered
Securities hereunder unless the Company and/or NPD exercise their option or
options to purchase all of the Offered Securities.
(vii) NPD shall have an option, exercisable for a period of 15
days from the date of delivery of the NPD Notice, to agree to purchase the
Remaining Securities for the consideration per share and on the terms and
conditions set forth in the Notice. Such option shall be exercised by delivery
of written notice to the Secretary of the Company. The closing of the purchase
of the Remaining Securities shall take place at the offices of the Company no
later than five days after the expiration of such 15-day period.
(viii) If the Company and/or NPD do not exercise their options
to purchase all of the Offered Securities within the periods described above
(the "Option Period"), then all options of the Company and NPD to purchase the
Offered Securities whether exercised or not, shall terminate, and the Selling
Holder shall be entitled to transfer the Offered Securities to the Offeror for
the consideration and on the terms and conditions set forth in the Notice. The
transaction contemplated by the Notice shall be consummated not later than 60
days after the expiration of the Option Period. If the Selling Holder wishes to
sell, transfer or otherwise dispose of any of the Offered Securities at a price
which differs from that set forth in the Notice or the NPD Notice, upon terms
different from those previously offered to the Company and NPD, or more than 60
days after the expiration of the Option Period, as a condition precedent to such
transaction, such Offered Securities must first be offered to the Company and
NPD on the same terms and conditions as given the Offeror, and in accordance
with the procedures and time periods set forth above.
(d) The Registered Holder shall not transfer this Warrant or any
Warrant Shares to any direct competitor of the Company listed on Exhibit II
attached hereto. The Exhibit may be amended from time to time by the Board, a
copy of any amendment of which shall be promptly provided to the Registered
Holder by the Company.
-5-
<PAGE>
(e) Each certificate representing Warrant Shares shall bear legends
substantially in the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not
be offered, sold or otherwise transferred, pledged or hypothecated
unless and until such securities are registered under such Act or an
opinion of counsel satisfactory to the Company is obtained to the
effect that such registration is not required."
"The sale, transfer or other disposition of any of the shares
represented by this certificate is subject to the right of first
refusal of this Corporation and certain shareholders of this
Corporation as set forth in the Common Stock Purchase Warrant issued
by the Corporation to the holder hereof on November 5,1998. A copy
of the Common Stock Purchase Warrant is available for inspection
during normal business hours at the principal executive office of
this Corporation."
5. No Impairment. The Company will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against impairment.
6. Liquidating Dividends. If the Company pays a dividend or makes a
distribution on the Common Stock payable otherwise than in cash out of earnings
or earned surplus (determined in accordance with generally accepted accounting
principles) except for a stock dividend payable in shares of Common Stock (a
"Liquidating Dividend"), then the Company will pay or distribute to the
Registered Holder of this Warrant, upon the exercise hereof, in addition to the
Warrant Shares purchased upon such exercise, the Liquidating Dividend which
would have been paid to such Registered Holder if he had been the owner of
record of such Warrant Shares immediately prior to the date on which a record is
taken for such Liquidating Dividend or, if no record is taken, the date as of
which the record holders of Common Stock entitled to such dividends or
distribution are to be determined.
7. Notices of Record Date, etc. In case:
(a) the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time deliverable upon the exercise of
this Warrant) for the purpose of entitling or enabling them to receive any
dividend or other distribution, or to receive any right to
-6-
<PAGE>
subscribe for or purchase any shares of stock of any class or any other
securities, or to receive any other right; or
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the surviving entity), or any
transfer of all or substantially all of the assets of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder of this Warrant a notice specifying, as the case may be, (i)
the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the effective date on which such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or such other stock or securities at the
time deliverable upon the exercise of this Warrant) shall be entitled to
exchange their shares of Common Stock (or such other stock or securities) for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be mailed at least twenty (20) days prior to the
record date or effective date for the event specified in such notice.
8. Reservation of Stock. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the exercise of this Warrant,
such number of Warrant Shares and other stock, securities and property, as from
time to time shall be issuable upon the exercise of this Warrant.
9. Exchange of Warrants. Upon the surrender by the Registered Holder of
any Warrant or Warrants, properly endorsed, to the Company at the principal
office of the Company, the Company will, subject to the provisions of Section 4
hereof, issue and deliver to or upon the order of such Holder, at the Company's
expense, a new Warrant or Warrants of like tenor, in the name of such Registered
Holder or as such Registered Holder (upon payment by such Registered Holder of
any applicable transfer taxes) may direct, calling in the aggregate on the face
or faces thereof for the number of shares of Common Stock called for on the face
or faces of the Warrant or Warrants so surrendered.
10. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
-7-
<PAGE>
11. Transfers, etc.
(a) The Company will maintain a register containing the names and
addresses of the Registered Holders of this Warrant. Any Registered Holder may
change its or his address as shown on the warrant register by written notice to
the Company requesting such change.
(b) Subject to the provisions of Section 4 hereof, this Warrant and
all rights hereunder are transferable, in whole or in part, upon surrender of
this Warrant with a properly executed assignment (in the form of Exhibit III
hereto) at the principal office of the Company.
(c) Until any transfer of this Warrant is made in the warrant
register, the Company may treat the Registered Holder of this Warrant as the
absolute owner hereof for all purposes; provided, however, that if and when this
Warrant is properly assigned in blank, the Company may (but shall not be
obligated to) treat the bearer hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary.
12. Registration Rights. The shares of Common Stock issuable upon exercise
of the Warrants shall have the registration rights set forth in the Registration
Rights Agreement dated November 5, 1998 among the Company and certain
stockholders of the Company listed on the signature pages thereto.
13. Mailing of Notices, etc. All notices and other communications from the
Company to the Registered Holder of this Warrant shall be mailed by first-class
certified or registered mail, postage prepaid, to the address furnished to the
Company in writing by the last Registered Holder of this Warrant who shall have
furnished an address to the Company in writing. All notices and other
communications from the Registered Holder of this Warrant or in connection
herewith to the Company shall be mailed by first-class certified or registered
mail, postage prepaid, to the Company at its principal office at 900 West Shore
Road, Port Washington, New York 11050. If the Company should at any time change
the location of its principal office to a place other than as set forth in the
immediately preceding sentence, it shall give prompt written notice to the
Registered Holder of this Warrant and thereafter all references in this Warrant
to the location of its principal office at the particular time shall be as so
specified in such notice.
14. No Rights as Stockholder. Until the exercise of this Warrant, the
Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a stockholder of the Company.
15. Change or Waiver. Any term of this Warrant may be changed or waived
only by an instrument in writing signed by the party against which enforcement
of the change or waiver is sought.
-8-
<PAGE>
16. Headings. The headings in this Warrant are for purposes of reference
only and shall not limit or otherwise affect the meaning of any provision of
this Warrant.
17. Governing Law. This Warrant will be governed by and construed in
accordance with the laws of the State of Delaware.
MEDIA METRIX, INC.
By:
-------------------------------
Name: Tod Johnson
Title: Chief Executive Officer
[Corporate Seal]
ATTEST:
- ---------------------------
<PAGE>
EXHIBIT I
PURCHASE FORM
To: Media Metrix, Inc. Dated: ____________________
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No. _____), hereby irrevocably elects to purchase _____ shares of the
Common Stock covered by such Warrant. The undersigned herewith makes payment of
$_______________, representing the full purchase price for such shares at the
price per share provided for in such Warrant. Such payment takes the form of
(check applicable box or boxes):
|_| $__________ in lawful money of the United States, and/or
|_| the cancellation of such portion of the attached Warrant as is
exercisable for a total of ________ Warrant Shares (using a
Fair Market Value of $________ per share for purposes of this
calculation).
Signature:
------------------------------------
Address:
------------------------------------
------------------------------------
<PAGE>
EXHIBIT II
LIST OF COMPETITORS
AC Nielsen
Ceridian
Nielsen Media Research, Inc.
Forrester Research
IntelliQuest
Odessey
Reuters
Site-Centric measurement systems-
(e.g. Internet Profiles Corporation)
Consumer-Centric measurement systems
(e.g. Net Ratings and PC Data)
International Data Corporation
Gartner Group
@Plan
United News
Media
VNU
WPP
<PAGE>
EXHIBIT III
ASSIGNMENT FORM
FOR VALUE RECEIVED, ________________________________ hereby sells, assigns
and transfers all of the rights of the undersigned under the attached Warrant
(No. ____) with respect to the number of shares of Common Stock covered thereby
set forth below, unto:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
Dated: Signature:
--------------------- ----------------------------------------
Dated: Witness:
--------------------- ------------------------------------------
<PAGE>
THIS WARRANT AND THE SHARES OF COMMON STOCK WHICH MAY BE PURCHASED UPON THE
EXERCISE OF THIS WARRANT HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE, OFFER,
PLEDGE OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS UNLESS SOLD
PURSUANT TO RULE 144 OF THE ACT.
Warrant No.: __________ Void after __________
MEDIA METRIX, INC.
WARRANT TO PURCHASE __________ SHARES OF COMMON STOCK
__________
THIS CERTIFIES THAT, for value received, __________ (the "Holder") is
entitled to subscribe for and purchase __________ shares (as adjusted pursuant
to Section 3 hereof) of the fully paid and nonassessable Common Stock (the
"Shares"), of Media Metrix, Inc., a Delaware corporation (the "Company"), at the
price (the "Exercise Price") of __________ per share (as adjusted pursuant to
Section 3 hereof).
1. Method of Exercise; Payment.
(a) Cash Exercise. The purchase rights represented by this Warrant may be
exercised by the Holder, in whole or in part, by the surrender of this Warrant
(with the notice of exercise form attached hereto as Exhibit D-1 duly executed)
at the principal office of the Company, and by the payment to the Company, by
certified, cashier's or other check acceptable to the Company, of an amount
equal to the aggregate Exercise Price of the shares being purchased.
(b) Net Issue Exercise.
(i) In lieu of exercising this Warrant, the Holder may elect
to receive shares equal to the value of this Warrant (or the portion thereof
being canceled) by surrender of this Warrant at the principal office of the
Company together with notice of such election, in which event the Company shall
issue to the Holder a number of shares of the Company's Common Stock computed
using the following formula:
<PAGE>
X = (Y (A-B))/A
Where X = the number of shares of Common Stock to be issued to the Holder.
Y = the number of shares of Common Stock purchasable under this Warrant.
A = the Fair Market Value of one share of the Company's Common Stock.
B = the Exercise Price (as adjusted to the date of such calculation).
(c) Fair Market Value. For purposes of this Section 1, the Fair Market
Value of the Company's Common Stock shall mean: (i) The average of the closing
bid and ask prices of the Company's Common Stock quoted in the Over-the-Counter
Market Summary or the closing price quoted on any exchange on which the Common
Stock is listed, whichever is applicable, as published in the Western Edition of
The Wall Street Journal for the ten trading days prior to the date of
determination of fair market value; or (ii) If the Company's Common Stock is not
traded over-the-counter or on an exchange, Fair Market Value of the Common Stock
per share shall be determined in good faith by the Board of Directors of the
Company.
(d) Stock Certificates. In the event of any exercise of the rights
represented by this Warrant, certificates for the shares of Common Stock so
purchased shall be delivered to the Holder within a reasonable time and, unless
this Warrant has been fully exercised or has expired, a new Warrant representing
the shares with respect to which this Warrant shall not have been exercised
shall also be issued to the Holder within such time.
2. Representations of the Company.
(a) Stock Fully Paid; Reservation of Shares. All of the Shares
issuable upon the exercise of the rights represented by this Warrant will, upon
issuance and receipt of the Exercise Price therefor, be fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof. During the period within which the rights represented by this
Warrant may be exercised, the Company shall at all times have authorized and
reserved for issuance sufficient shares of its Common Stock to provide for the
exercise of the rights represented by this Warrant.
(b) Corporate Action. The Company represents that all corporate
actions on the part of the Company, its officers, directors and shareholders
necessary for the sale and issuance of the Shares pursuant hereto and the
performance of the Company's obligations hereunder were taken prior to and are
effective as of the effective date of this Warrant.
3. Adjustment of Exercise Price and Number of Shares. The number and kind
of securities purchasable upon the exercise of this Warrant and the Exercise
Price therefor shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
2
<PAGE>
(a) Reclassification, Consolidation or Merger. In case of any
reclassification or change of the Common Stock (other than a change in par
value, or as a result of a subdivision or combination), or in case of any
consolidation or merger of the Company with or into another corporation (other
than a merger with another corporation in which the Company is a continuing
corporation and which does not result in any reclassification or change of
outstanding securities issuable upon exercise of this Warrant), or in case of
any sale of all or substantially all of the assets of the Company, the Company,
or such successor or purchasing corporation as the case may be, shall execute a
new Warrant, providing that Holder shall have the right to exercise such new
Warrant, and procure upon such exercise and payment of the same aggregate
Exercise Price, in lieu of the shares of Common Stock theretofore issuable upon
exercise of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification, change,
consolida tion, sale of all or substantially all of the Company's assets or
merger by a holder of an equivalent number of shares of Common Stock. Such new
Warrant shall provide for adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Section 3. If such
successor or purchasing corporation does not assume the obligations of this
Warrant and Holder has not otherwise exercised this Warrant in full, then the
unexercised portion of this Warrant shall be deemed to have been automatically
converted pursuant to Section 1 and thereafter Holder shall participate in the
acquisition on the same terms as other holders of the same class of securities
of the Company.
(b) Stock Splits, Dividends and Combinations. In the event that the
Company shall at any time subdivide the outstanding shares of Common Stock or
shall issue a stock dividend on its outstanding shares of Common Stock the
number of Shares issuable upon exercise of this Warrant immediately prior to
such subdivision or to the issuance of such stock dividend shall be
proportionately increased, and the Exercise Price shall be proportionately
decreased, and in the event that the Company shall at any time combine the
outstanding shares of Common Stock the number of Shares issuable upon exercise
of this Warrant immediately prior to such combination shall be proportionately
decreased, and the Exercise Price shall be proportionately increased, effective
at the close of business on the date of such subdivision, stock dividend or
combination, as the case may be.
4. Notice of Adjustments. Whenever the number of Shares purchasable
hereunder or the Exercise Price thereof shall be adjusted pursuant to Section
3(b) hereof, the Company shall provide notice by first class mail to the holder
of this Warrant setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the number of Shares which may be purchased and the Exercise
Price therefor after giving effect to such adjustment.
5. Fractional Shares. No fractional shares of Common Stock will be issued
in connection with any exercise hereunder. In lieu of such fractional shares the
Company shall make a cash payment therefor based upon the Exercise Price then in
effect.
6. Investment Representations. In connection with the purchase of the
Shares, Holder represents to the Company the following:
3
<PAGE>
(a) Holder is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Shares. Holder is purchasing
the Shares for investment for Holder's own account only and not with a view to,
or for resale in connection with, any "distribution" thereof within the meaning
of the Securities Act of 1933, as amended (the "Securities Act").
(b) Holder understands that the Shares have not been registered
under the Securities Act by reason of a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Holder's
investment intent as expressed herein. In this connection, Holder understands
that, in view of the Securities and Exchange Commission ("Commission"), the
statutory basis for such exemption may not be present if Holder present
intention is to hold the Shares for a minimum capital gains period under
applicable tax statutes, for a deferred sale, for a market rise, for a sale if
the market does not rise, or for a year or any other fixed period in the future.
(c) Holder further acknowledges and understands that the Shares must
be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. Holder
further acknowledges and understands that the Company is under no obligation to
register the Shares. Holder understands that the certificate evidencing the
Shares will be imprinted with a legend which prohibits the transfer of the
Shares unless they are registered or such registration is not required in the
opinion of counsel satisfactory to the Company.
7. Stock Certificate Legends. The share certificate evidencing the Shares
issued hereunder shall be endorsed with the following legends:
(a) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933.
(b) THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED
ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND
THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
(c) Any legend required by any applicable state securities laws.
4
<PAGE>
8. Restrictions Upon Transfer.
(a) The Company need not register a transfer of Shares bearing the
restrictive legend set forth in Section 7 hereof, unless the conditions
specified in such legend are satisfied. The Company may also instruct its
transfer agent not to register the transfer of the Shares, unless one of the
conditions specified in the legend referred to in Section 7 hereof is satisfied.
(b) Notwithstanding the provisions of paragraph (a) above, no
opinion of counsel or "no-action" letter shall be necessary for a transfer
without consideration by any holder (i) to an affiliate of the holder, (ii) if
such holder is a partnership, to a partner or retired partner of such
partnership who retires after the date hereof or to the estate of any such
partner or retired partner, (iii) if such holder is a corporation, to a
shareholder of such corporation, or to any other corporation under common
control, direct or indirect, with such holder, or (iv) by gift, will or
intestate succession of any individual holder to his spouse or siblings, or to
the lineal descendants or ancestors of such holder or his spouse, if the
transferee agrees in writing to be subject to the terms hereof to the same
extent as if such transferee were the original holder hereunder.
9. Rights of Shareholders. No holder of this Warrant shall be entitled, as
a Warrant holder, to vote or receive dividends or be deemed the holder of Common
Stock or any other securities of the Company which may at any time be issuable
on the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value, consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein.
10. Term of Warrant. This Warrant is exercisable, in whole or in part, at
any time on or before __________ or at such time as is immediately prior to the
closing of the Company's initial public offering of its securities under the
Securities Act, whichever is earlier.
11. Notices. All notices and other communications from the Company to the
Holder shall be mailed by overnight courier or by first-class, registered or
certified mail, postage prepaid, to the address furnished to the Company in
writing by the last Holder who has furnished an address to the Company in
writing. Notice shall be deemed given one (1) day after deposit with an
overnight courier service, three (3) days after deposit in the mails as
aforesaid or upon delivery if personally delivered.
12. Change; Waiver. Neither this Warrant nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
5
<PAGE>
13. Governing Law. This Warrant shall be construed and enforced in
accordance with and governed by the laws of the State of Delaware.
Issued this 5th day of November, 1998.
MEDIA METRIX, INC.
By:
-----------------------------------
Title:
--------------------------------
6
<PAGE>
Exhibit D-1
NOTICE OF EXERCISE
TO: Media Metrix, Inc.
900 West Shore Road
Port Washington, NY 11050
Attention: Chief Executive Officer
1. The undersigned hereby elects to purchase __________ shares of Common
Stock of Media Metrix, Inc. pursuant to the terms of the attached Warrant.
2. Method of Exercise (Please initial the applicable blank):
___ The undersigned elects to exercise the attached Warrant by
means of a cash payment, and tenders herewith payment in full
for the purchase price of the shares being purchased, together
with all applicable transfer taxes, if any.
___ The undersigned elects to exercise the attached Warrant by
means of the net exercise provisions of Section 1(b) of the
Warrant.
3. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
---------------------------------
(Name)
---------------------------------
---------------------------------
(Address)
4. The undersigned hereby represents and warrants that the aforesaid
shares of Common Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection with, the
distribution thereof, and that the undersigned has no present intention of
distributing or reselling such shares and all representations and warranties of
the undersigned set forth in Section 6 of the attached Warrant are true and
correct as of the date hereof. In support thereof, the undersigned hereby
delivers an Investment Representation Statement in a form substantially similar
to the form attached to the Warrant as Exhibit D-2.
--------------------------------
(Signature)
Title:
--------------------------
Date:
--------------------------
<PAGE>
Exhibit D-2
INVESTMENT REPRESENTATION STATEMENT
PURCHASER : __________________
COMPANY : MEDIA METRIX, INC.
SECURITY : COMMON STOCK ISSUED UPON EXERCISE OF THE STOCK
PURCHASE WARRANT ISSUED ON NOVEMBER 5, 1998
AMOUNT : ___________ SHARES
DATE : __________, 1999
In connection with the purchase of the above-listed Securities, the Purchaser
represents to the Company the following:
(a) Purchaser is aware of the Company's business affairs and financial
condition, and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Purchaser is
purchasing these Securities for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Purchaser understands that the Securities have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of its
investment intent as expressed herein. In this connection, Purchaser understands
that, in the view of the Securities and Exchange Commission (the "SEC"), the
statutory basis for such exemption may be unavailable if its representation was
predicated solely upon a present intention to hold these Securities for the
minimum capital gains period specified under tax statutes, for a deferred sale,
for or until an increase or decrease in the market price of the Securities, or
for a period of one year or any other fixed period in the future.
(c) Purchaser further understands that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from registration is otherwise available. Moreover, Purchaser
understands that the Company is under no obligation to register the Securities.
In addition, Purchaser understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel for the Company.
(d) Purchaser is familiar with the provisions of Rule 144, promulgated
under the Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof, in a non-public offering subject to the satisfaction of certain
conditions.
<PAGE>
The Securities may be resold in certain limited circumstances subject to
the provisions of Rule 144, which requires among other things: (1) the
availability of certain public information about the Company, (2) the resale
occurring not less than one year after the party has purchased, and made full
payment for, within the meaning of Rule 144, the securities to be sold; and, in
the case of an affiliate, or of a non-affiliate who has held the securities less
than two years, (3) the sale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934) and the amount of
securities being sold during any three month period not exceeding the specified
limitations stated therein, if applicable.
(e) Purchaser agrees, in connection with the Company's initial
underwritten public offering of the Company's securities, (1) not to sell, make
short sale of, loan, grant any options for the purchase of, or otherwise dispose
of any shares of Common Stock of the Company held by me (other than those shares
included in the registration) without the prior written consent of the Company
or the underwriters managing such initial underwritten public offering of the
Company's securities for one hundred eighty (180) days from the effective date
of such registration, and (2) Purchaser further agrees to execute any agreement
reflecting (1) above as may be requested by the underwriters at the time of the
public offering; provided however that the officers and directors of the Company
who own the stock of the Company also agree to such restrictions.
(f) Purchaser further understands that in the event all of the applicable
requirements of Rule 144 are not satisfied, registration under the Securities
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 are not exclusive,
the Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
--------------------------------
Date:
------------------
2
<PAGE>
Exhibit D-3
FORM OF TRANSFER
(To be signed only upon transfer of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________________________ the right represented by
the attached Warrant to purchase ____________* shares of Common Stock of Media
Metrix, Inc., to which the attached Warrant relates, and appoints ______________
Attorney to transfer such right on the books of Media Metrix, Inc., with full
power of substitution in the premises.
Dated: ____________________
--------------------------------------
(Signature must conform in all
respects to name of Holder as
specified on the face of the Warrant)
--------------------------------------
--------------------------------------
(Address)
Signed in the presence of:
- --------------------------------
* Insert here the number of shares without making any adjustment for additional
shares of Common Stock or any other stock or other securities or property or
cash which, pursuant to the adjustment provisions of the Warrant, may be
deliverable upon exercise.
<PAGE>
Exhibit 10.1
MANAGEMENT SERVICES AGREEMENT
The parties to this agreement are Media Metrix, Inc., a Delaware
corporation ("MMX"), The NPD Group, Inc., a New York corporation ("NPD") and Tod
Johnson, an individual with an address at c/o The NPD Group, Inc., 900 West
Shore Road, Port Washington, New York 11050 ("Johnson").
MMX is in the business of developing, marketing and selling
marketing research services which track and evaluate usage of Internet resources
and computer software and operates a national consumer usage panel (the "Panel")
in order to generate data for market research purposes (the "Business"). NPD has
been providing certain services to MMX pursuant to an Amended and Restated
Management Services Agreement among MMX, NPD and Johnson, dated as of April 17,
1997 (the "Prior MMX Management Services Agreement"). Johnson is the Chief
Executive Officer and the controlling shareholder of NPD. The parties desire to
provide for a continuation of certain of the services set forth in the Prior MMX
Management Services Agreement.
It is therefore agreed as follows:
1. Appointment; Services.
1.1 Appointment. MMX hereby retains NPD on behalf of itself
and its subsidiaries, and NPD hereby accepts retention, to provide the services
relating to the Business set forth in this agreement.
1.2 Services. Subject to the terms and conditions of this
agreement, NPD shall continue to provide to MMX and its subsidiaries such
services relating to the Business as NPD performed immediately prior to the date
hereof under the Prior MMX Management Services Agreement. Services under this
agreement shall be provided at such times and in such manner as MMX shall
reasonably request. The services to be provided by NPD shall include:
<PAGE>
(i) The support of the operation and administration of the
Panel. Such support includes supporting efforts such as recruiting, operating,
projecting and compensating the Panel, using the methods and procedures
generally in use on the date of this agreement or as modified in the reasonable
judgment of MMX.
(ii) Access to panelists in NPD's panels, including the Home
Testing Institute ("HTI") panel, so long as such access will not adversely
affect other projects using any panelist who is primarily a member of an NPD
panel.
(iii) The data capture and editing of all data reasonably
requested by MMX.
(iv) The data base structuring and storage of all relevant
data.
(v) Processing of reports as reasonably specified by MMX and,
where appropriate, supporting clients for on-line usage.
(vi) Provision of such systems support and development as
shall be mutually agreed between NPD and MMX.
(vii) Provision of such computer time, storage and printing as
shall be reasonably necessary in connection with the services specified in (i)
through (vi) above.
(viii) Support in connection with client service and sales.
(ix) Office space and facilities appropriate to the Business
within NPD leased facilities.
(x) The provision of NPD's Hardware Ownership Survey (if NPD
chooses to collect it).
-2-
<PAGE>
In addition to the services specified above, NPD shall provide MMX
with such administrative and office logistical support, including payroll
management, as shall be reasonably necessary in connection with the performance
of such services and the operation of the Business.
1.3 Employees. All NPD employees (other than those, if any,
who become employees of MMX) shall remain under the exclusive direction and
control of NPD.
2. Non-Competition. NPD and Johnson hereby agree that during the
term of this agreement and for a period of two years thereafter, they shall not
individually nor collectively, directly or indirectly, either as an employee,
employer, consultant, agent, principal, partner, stockholder, corporate officer,
director or in any other individual or representative capacity, engage or
participate in the field of audience measurement for digital online media and
measurement of usage of computer software and personal computers, except for any
investment in a publicly traded company which does not exceed, in the aggregate,
10% of the outstanding capital stock thereof.
3. Term. The term of this agreement commenced on the date hereof and
shall continue until terminated by either party giving the other at least 90
days' prior written notice to such effect; provided, however, NPD may not
terminate this agreement pursuant to this Section 3 until March 31, 2002. Upon
termination of this agreement, NPD shall provide to MMX a copy of all data and
other documentation in its possession which were generated during the
performance of its services pursuant to this agreement relating to, and
necessary or useful to continue, the Business or other businesses developed in
connection with the Business (the "Information") upon reimbursement by MMX to
NPD of its reasonable out of pocket costs for delivering the Information. All
the Information with respect to the operation of the Panel shall be provided on
a non-exclusive basis pursuant to a perpetual, royalty free, non-forfeitable
license from NPD to MMX, subject to
-3-
<PAGE>
confidentiality agreements similar in scope and substance to those set forth in
section 6(a); all other Information (including those derived from the operation
of the Panel) shall be the exclusive property of MMX, and NPD shall, to the
extent not previously done, transfer title to such other Information (without
representation or warranty) to MMX pursuant to instruments of transfer
reasonably satisfactory to MMX. MMX shall, at the reasonable request of NPD,
license such Information owned by MMX back to NPD for use in connection with its
businesses pursuant to a non-exclusive, perpetual, royalty-free, non-forfeitable
license, subject to confidentiality agreements similar in scope and substance to
those set forth in section 6(a). Any services provided by NPD to MMX following
the termination of this agreement shall be at NPD's discretion and on such terms
and conditions as shall be agreed to by the parties.
4. Compensation.
4.1 Amount. As compensation for the services provided by NPD,
MMX shall pay to NPD an amount equal to (a) all expenses reasonably incurred by
NPD in the performance of its duties under this agreement, plus, without
duplication, 105% of the sum of (b) a reasonable allocation of the overhead of
NPD as set forth on Exhibit A hereto and (c) the service charges, subject to
adjustment, as set forth in said Exhibit A. Exhibit A hereto also summarizes
NPD's monthly cost allocation system and will be applied to the extent
appropriate in determining expenses under this Section 4.1.
4.2 Billing. NPD shall allocate its expenses and overhead
relating to the performance of its obligations under this agreement in its cost
accounting system as currently in effect, with such changes as may be agreed to
by the parties. NPD shall bill MMX monthly in arrears
-4-
<PAGE>
for the amounts payable to NPD pursuant to Section 4.1 for that month, and MMX
shall pay such amounts as soon as practical after receipt of such invoice but no
later than 30 days after receipt.
5. Indemnity. (a) MMX shall indemnify and hold harmless NPD and its
directors, officers and employees from and against all loss, liability, damage
or expense (including, without limitation, reasonable fees and expenses of
counsel) NPD or such directors, officers or employees may suffer, sustain or
become subject to as a result of, or otherwise relating to, (i) the performance
of its or their duties under this agreement, unless such loss, liability, damage
or expense shall result from the gross negligence or willful misconduct of NPD
or its directors, officers or employees or the breach of this agreement and (ii)
the operation of the Businesses.
(b) NPD shall indemnify and hold harmless MMX and its subsidiaries
and their respective directors, officers and employees from and against all
loss, liability, damage or expense (including, without limitation, reasonable
fees and expenses of counsel) MMX or such directors, officers or employees may
suffer, sustain or become subject to as a result of, or otherwise relating to,
(i) the gross negligence or willful misconduct of NPD or its directors, officers
or employees in the performance of its or their duties under this agreement or
(ii) the operation of the business of NPD (excluding the services performed
hereunder).
6. Confidentiality. (a) MMX and NPD each agrees that it shall not,
and shall cause its directors, officers, employees and affiliates not to,
directly or indirectly, either during the term of this agreement or thereafter,
disclose to anyone (except at the other's direction), any confidential or secret
aspect of the business or affairs of the other obtained during the term of this
agreement which is not presently in and does not enter the public domain.
-5-
<PAGE>
(b) Subject to the provisions of Section 3 of this agreement,
all processes and ideas developed by NPD or its employees in connection with the
services rendered under this agreement shall remain the sole property of NPD.
(c) NPD and MMX each acknowledges that the remedy at law for
breach of its covenants under this Section 6 will be inadequate and,
accordingly, in the event of any breach or threatened breach by NPD or MMX of
the provisions of this Section 6, MMX or NPD, as the case may be, shall be
entitled, in addition to all other remedies, to an injunction restraining any
such breach.
7. Complete Agreement. This agreement contains a complete statement
of all the arrangements between the parties with respect to its subject matter,
supersedes all previous agreements between them relating to its subject matter
and cannot be modified, amended or terminated orally. The Prior MMX Management
Services Agreement is hereby terminated. Nothing herein shall limit the rights
and obligations of the parties under that certain Services Agreement, dated
March 31, 1996, by and between PC Meter L. P. (the predecessor in interest to
MMX) and NPD.
8. Waiver. The failure of a party to insist upon strict adherence to
any term of this agreement on any occasion shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this agreement. Any waiver must be in writing.
9. Invalidity. The invalidity or unenforceability of any term or
provision of this agreement shall not affect the validity or enforceability of
the remaining terms or provisions of this agreement which shall remain in full
force and effect and any such invalid or unenforceable term or provision shall
be given full effect to the extent possible. If any term or provision of this
agreement
-6-
<PAGE>
is invalid or unenforceable in one jurisdiction, it shall not affect the
validity or enforceability of that term or provision in any other jurisdiction.
10. Governing Law. This agreement shall be governed by and construed in
accordance with the law of the State of New York applicable to agreements made
and to be performed in New York.
11. Assignability. This agreement shall be binding on and inure to the
benefit of the respective successors and assigns of the parties, provided, that
neither party may assign any of its rights under this agreement (by operation of
law or otherwise) without the prior written consent of the other, other than in
connection with a transfer of the Business, in the case of MMX, or a transfer of
all or substantially all of its business, in the case of NPD, in either case to
an entity that agrees in a writing satisfactory to the other to be bound by the
terms of this agreement.
Dated as of September 30, 1998.
MEDIA METRIX, INC.
By: /s/ Tod Johnson
----------------------------------
Name:
Title:
THE NPD GROUP, INC.
By: /s/ Tod Johnson
----------------------------------
Name:
Title:
/s/ Tod Johnson
--------------------------------------
TOD JOHNSON
-7-
<PAGE>
EXHIBIT A
SUMMARY OF NPD COST ALLOCATION SYSTEM AND SERVICE CHARGES
General
NPD accounting utilizes an expense cost allocation system that is
currently maintained in a Microsoft Excel and Smith Denis Gaylord (SDG)
financial software environment. In the near future, SDG will be replaced by
Lawson financial software. Reports generated from this system reflect (a) direct
expenses captured through the general ledger or "book" and (b) allocated costs.
These latter expenses represent costs originally incurred by either NPD Service
or Corporate Administration departments (cost centers) which are subsequently
allocated to the operating departments based on an actual usage or on an
overhead basis.
NPD Charges on an Actual Usage Basis
Computer Rent Charge from NPD Dept 835 for desktop PCs/Network/Tech.
Support. Average of $500 per month per PC.
Computer Time: Charge from NPD Dept 830 for usage of HP Mainframe
Computer. Based on standard CPU click charge plus disk
storage charge.
Data Capture: Charge from NPD Dept 630 for loading and processing
disks. Based on standard hourly personnel charge -
$20.50 per hour.
Mail Handling: Charge from NPD Dept 770 for mail handling. Based on
standard hourly personnel charge - $24.50 per hour.
Panel Management: Charge from NPD Dept 745 for panel assistance. Based on
standard hourly personnel charge - $50 per hour.
HTI Panel Charge: Charge for use of HTI Panelists. Based on $2.50 per
month for each HTI panel member.
Printing & Postage: Charge from NPD Dept 781 for printing of monthly
reports. Based on standard click charges from Printing
Center.
NSHO/Other Survey: Charge from NPD Dept 465 for assistance from Custom for
fielding surveys. Based on discounted internal Custom
charge out rates.
Applications Support: Charge from NPD Dept. 840 for testing of software. Based
on standard hourly personnel charge.
-8-
<PAGE>
NPD Charges on an Overhead Basis
NPD - Rent: Charge from NPD Dept. 130 and Dept. 131 for space at
Port Washington and Uniondale. Such space in Port
Washington is leased by NPD from NPD Realty Company LLC
which is owned by Tod Johnson, the 1995 Stacey Johnson
Trust and the 1995 Scott Johnson Trust, at rates not
exceeding fair rental value. Based on actual square
footage used and standard sq. footage charge.
NPD - Benefits: Charge from NPD Dept. 110 for personnel related benefits
such as 401(k) plan, vacation pay and standard bonus
accrual. Based on actual headcount or actual
participation.
NPD - Insurance: Charge from NPD Dept. 110 for Life and Health (L&H), and
Property and Casualty Insurance (P&C). L&H based on
actual headcount and actual usage and P&C based on
actual sq. footage and actual usage.
NPD - Finance: Charge from NPD Dept. 121 for Tom Lynch and accounting
dept. services (A/R, A/P Processing etc). Based on $200
per hour for Tom Lynch and fixed agreed charge for other
services.
NPD - HR: Charge from NPD Depts. 122/123 for provision of Human
Resource and Personnel services. Based on actual
headcount.
NPD - Mgment: Charge from Dept. 110 for Tod Johnson. Based on $400 per
hour.
NPD reserves the right to implement reasonable fee increases upon no less
than 90 days advance notice to Media Metrix consistent with NPD's internal
policies.
-9-
<PAGE>
Exhibit 10.2
SERVICES AGREEMENT
The parties to this agreement are Media Metrix, Inc, a Delaware
corporation (the "Company"), and The NPD Group, Inc., a New York corporation
("NPD").
The Company is in the business of developing, marketing and selling
marketing research services which track and evaluate usage of Internet resources
and computer software and operates a national consumer usage panel (the "Panel")
in order to generate data for market research purposes (the "Business"). The
Company owns certain computer software (the "Software") used to effect such
measurement. The Company has been providing NPD with a royalty-free license to
certain computer software relating to the Business and access to all databases
generated by the Business pursuant to a Services Agreement between PC Meter
L.P., the Company's predecessor, and NPD dated as of March 31, 1996 (the "Prior
Services Agreement"). The parties desire to provide for a continuation of the
services set forth in the Prior Services Agreement.
It is therefore agreed as follows:
1. Services; License.
1.1 Services. Subject to the terms and conditions of this agreement,
the Company shall provide to NPD and its affiliated companies access to its data
bases, at such times and in such manner as NPD may reasonably request, for any
business purpose of NPD; provided that such data bases may not be used by NPD or
its affiliated companies in direct competition with the Business.
1.2 Grant of License; Scope. The Company hereby grants to NPD and
its affiliated companies a perpetual, non-forfeitable, worldwide license (the
"License") to use the Software in the operation of its businesses. The License
shall include the right to make revisions, modifications and improvements to the
Software; without limitation, NPD may modify the Software as necessary or
desirable to permit the Software to be used on hardware and operating systems
<PAGE>
different than those used by the Company. Any such revisions, modifications and
improvements shall be the property of the Company.
1.3 Exclusivity. The License shall be non-exclusive and the Company
shall retain the right to use, and to license the use of, the Software (and any
modifications, revisions and improvements to the Software) for all purposes;
provided that the Company shall not license or otherwise transfer the Software
to any third party or use the Software or any modification, revision or
improvement of the Software for uses in direct competition with the businesses
of NPD and in connection with any license or transfer to a third party shall
obtain a written undertaking from such third party not to use the Software (or
such modifications, revisions and improvements) in direct competition with such
businesses.
1.4 Modifications. If the Company shall modify the Software during
the term of this agreement, it shall make such modifications available to NPD
upon the terms and subject to the conditions set forth in this agreement as if
such modifications were part of the Software licensed under this agreement.
2. Term. The term of this agreement shall commence on the date of this
agreement and shall continue until terminated by (i) either party giving the
other at least 120 days' prior written notice or (ii) the mutual consent of the
parties hereto. No termination of this agreement shall affect the right of any
client of NPD or its affiliated companies to use the Software for the balance of
any unfulfilled contractual commitment of NPD or such affiliate to such client.
3. Compensation.
3.1 Amount. As compensation for the services provided by the
Company, NPD shall pay to the Company a monthly fee of $2,500 plus the
reasonable out of pocket expenses incurred by the Company in providing services
to NPD hereunder. The Company reserves the right to implement reasonable fee
increases upon no less than 90 days' advance written notice to NPD. The
percentage increases in any calendar year shall not exceed the increase over the
prior year in the
2
<PAGE>
Consumer Price Index for the New York Metropolitan Area -- All Items, as
reported by the U.S. Department of Labor.
3.2 Billing. The Company shall bill NPD monthly in arrears for the
amounts payable to the Company pursuant to section 3.1 for that month, and NPD
shall pay such amounts as soon as practical after receipt of such invoice but no
later than 30 days after receipt.
4. Title; Confidentiality.
4.1 Title. The Company shall deliver to NPD complete sets of object
and source code for the Software and any revisions, modifications or
improvements to the Software and complete sets of such documentation as may at
any time be available for the Software or such revisions, modifications or
improvements. In the event of destruction of the NPD's copy of any source code
or documentation, the Company shall, at NPD's expense, use its best efforts to
deliver a replacement copy of such destroyed source code or documentation. NPD
may make such copies of the Software or such revisions, modifications and
improvements as may be appropriate to enable NPD to exercise its rights under
this agreement. Title to the Software, source code and documentation, shall at
all times be vested in the Company, notwithstanding any delivery to NPD.
5. Indemnity.
(a) The Company shall indemnify and hold harmless NPD and its
directors, officers, affiliates and employees from and against all loss,
liability, damage or expense (including, without limitation, reasonable fees and
expenses of counsel) NPD or such directors, officers, affiliates or employees
may suffer, sustain or become subject to as a result of, or otherwise relating
to, (i) the performance of its or their duties under this agreement, unless such
loss, liability, damage or expense shall result from the gross negligence or
willful misconduct of NPD or its directors, officers, affiliates or employees or
the breach of this agreement and (ii) the operation of the Business.
3
<PAGE>
(b) NPD shall indemnify and hold harmless the Company and its
partners, officers and employees from and against all loss, liability, damage or
expense (including, without limitation, reasonable fees and expenses of counsel)
the Company or such partners, officers or employees may suffer, sustain or
become subject to as a result of, or otherwise relating to, (i) the gross
negligence or willful misconduct of NPD or its directors, officers, affiliates
or employees in the performance of its or their duties under this agreement or
(ii) the operation of the businesses of NPD.
6. Confidentiality.
(a) The Company and NPD each agrees that it shall not, and shall
cause its directors, partners, officers, employees and affiliates not to,
directly or indirectly, either during the term of this agreement or thereafter,
disclose to anyone (except at the other's direction), any confidential or secret
aspect of the business or affairs of the other obtained during the term of this
agreement which is not presently in and does not enter the public domain.
(b) All processes and ideas developed by the Company or its
employees in connection with the services rendered under this agreement shall
remain the sole property of Company.
(c) NPD and the Company each acknowledges that the remedy at law for
breach of its covenants under this section 6 will be inadequate and,
accordingly, in the event of any breach or threatened breach by NPD or the
Company of the provisions of this section 6, the Company or NPD, as the case may
be, shall be entitled, in addition to all other remedies, to an injunction
restraining any such breach.
7. Complete Agreement. This agreement contains a complete statement of all
the arrangements between the parties with respect to its subject matter,
supersedes all previous agreements between them relating to its subject matter
and cannot be modified, amended or terminated orally.
4
<PAGE>
8. Waiver. The failure of a party to insist upon strict adherence to any
term of this agreement on any occasion shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this agreement. Any waiver must be in writing.
9. Invalidity. The invalidity or unenforceability of any term or provision
of this agreement shall not affect the validity or enforceability of the
remaining terms or provisions of this agreement which shall remain in full force
and effect and any such invalid or unenforceable term or provision shall be
given full effect to the extent possible. If any term or provision of this
agreement is invalid or unenforceable in one jurisdiction, it shall not affect
the validity or enforceability of that term or provision in any other
jurisdiction.
10. Governing Law. This agreement shall be governed by and construed in
accordance with the law of the State of New York applicable to agreements made
and to be performed in New York.
11. Assignability. This agreement shall be binding on and inure to the
benefit of the respective successors and assigns of the parties, provided, that
neither party may assign any of its rights under this agreement (by operation of
law or otherwise) without the prior written consent of the other, other than in
connection with a transfer of the Business, in the case of the Company, or
5
<PAGE>
a transfer of all or substantially all of its business, in the case of NPD, in
either case to an entity that agrees in a writing satisfactory to the other to
be bound by the terms of this agreement.
Dated as of September 30, 1998.
MEDIA METRIX, INC.
By: /s/ Tod Johnson
---------------------------------
Name: Tod Johnson
Title: Chairman
THE NPD GROUP, INC.
By: /s/ Rupert Walters
---------------------------------
Name: Rupert Walters
Title: President
<PAGE>
Exhibit 10.3
LICENSE AGREEMENT
Agreement dated as of November 5, 1998 between The NPD Group, Inc.,
900 West Shore Road, Port Washington, NY 11050-0402 ("Licensor" or "NPD") and
Media Metrix, Inc., 900 West Shore Road, Port Washington, NY 11050-0402
("Licensee").
1. GRANT OF LICENSE:
(a) Licensor hereby grants to Licensee, on the terms and conditions
hereinafter set forth, an exclusive, non-transferable worldwide license (the
"Territory") to use the NPD PowerView(R) computer software and standard set ups
("NPD PowerView(R)"), Flexsys(TM) ("Flexsys(TM)") and NPD SofTrends(TM)
dictionary ("NPD SofTrends(TM)") solely in connection with the operation of the
Media Metrix New Media Measurement Service. NPD PowerView, Flexsys and NPD
SofTrends (as well as any updates thereof furnished by Licensor pursuant to this
Agreement) are hereinafter collectively referred to as the "Licensed Programs."
In connection with such grant, the Licensee shall be entitled:
(i) to use and, to the extent explicitly set forth in this
Agreement, to sublicense, the NPD PowerView, Flexsys and NPD SofTrends and to
use, exclusively for its own internal purposes the software tools identified in
Schedule A hereto.
(ii) to use the marks NPD PowerView, Flexsys and NPD SofTrends
and such other marks which Licensor may specify for use in connection with the
Licensed Programs (the "Marks"), subject to their availability in the Territory;
and
(iii) to use such know-how related to the Licensed Programs as
may be required to operate the Media Metrix New Media Measurement Service.
(b) For the purpose of this Agreement, the "Media Metrix New Media
Measurement Service" means a market research and information service or services
which track and evaluate usage of Internet resources and computer software.
(c) For purposes of this Agreement, "Licensed Programs" as defined
in Section 1(a), shall be in machine readable binary image format, and includes
related material, whether in machine readable, printed or other form, including
but not limited to instructional and operations manuals. The term Licensed
Programs includes all or any portion of a Licensed Programs incorporated in
another program, whether in machine readable, printed or other form.
Notwithstanding the foregoing, the term Licensed Programs does not include
source code in any form.
<PAGE>
(d) For purposes of this Agreement, with respect to a Licensed
Program "Use" means (i) transferring any portion of any Licensed Programs from
storage units or media into equipment for processing, whether by electronic,
mechanical or other means; (ii) utilizing any portion of any of the Licensed
Programs in the course of the operation of any equipment or in support of the
use of any equipment or program; or (iii) merging any Licensed Programs in
machine readable form into another program. "Use" also means referring to any
instructional or operational manual included in the definition of the Licensed
Programs for the purpose of understanding or operating the Licensed Programs.
(e) For purposes of this Agreement, the License is restricted to the
specific corporation designated as "Licensee" at the outset of this Agreement.
Licensee does not include any affiliate of Licensee other than its subsidiaries.
(f) For the purposes of this Agreement, "Update" means any generally
released corrections, enhancements or minor improvements to the Licensed
Programs.
2. CONDITIONS OF LICENSE:
(a) The license granted hereunder shall expire or terminate upon the
expiration or termination of this Agreement.
(b) NPD PowerView may be copied only for back-up and archive
purposes and for the Use of Licensee's clients in the Territory in conjunction
with the Media Metrix New Media Measurement Service. The other Licensed Programs
may be copied by Licensor in machine readable form to the extent required in
connection with the operation of the Media Metrix New Media Measurement Service
in the Territory. Licensed Programs provided in machine readable form may not be
copied into any media for any other purpose. Licensee may not copy any portion
of a Licensed Programs provided in printed form, including but not limited to
instructional or operational manuals.
(c) The parties hereby acknowledge that this Agreement establishes a
relationship of confidentiality between them, and Licensee acknowledges that the
Licensed Programs are furnished by Licensor on a confidential basis. Unless
otherwise agreed to in writing by Licensor, Licensee shall limit access to the
Licensed Programs to its employees who require such access to operate the Media
Metrix New Media Measurement Service only. Such access shall be solely for the
purpose of enabling Licensee to use the Licensed Programs for its own internal
purposes or to operate the Media Metrix New Media Measurement Service.
(d) Under no circumstances shall the Licensee transfer, assign or
sublicense any rights or obligations under this Agreement.
(e) Under no circumstances shall Licensee be deemed the owner of any
copy of the Licensed Programs within the meaning of Section 117 of Title 17 of
the United States Code.
-2-
<PAGE>
Within thirty (30) days after Licensee has permanently discontinued the use of
any part of the Licensed Programs or immediately upon the termination or
expiration of the License, Licensee shall return to Licensor the original and
all copies (whether whole or partial) of the Licensed Programs in any form and
shall certify in writing to Licensor that it has done so.
(f) Notwithstanding any provision herein to the contrary, the
Licensor acknowledges that an essential element of the Media Metrix New Media
Measurement Service involves the use by clients of copies of NPD PowerView, and
the use and sublicense by regional licensees of the Media Metrix New Media
Measurement Service, of the Licensed Programs. Accordingly, the Licensee shall
be entitled to sublicense the Licensed Programs only to regional sublicensees in
connection with the operation of the Media Metrix New Media Measurement Service;
provided that such sublicensees enter into license agreements substantially in
the form hereof restricting the use of the Licensed Programs to the same extent
that Licensee is restricted hereby and provided further than such sublicensees
are bound by confidentiality agreements relating to their use of the Licensed
Programs. A "regional licensee" shall mean an entity that has entered into an
agreement with the Licensee to license the Media Metrix New Media Measurement
Service within a defined territory.
(g) The Licensee acknowledges that, in addition to the Licensed
Programs, the Licensee will require and obtain, at the Licensee's expense,
additional market research data handling utilities. The Licensed Programs
include certain data handling utilities, but these only operate on a
Hewlett-Packard mainframe.
3. LICENSING FEES:
(a) The Licensee will pay the Licensor for the license of the
Licensed Programs, the fees set forth on Schedule B hereto, which will be paid
on a quarterly basis (the "License Fees"). The Licensor reserves the right to
implement reasonable fee increases upon no less than 90 days' advance written
notice to the Licensee consistent with the Licensor's internal policies.
(b) The Licensee will be charged by Licensor for time and support of
Licensor's personnel, at the Licensor's standard billing rates plus
out-of-pocket expenses, for services requested by the Licensee (the "Services").
(c) Any applicable sales, use, personal property, excise or other
taxes (other than income or corporate franchise taxes) will be added to the
License Fees listed on Schedule B and shall be payable by the Licensee at such
times and in such manner as required by law.
-3-
<PAGE>
4. TERMS OF PAYMENT:
(a) The License Fees will be paid for each quarter not later than
the 15th day of the first month following the end of the quarter. For the
purposes of this sub-section, "quarter" means each calendar quarter, except that
for the period commencing on the date of this Agreement and ending on the day
prior to the first day of the following full calendar quarter will be treated as
the first quarter of the term.
(b) The Licensor will invoice the Licensee for Services on a monthly
basis. Payment is due within thirty (30) days of the date of invoice.
(c) Interest will be charged on overdue amounts at a monthly rate of
one and one-half percent (1 1/2%) or at the maximum legal rate, whichever is
less.
5. INSTALLATION:
(a) It is the Licensee's responsibility, without charge to Licensor,
to provide and prepare any workstation(s) upon which any software is to be
installed under this Agreement in accordance with specifications supplied by the
Licensor.
(b) Unless otherwise specified in Schedule D hereto, it shall be the
responsibility of the Licensee to install the Licensed Programs at its own
expense.
6. PROPRIETARY RIGHTS:
(a) Title to the Licensed Programs shall at all times remain
exclusively with Licensor. Licensee acknowledges that Licensed Programs and the
original and any copies thereof, in whole or in part, and all copyright, patent,
trade secret, trademark and other intellectual property and proprietary rights
which now or hereafter may exist therein or in anyway related to the operation
of the NPD PowerView, Flexsys and NPD SofTrends, are owned by and shall remain
the exclusive valuable property of Licensor, and embody substantial creative
efforts, ideas and expressions. Under no circumstances shall Licensee attempt,
or permit others to attempt, to decompile, disassemble or otherwise reverse
engineer the Licensed Programs.
(b) The Licensee shall include, and shall not alter or remove, any
applicable copyright, patent, trade secret, trademark or other proprietary
notices on all copies (in whatever form) of the Licensed Programs and the
packaging in which they may be contained.
(c) The Licensee shall take all reasonable steps to safeguard the
Licensed Programs to assure that no unauthorized persons have access to them and
that no person authorized to have access to any part of it takes any action with
respect thereto which is herein prohibited. For the purposes of this Agreement,
the only persons authorized to have access to the Licensed Programs
-4-
<PAGE>
are those of Licensee's officers, directors and employees who have a need for
such access to operate the Media Metrix New Media Measurement Service and those
clients of the Licensee which enter into sublicenses with the Licensee. The
Licensee shall promptly report to the Licensor the taking of any prohibited
action with respect to any part of the Licensed Programs of which the Licensee
becomes aware and shall take such further steps as may reasonably be requested
by the Licensor to prevent such action.
(d) To the extent that the Licensee develops improvements or
enhancements to the Licensed Programs (the "Licensee Enhancements"), it agrees
to provide to NPD a perpetual, unrestricted royalty free license under the
Licensee Enhancements. The Licensee shall promptly notify the Licensor and
provide copies thereof to the Licensor in machine readable binary image format
and shall deliver to the Licensor the source code underlying the Licensee
Enhancements.
7. EXCLUSIVE WARRANTY AND REMEDY:
(a) The Licensor warrants that Licensed Programs (excluding, for
purposes of this subparagraph, any Updates furnished pursuant to this Agreement)
will upon delivery substantially conform to the description thereof set forth in
the pertinent user manuals. The Licensee, however, acknowledges that Licensed
Programs are of such complexity that they may contain inherent defects and the
mere existence thereof shall not constitute a breach of this warranty.
(b) As the sole and exclusive remedy for breach of the warranty
contained in the preceding subparagraph, the Licensor will provide the support
services set forth in paragraph 11 hereof.
(c) The Licensor's exclusive warranty and the remedy provided for
breach thereof shall not apply to damage or deficiencies resulting from
accident, alteration, modification, foreign attachments, misuse, tampering,
negligence, improper maintenance, abuse or failure to implement any Updates
furnished pursuant to this Agreement.
(d) The Licensor reserves the right to make substitutions and
modifications in the specification of the Licensed Programs.
8. DISCLAIMER OF ALL OTHER WARRANTIES:
EXCEPT FOR THE EXPRESS WARRANTY STATED IN PARAGRAPH 7 ABOVE,
LICENSOR GRANTS NO WARRANTIES WITH RESPECT TO THE LICENSED PROGRAMS, EITHER
EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. THE STATED EXPRESS WARRANTY, AND THE REMEDY
PROVIDED FOR BREACH THEREOF, ARE IN LIEU OF ALL OTHER LIABILITIES OR OBLIGATIONS
OF THE LICENSOR (WHETHER SUCH LIABILITIES OR OBLIGATIONS WOULD ARISE UNDER THIS
AGREEMENT OR
-5-
<PAGE>
OTHERWISE BY OPERATION OF LAW) FOR ANY DAMAGES WHATSOEVER ARISING OUT OF OR IN
CONNECTION WITH THE DELIVERY, INSTALLATION, USE OR PERFORMANCE OF THE LICENSED
PROGRAMS.
9. LIMITATION OF LIABILITY:
(a) IN NO EVENT SHALL LICENSOR BE LIABLE UNDER ANY LEGAL THEORY
(INCLUDING BUT NOT LIMITED TO CONTRACT, NEGLIGENCE, MISREPRESENTATION, STRICT
LIABILITY IN TORT OR WARRANTY OF ANY KIND) FOR ANY INDIRECT, SPECIAL, INCIDENTAL
OR CONSEQUENTIAL DAMAGES (INCLUDING BUT NOT LIMITED TO LOST PROFITS), EVEN IF
LICENSOR HAS NOTICE OF THE POSSIBILITY OF SUCH DAMAGES. THIS LIMITATION SHALL
APPLY NOTWITHSTANDING ANY DETERMINATION THAT THE EXCLUSIVE REMEDY REFERRED TO IN
SUBPARAGRAPH 7(B) ABOVE FAILED OF ITS ESSENTIAL PURPOSE.
(b) Without limiting the effect of the preceding subparagraph,
Licensor's maximum liability, if any, for damages (including but not limited to
liability arising out of contract, negligence, misrepresentation, strict
liability in tort or warranty of any kind) shall not exceed the allocable
portion of the License Fees paid by the Licensee during the preceding twelve
(12) months. This subparagraph (b) shall not apply to Licensor's obligations
under paragraph 10 of this Agreement.
(c) The Licensor shall under no circumstances be liable to the
Licensee for damages arising out of any claim (including, but not limited to, a
claim for personal injury or property damage) made against the Licensee by any
other person or party.
(d) The Licensee shall, at its cost and expense, defend, indemnify
and hold Licensor harmless from and against any claim (including, but not
limited to, a claim for personal injury or property damage) by any other person
or party arising out of or in connection with the use of the Licensed Programs
to perform the Licensee's applications, regardless of whether such claim is
founded in contract, tort or warranty.
10. INTELLECTUAL PROPERTY:
(a) The Licensor will defend and indemnify the Licensee against any
claim that the use of the Licensed Programs delivered hereunder, constitute an
infringement of a currently effective United States patent, copyright or other
intellectual property right. The Licensor's obligations hereunder will only
apply if the Licensee notifies the Licensor promptly in writing as to any such
claim; gives the Licensor the right to control and direct the investigation,
preparation, defense, trial and settlement of each such claim; and provides the
Licensor with information deemed necessary by the Licensor or its counsel in
connection with the foregoing. The Licensee agrees to cooperate fully with the
Licensor in the defense and/or settlement of each such claim. If the Licensor
-6-
<PAGE>
receives notice of an alleged infringement or if the use of Licensed Programs is
prevented based on an alleged infringement, the Licensor will have the right, at
its option, to obtain for the Licensee the right to the use of such Licensed
Program; substitute other comparable software; or replace or modify the
operation of such Licensed Program or its design so that it is no longer
infringing. If, in the Licensor's opinion, none of the foregoing alternatives is
reasonably available to the Licensor, then the Licensor may terminate this
Agreement and/or and discharge the Licensee from its obligations to pay any
further licensing fees under this Agreement for such Licensed Programs. In no
event shall the Licensor's liability under this paragraph (excluding the
Licensor's outside counsel fees and internal costs) exceed the allocable License
Fees paid by the Licensee to the Licensor under this Agreement. The foregoing
states the entire liability of the Licensor with respect to infringement of any
patents, copyrights or other intellectual property rights by the operation of
the Licensed Programs.
(b) The Licensor's obligation contained in the preceding
subparagraph does not extend to any suit or proceeding which is based upon a
patent claim covering a combination of which the operation of any Licensed
Programs licensed under this Agreement is merely an element of the claim
combined with other devices or elements not acquired hereunder unless Licensor
is a contributory infringer, nor does it extend to use of any operation of any
of the Licensed Programs in a manner for which the same was not designed.
(c) Ownership of Marks.
(i) The Licensee acknowledges the ownership of the Marks in
the Licensor, agrees that it will do nothing inconsistent with such ownership
and that all use of the Marks by the Licensee shall inure to the benefit and be
on behalf of the Licensor, and agrees to assist the Licensor in recording this
License with appropriate government authorities. The Licensee agrees that
nothing in this License shall give the Licensee any right, title or interest in
the Marks other than the right to use the Marks in accordance with this License
and the Licensee agrees that it will not attack the title of the Licensor to the
Marks or attack the validity of this License.
(ii) The Licensee will comply with all laws, rules,
regulations and requirements of any governmental body which may be applicable to
the delivery, sale or promotion of the Licensed Programs.
(iii) The Licensee acknowledges that only the Licensor may
file and prosecute a trademark application or applications to register the
Marks. Licensee agrees to cooperate with the Licensor when requested for
purposes of filing applications to register the Marks.
(iv) The Licensee agrees and undertakes to use the Marks
strictly in compliance with and observance of any and all trademark laws and to
use markings in connection therewith solely as may reasonably be required by the
Licensor. The Licensor shall be solely
-7-
<PAGE>
responsible for bearing all expenses reasonably incurred in preparing and
recording any and all such documents.
(v) The Licensee agrees not (1) to challenge the validity or
ownership of the Marks or any application for registration thereof, or any
trademark registrations thereof in any jurisdiction, or (2) to contest the fact
that the Licensee's rights under this Agreement terminate upon termination of
this Agreement. The provisions of this subsection shall survive any termination
or expiration of this Agreement.
(vi) The Licensee shall not at any time use, promote,
advertise, display or otherwise commercialize the Marks or any material
utilizing or reproducing the Marks in a manner that will adversely affect the
Marks or any rights or ownership of the Licensor therein.
(d) Quality Standards. The Licensee agrees that the nature and
quality of: all services rendered by the Licensee in connection with the Marks;
all goods sold by the Licensee under the Marks; and all related advertising,
promotional and other related uses of the Marks by the Licensee shall conform to
standards set by and be under the control of the Licensor.
(e) Quality Maintenance. The Licensee agrees to cooperate with the
Licensor in facilitating the control of such nature and quality by the Licensor,
to permit reasonable inspection of its operation by the Licensor. The Licensee
agrees to supply the Licensor with all specimens of any use by facsimile
transmission within seventy-two (72) hours prior to public release. If the
Licensor takes no action within twenty-four (24) hours of fax receipt, the
proposal shall be deemed acceptable and accepted. The Licensee shall comply with
all applicable laws and regulations and obtain all appropriate government
approvals pertaining to the sale, distribution and advertising of goods and
services covered by this License.
(f) Form of Use; Advertising and Graphic Standards. The Licensee
agrees to use the Marks only in the form and manner and with appropriate legends
as prescribed from time to time by the Licensor, and not to use any other
trademark or service mark in combination with any of the Marks without prior
written approval of the Licensor.
(g) Infringement. The Licensee shall promptly notify the Licensor of
any infringements or unauthorized use of the Marks or other intellectual
property used in connection with Licensed Programs by third parties, or any act
of unfair competition by third parties relating to the Licensed Programs,
whenever such infringement, use or act shall come to the Licensee's attention.
After receipt of such notice from the Licensee, the Licensor may in its sole
discretion take such action to stop such infringement or act as is reasonably
necessary to protect the Mark or other intellectual property in connection with
the Licensed Programs within the Territory. In connection therewith, the
Licensee shall fully cooperate with the Licensor to stop such infringement or
act and, if so requested by the Licensor, shall join with the Licensor as a
party to any action brought by the Licensor for such purpose. The Licensor shall
bear all expenses in connection with the foregoing.
-8-
<PAGE>
Any recovery as a result of such action shall belong solely to the Licensor,
except to the extent that such recovery represents damage specifically allocable
to the Licensee in which event such specified recovery, net of all expenses,
including all of the Licensor's counsel fees and other litigation expenses,
shall be paid to the Licensee. The Licensee agrees that the Licensor shall have
the sole power to take legal action or other action before any court or
governmental authority with respect to infringement of or the protection of the
Marks or other intellectual property.
11. SUPPORT SERVICES:
(a) The Licensor will, at such intervals as Licensor deems
appropriate, distribute Updates to the Licensee. Updates will consist of such
corrections, modifications and minor improvements of the Licensed Programs or
portions thereof, in machine readable binary image format, as the Licensor deems
appropriate and which the Licensor distributes generally to its other licensees.
The Licensee shall, upon receipt of any Update, implement its use such that it
replaces entirely any previous version of the Licensed Programs or portion
thereof to which the Update applies. Upon implementation, an Update shall
constitute a Licensed Program and shall be subject to all the terms and
conditions of this Agreement. If the Licensee fails to implement the use of any
Update, the Licensor will be under no obligation to furnish any further support
services under this Agreement, and if the Licensor chooses to honor the
Licensee's request for such services, any and all costs incurred to correct
errors in any previous version of the Licensed Programs will be borne by the
Licensee.
(b) The Licensor will use commercially reasonable efforts to correct
any error in the Licensed Programs identified by the Licensee in writing. An
error will be deemed to exist if, and only if, the Licensed Programs
substantially deviates from the description thereof in the pertinent user manual
or help files. The Licensee, however, acknowledges that the Licensed Programs
are of such complexity that it may be impossible or impracticable to effectuate
the correction of an error. If an error is, in the opinion of the Licensor, not
reasonably capable of correction, the Licensor will use its reasonable efforts
to advise the Licensee on methods of avoiding or overcoming the error. The
Licensor does not guarantee the results of any services provided under this
subparagraph or that all or any errors will be corrected, overcome or avoided.
12. EXCLUSIONS:
(a) The Licensor's obligation to provide support services hereunder
is conditioned upon the proper use of the Licensed Programs and does not cover
the Licensed Programs that have been (i) modified without the Licensor's
approval, (ii) used contrary to the Licensor's instructions or (iii) serviced by
anyone other than the Licensor. The Licensor will not be obligated to furnish
service hereunder if the need for such service arises from hardware malfunction,
user error, conditions correctable by reference to available documentation or
malfunction of programs not furnished by the Licensor.
-9-
<PAGE>
(b) If service is requested by the Licensee and furnished by the
Licensor as a result of any of the causes specified in the preceding
subparagraph, the Licensee will be obligated to pay for such service at the
Licensor's standard rates then in effect for time, travel, expenses and
materials.
13. TERM:
(a) The term of this Agreement shall commence upon the signing of
this Agreement; provided, however, that the Licensee shall have the right to
terminate this Agreement upon ninety (90) days prior written notice to the
Licensor.
(b) The Licensor may terminate the License at any time by written
notice to the Licensee upon the occurrence of any of the following:
(i) the Licensee fails to pay any amount required to be paid
by the Licensee pursuant to this Agreement within thirty
(30) days after written notice of such failure has been
given by the Licensor to the Licensee; or
(ii) any representation, warranty, certification or statement
made by the Licensee under or in connection with this
Agreement shall have been incorrect in any material
respect when made; or
(iii) the Licensee shall fail to perform or observe any term,
covenant, or agreement contained in this Agreement and
such failure, if capable of being remedied, shall remain
unremedied for thirty (30) days after written notice
thereof shall have been given to the Licensee by the
Licensor; or
(iv) the Licensee shall generally not be paying its debts as
such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against the
Licensee seeking to adjudicate it a bankrupt or
insolvent, or seeking dissolution, liquidation, winding
up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee,
custodian or other similar official for the Licensee or
for any substantial part of its property, which
proceeding, if commenced by a person other than the
Licensee, remains unstayed or undismissed for a period
of thirty (30) days or
-10-
<PAGE>
more; or the Licensee shall take any action to authorize
or effect any of the actions set forth above in this
subsection; or
(v) the performance by the Licensee of any of its
obligations under this Agreement shall become unlawful;
or
(vi) any change in law, or any interpretation or directive
(whether or not having the force of law) by any
governmental authority or other regulatory body charged
with the interpretation or administration thereof which
materially adversely affects the condition or
operations, financial or otherwise, of the Licensee and
which materially impairs the Licensee's ability to
perform its obligations under this Agreement or to meet
its obligations generally shall have occurred.
(c) Upon termination of the License in accordance with this
paragraph 14 or otherwise, the Licensee shall promptly destroy (or cause to be
destroyed) all copies of the Licensed Programs (and any Upgrades thereto) and
other materials delivered to it in connection with the Licensed Programs in its
possession (or in the possession of any of employees, clients, agents,
affiliates or associates or any other party to whom the Licensee supplied copies
of the Licensed Programs or such other materials in accordance with this
Agreement) and shall deliver a certificate to the Licensor as to such
destruction. Contemporaneously with such destruction, the Licensee shall cause
to be removed from all computers or processors on which any of the Licensed
Programs has theretofore been loaded in accordance with this Agreement any
"software key" which permits the Licensed Programs to be operated; all such
software keys shall be delivered by the Licensee to the Licensor as soon as
practicable following the termination of this Agreement.
(d) Effect of Expiration or Termination. Upon the expiration or
termination of this Agreement for any reason, neither the Licensee not its
receivers, representatives, agents, successors or assigns shall have any right
to exploit or in any way use the Marks. Upon such expiration or termination of
this Agreement, the Licensee shall forthwith discontinue operation of the
Licensed Programs and all use of the Marks and any variation or simulation
thereof, or any mark confusingly similar therewith, and the Licensee hereby
irrevocably releases and disclaims any right or interest in or to the Marks.
(e) Payment Obligation. The Licensee's obligations of
confidentiality and to pay the Licensor amounts due hereunder accrued prior to
the date of termination shall survive any expiration or termination of this
Agreement.
-11-
<PAGE>
14. GENERAL:
(a) This Agreement will not be binding upon the Licensor until
signed by Licensee and accepted in writing by an authorized officer of the
Licensor.
(b) The Licensee may not assign this Agreement without the prior
written consent of the Licensor.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
(d) No failure or delay on the part of either party in exercising
any right or remedy provided in this Agreement shall operate as a waiver
thereof; nor shall any single or partial exercise of or failure to exercise any
such right or remedy preclude any other or further exercise thereof or the
exercise of any other right or remedy under this Agreement.
(e) Any notice required or permitted under this Agreement shall be
in writing and shall be sent to the appropriate address shown on the first page
hereof (unless notice of a changed address has been given) by telecopier,
telegram, private overnight courier service or registered or certified airmail,
return receipt requested, with postage prepaid.
(f) The Licensor's performance hereunder is subject to force
majeure, including but not limited to wars, riots, failure of contractors and
subcontractors to perform, strikes, labor disturbances, acts of God, fires,
floods, explosions, civil disturbances, inability to obtain required material or
transportation, and acts of governmental authorities.
(g) The Licensee hereby acknowledges that the Licensed Programs may
be subject to United States government export control restrictions. The Licensee
agrees not to locate, relocate or export the Licensed Programs outside the
Territory without the express written permission of the Licensor.
(h) Paragraph headings herein are for convenience only and do not
control or affect the meaning or interpretation of any terms or provisions of
this Agreement.
(i) This Agreement (including any schedule hereto) supersedes all
prior agreements and understandings between the parties, whether written or
oral, related to the subject matter and is intended by the parties as the
complete and exclusive statement of the terms of their Agreement.
(j) No modification, addition to, or waiver of any of the terms of
this Agreement (including any schedule hereto) shall be effective unless in
writing and signed by an authorized
-12-
<PAGE>
officer of the Licensor. If any of the provisions of this Agreement are invalid
under any applicable statute or rule of law, they are, to that extent, deemed
omitted.
(k) No action to enforce any claim arising out of or in connection
with the transaction which is the subject matter of this Agreement shall be
brought by the Licensee against the Licensor more than one (1) year after the
cause of action has accrued.
(l) The Licensor may, in its discretion, delegate all or any portion
of its obligation to perform services hereunder to an agent or subcontractor. In
the event the Licensor does so, references to the Licensor in this Agreement
shall be deemed to refer, in the alternative, to such agent or subcontractor.
(m) Nothing herein contained shall be construed to constitute the
parties hereto as partners or as joint venturers, or either as agent of the
other.
Accepted by: Agreed:
THE NPD GROUP, INC. MEDIA METRIX, INC.
By: /s/ Rupert Walters By: /s/ Tod Johnson
----------------------- ---------------------------
Rupert Walters Tod Johnson
President Chief Executive Officer
-13-
<PAGE>
SCHEDULE A
SOFTWARE TOOLS
PWSETUP - Setup - Setup PV DB
Convert - Convert PV DB
UI - User Interface
Execute - Execute a PV DB
Viewer - Views a PV Table
-14-
<PAGE>
SCHEDULE B
License Fees shall be $10,000 per month in the aggregate for NPD PowerView and
Flexsys, and $1,000 per month for NPD SofTrends.
-15-
<PAGE>
Exhibit 10.4
STOCK PURCHASE AGREEMENT
This Agreement is made as of the 23rd day of November 1998, by and
between Media Metrix, Inc., a Delaware corporation (the "Corporation"), and
Investment AB Bure, a corporation organized under the laws of Sweden ("Bure").
W I T N E S S E T H:
WHEREAS, Bure was a party to that certain Series C-1 and Series C-2
Preferred Stock Purchase Agreement dated as of July 9, 1998 by and among
RelevantKnowledge, Inc. ("RKI") and the Purchasers listed therein, pursuant to
which Bure had the right to purchase 615,384 shares of Series C-2 Preferred
Stock of RKI at a purchase price of $3.25 per share;
WHEREAS, effective as of November 5, 1998, RKI was merged with and
into the Corporation (the "Merger") pursuant to the terms of that certain
Agreement and Plan of Reorganization dated as of September 30, 1998 by and
between the Corporation and RKI, with the Corporation as the sole surviving
corporation;
WHEREAS, the Corporation and Bure entered into a letter agreement
dated as of October 31, 1998 (the "Bure Agreement") pursuant to which the
Corporation agreed to extend Bure's right to purchase shares of RKI Series C-2
Preferred Stock until November 15, 1998, and, following the Merger, to
substitute shares of the Corporation's common stock, par value $.01 per share
(the "Common Stock") at a rate of 0.21564 shares of Common Stock for every one
share of Series C-2 Preferred Stock at an adjusted purchase price per share of
$15.07;
WHEREAS, the Corporation desires to issue and Bure desires to accept
shares of the Common Stock pursuant to the Bure Agreement, on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, IT IS AGREED between the parties as follows:
1. Purchase and Sale. Bure hereby accepts from the Corporation, and
the Corporation agrees to issue to Bure, One Hundred Thirty Two Thousand Seven
Hundred and One shares (132,701) (the "Shares") of Common Stock, at a price per
share of $15.07 (the "Purchase Price"). The delivery of the Shares and payment
of the aggregate purchase price of $1,999,849.28 shall be made on January 4,
1999 at the offices of the Corporation, 900 West Shore Road, Port Washington,
New York.
2. Securities Law Matters.
(a) Bure acknowledges and agrees that all certificates representing
the Shares shall have endorsed thereon the following legend:
<PAGE>
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 and, accordingly, may
not be offered for sale, sold or otherwise transferred except (i)
upon effective registration of the securities represented by this
certificate under the Securities Act of 1933, or (ii) upon
acceptance by the issuer of an opinion of counsel in such form and
by such counsel, or other documentation, as shall be satisfactory to
counsel for the issuer that such registration is not required."
and any legend required to be placed thereon by appropriate Blue Sky officials.
(b) Bure acknowledges that it is aware that the Shares have not been
registered under the Securities Act of 1933, as amended (the "Securities Act").
In this connection, Bure warrants and represents to the Corporation that it is
acquiring the Shares for investment and not with a view to or for sale in
connection with any distribution of said Shares or with any present intention of
distributing or selling said Shares and it does not presently have reason to
anticipate any change in circumstances or any particular occasion or event which
would cause it to sell said Shares. Bure acknowledges that its investment in the
Shares will be a highly speculative investment and that it is able, without
impairing its financial condition, to hold the Shares for an indefinite period
of time and to suffer a complete loss on its investment.
3. Anti-Dilution Rights.
(a) Special Definitions. For purposes of this Section 3, the
following definitions shall apply:
(1) "Option" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities.
(2) "Original Issue Date" shall mean January 4, 1999.
(3) "Convertible Securities" shall mean any evidence of
indebtedness, shares (other than Common Stock) or other securities
directly or indirectly convertible into or exchangeable for Common
Stock.
(4) "Excluded Shares" shall mean:
(A) shares of Common Stock (subject to adjustment for stock
splits, stock dividends, recapitalizations and other similar events)
or Convertible Securities issuable to officers or employees of, or
consultants to, the Corporation pursuant to a stock purchase or
option plan or other incentive program or compensation arrangement
in effect on the date hereof (collectively, the "Plans");
2
<PAGE>
(B) shares of Common Stock (subject to adjustment for stock
splits, stock dividends, recapitalizations and other similar events)
or Convertible Securities issuable upon the exercise of outstanding
warrants and options as of the date hereof;
(C) shares of Common Stock or Convertible Securities issued or
issuable in connection with (i) a strategic venture or ventures
between the Corporation and another corporation or entity to the
extent that Bure agrees with the Company that any such issuance
constitutes a strategic venture (which agreement shall not be
unreasonably withheld) or (ii) a merger, acquisition or other
business combination involving the Corporation or any of its
subsidiaries;
(D) by way of dividend or other distribution on shares of
Common Stock included in the definition of Excluded Shares by the
foregoing clause (A), (B) or (C) or on Common Stock so excluded.
(5) "Aggregate Shares" shall mean the Shares, as adjusted to
give effect to any subdivision or combination of the Common Stock or
dividend payable solely in shares of Common Stock.
(6) "Target Price" means $15.07, subject to adjustment as
provided below.
(b) Dilutive Issuance. In the event that the Corporation at
any time or from time to time after the Original Issue Date and prior to the
earlier of (i) the consummation of an initial public offering of the
Corporation's Common Stock and (ii) November 23, 2000, shall issue or sell
shares of Common Stock (other than Excluded Shares) at a consideration per share
less than the Target Price in effect immediately prior to the time of such
issuance or sale (a "Dilutive Issuance") then, the provisions of this paragraph
(b) shall apply. Within fifteen days after such Dilutive Issuance, the
Corporation will issue and deliver to Bure for a purchase price of $.01 per
share] a stock certificate representing additional shares of Common Stock
("Additional Shares"). The number of such Additional Shares shall be determined
by (i) multiplying the Target Price in effect immediately prior to such Dilutive
Issuance by the Aggregate Shares held by Bure prior to such Dilutive Issuance;
(ii) dividing the product thereof by the Target Price in effect immediately
following such Dilutive Issuance, as calculated in accordance with the following
sentence; and (iii) subtracting therefrom the Aggregate Shares held by Bure
prior to such Dilutive Issuance. Upon any Dilutive Issuance the Target Price
shall be reduced to a price (calculated to the nearest cent) determined by
multiplying (i) the Target Price in effect immediately prior to such Dilutive
Issuance by (ii) the quotient obtained by dividing (x) the sum of (A) the total
number of shares of Common Stock outstanding, immediately prior to such Dilutive
Issuance, multiplied by the then-effective Target Price, plus (B) the aggregate
amount of all consideration, if any, received by the Corporation upon such
Dilutive Issuance, by (y) the total number of shares of Common Stock outstanding
immediately after such Dilutive Issuance.
3
<PAGE>
(c) Adjustments to Target Price, Determination of
Consideration Received and Determination of Common Stock Outstanding. The Target
Price, the determination of the consideration received and the determination of
the number of shares of Common Stock outstanding upon a Dilutive Issuance shall
be subject to the further provisions of this subparagraph (c).
(1) Adjustment of Target Price. In case the Company shall at
any time subdivide its outstanding shares of Common Stock into a
greater number of shares or declare a dividend upon its Common Stock
payable solely in shares of Common Stock, the Target Price then in
effect shall be proportionately reduced. Conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller
number of shares, the Target Price in effect immediately prior to
such combination shall be proportionately increased.
(2) Consideration and Stock Outstanding. For the purposes of
determining the consideration received upon the issuance and sale of
Common Stock and the number of shares of Common Stock outstanding,
the following provisions shall be applicable:
(i) Cash Consideration. In case of the issuance or sale
of additional Common Stock for cash, the consideration
received by the Corporation therefore shall be deemed to be
the amount of cash received by the Corporation for such
shares.
(ii) Non-Cash Consideration. In case of the issuance
(other than upon conversion or exchange of outstanding
Convertible Securities) or sale of additional Common Stock,
Options or Convertible Securities for a consideration other
than cash or a consideration a part of which shall be other
than cash, the fair value of such consideration as determined
by the Board of Directors of the Company if the good faith
exercise of its business judgment, irrespective of the
accounting treatment thereof, shall be deemed to be the value,
for purposes of this Agreement, of the consideration other
than cash received by the Corporation for such securities.
(iii) Options and Convertible Securities. In case the
Corporation shall issue Convertible Securities or Options
(other than Excluded Shares), the total maximum number of
shares of Common Stock issuable upon the exercise of such
Options or upon conversion or exchange of the total maximum
amount of such Convertible Securities at the time such
Convertible Securities first become convertible or
exchangeable shall (as of the date or issue or grant of such
Options or, in the case of the issue or sale of Convertible
Securities
4
<PAGE>
other than where the same are issuable upon the exercise of
Options, as of the date of such issue or sale) be deemed to be
issued and to be outstanding for the purpose of determining
whether an issuance is a Dilutive Issuance and to have been
issued for the sum of the amount (if any) paid for such
Options or Convertible Securities and the amount (if any)
payable upon the exercise of such Options or upon conversion
or exchange of such Convertible Securities at the time such
Convertible Securities first become convertible or
exchangeable; provided that, no further adjustment of the
Target Price shall be made upon the actual issuance of any
such Common Stock or Convertible Securities or upon the
conversion or exchange of any such Convertible Securities.
(d) Change in Option Price or Conversion. In the event that
the purchase price provided for in any Option referred to in section
3(c)(2)(iii), or the rate at which any Convertible Securities referred to in
Section 3(c)(2)(iii) are convertible into or exchangeable for shares of Common
Stock, shall change at any time (other than under or by reason or provisions
designed to protect against dilution), then, for purposes of any adjustment
required to the Target Price by Section 3(c), the Target Price then in effect
shall forthwith be readjusted to the Target Price that would have been in effect
at such time had such Options or Convertible Securities which are then still
outstanding at the time initially granted, issued or sold, provided for such
changed purchase price, additional consideration or conversion rate, as the case
may be. Notwithstanding the foregoing, if such readjustment is an increase in
the Target Price, such readjustment shall not exceed the amount (as adjusted by
Sections 3(b) and 3(c)) by which the Target Price was decreased pursuant to
Section 3(b) upon the issuance of the Option or Convertible Security. No
adjustment shall be made in respect to changes in Options or Convertible
Securities by reason of provisions with respect thereto designed to protect
against dilution.
(e) Termination or Option or Conversion Rights. In the event
of the termination or expiration of any right to purchase Common Stock under any
Option granted after the Original Issue Date or of any right to convert or
exchange Convertible Securities issued after the date of this Agreement, the
Target Price shall, upon such termination, be readjusted to the Target Price
that would have been in effect at the time of such expiration or termination had
such Option or Convertible Security, to the extent outstanding immediately prior
to such expiration or termination, never been issued, and the shares of Common
Stock issuable thereunder shall no longer be deemed to be outstanding, provided
that if such readjustment is an increase in the Target Price, such readjustment
shall not exceed the amount (as adjusted by Sections 3(b) and 3(c)) by which the
Target Price was decreased pursuant to Section 3(b) upon the issuance of the
Option or Convertible Security.
(f) Changes in Common Stock. In case at any time following the
date hereof until the date the Shares are purchased under the terms of this
Agreement, the Corporation shall be a party to any transaction (including,
without limitation, a merger, consolidation, sale of all
5
<PAGE>
or substantially all of the Corporation's assets or recapitalization of the
Common Stock) in which the previously outstanding Common Stock shall be changed
into or exchanged for different securities of the Corporation or common stock or
other securities of another corporation or interest in a noncorporate entity or
other property (including cash) or any combination of any of the foregoing (each
such transaction being herein called the "Transaction" and the different
securities, common stock, other securities or interests being herein called the
"Consideration")), then, as a condition of the consummation of the Transaction,
lawful and adequate provisions shall be made so that Bure shall be entitled to
receive, in lieu of the Common Stock issuable hereunder, the Consideration
resulting from such Transaction. The provisions of this Section 3(f) shall
similarly apply to successive Transactions.
4. The issuance of certificates for Additional Shares under this
Agreement shall be made without charge to Bure for any issue tax in respect
thereof; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than of the then holder of the
Aggregate Shares upon which any certificate is being issued.
5. This Agreement shall inure to the benefit of and be binding upon
each of the Corporation, Bure and their respective successors and assigns.
6. Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when personally delivered
or sent by registered mail, return receipt requested, addressed (i) if to the
Corporation, at Media Metrix, Inc., 900 West Shore Road, Port Washington, New
York 11050, Attention: Chief Executive Officer, and (ii) if to Bure, to P.O. Box
5419, S-402 29 Gothenburg, Sweden, Attention: Ulf, Ivarsson.
7. This Agreement shall be enforced, governed and construed in all
respects in accordance with the laws of the State of Delaware. In the event that
any provision of this Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any provision hereof which may prove invalid
or unenforceable under any law shall not affect the validity or enforceability
of any other provisions hereof.
8. This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof. Any provision of this
Agreement may be amended and the observance thereof may be waived only by a
writing executed by each party hereto.
9. This Agreement shall terminate and be of no further force or
effect upon the closing of an initial public offering of the Corporation's
Common Stock.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
MEDIA METRIX, INC.
By: /s/ Tod Johnson
--------------------------
Name: Tod Johnson
Title: Chief Executive Officer
INVESTMENT AB BURE
By: /s/ Ulf Ivarsson
--------------------------
Name: Ulf Ivarsson
Title: Director IT/Infomedia
7
<PAGE>
Exhibit 10.5.1
BUILDING LEASE
between
EAGLE INSURANCE COMPANY,
Landlord
- and -
THE NPD GROUP, INC.
Tenant
100 Charles Lindbergh Boulevard,
Uniondale, New York 11553
Dated: August 18, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 FUNDAMENTAL LEASE PROVISIONS ........................... 1
SECTION 1.1. Fundamental Lease Provisions ..................... 1
SECTION 1.2. Definitional Provisions .......................... 2
ARTICLE 2 PREMISES AND LEASE TERM ................................ 3
SECTION 2.1. Demise of Premises ............................... 3
SECTION 2.2. Lease Term; Commencement Date .................... 3
SECTION 2.3. Preparation of Premises .......................... 3
SECTION 2.4. Failure to Deliver Possession; Tenant's Waiver ... 4
SECTION 2.5. Early Delivery.
ARTICLE 3 OWNERSHIP OF IMPROVEMENTS .............................. 4
SECTION 3.1. Ownership of Improvements ........................ 4
ARTICLE 4 RENTS .................................................. 5
SECTION 4.1. Rents ............................................ 5
SECTION 4.2. Payment of Rents ................................. 5
SECTION 4.3. Payment of Base Rent ............................. 5
SECTION 4.4. Rent for a Partial Month ......................... 5
SECTION 4.5. Adjustment of Base Rent .......................... 6
SECTION 4.6. Ground Lease Rent ................................ 6
SECTION 4.7. Interest ......................................... 6
SECTION 4.8. Payment of Additional Rent ....................... 6
SECTION 4.9. Partial Payment .................................. 6
SECTION 4.10. Late Charge ...................................... 7
ARTICLE 5 TAX AND OPERATING EXPENSE ADJUSTMENTS .................. 7
SECTION 5.1. Tax and Operating Expense Definitions ............ 7
SECTION 5.2. Payment of Taxes and Operating Expenses .......... 9
ARTICLE 6 SERVICES AND UTILITIES ................................. 12
SECTION 6.1. Electricity ...................................... 12
SECTION 6.2. Water ............................................ 12
SECTION 6.3. Cleaning ......................................... 12
ARTICLE 7 INSURANCE .............................................. 13
SECTION 7.1. Use of Premises .................................. 13
SECTION 7.2. Property Insurance ............................... 13
SECTION 7.3. Liability Insurance .............................. 13
SECTION 7.4. Other Insurance .................................. 13
SECTION 7.5. Waiver of Subrogation ........................... 13
SECTION 7.6. Policy Requirements .............................. 15
SECTION 7.7. Premium Increase ................................. 15
-i-
<PAGE>
ARTICLE 8 ALTERATIONS ............................................ 16
SECTION 8.1. Conditions ....................................... 16
SECTION 8.2. Approval of Plans and Specifications ............. 16
SECTION 8.3. Other Items to be submitted Prior to
Commencement .................................... 17
SECTION 8.4. Governmental Approvals and Permits ............... 17
SECTION 8.5. General Conditions for Alterations ............... 17
SECTION 8.6. Violations and Liens ............................. 18
SECTION 8.7. Indemnity ........................................ 19
ARTICLE 9 TENANT'S PROPERTY ...................................... 19
SECTION 9.1. Tenant's Property ................................ 19
SECTION 9.2. Abandonment ...................................... 19
SECTION 9.3. Taxes on Tenant's Use and Occupancy .............. 20
ARTICLE 10 REPAIRS AND MAINTENANCE ................................ 20
SECTION 10.1. Landlord's Obligations ........................... 20
SECTION 10.2. Tenant's Obligations ............................. 20
SECTION 10.3. Exculpation of Landlord for Repairs .............. 21
ARTICLE 11 USE AND COMPLIANCE WITH LAW ............................ 21
SECTION 11.1. Use .............................................. 21
SECTION 11.2. Licenses and Permits ............................. 21
SECTION 11.3. Prohibited Uses .................................. 21
SECTION 11.4. Compliance by Tenant ............................. 22
ARTICLE 12 RIGHTS OF LANDLORD ..................................... 22
SECTION 12.1. Entry by Landlord ................................ 22
SECTION 12.2. Obstructions of Light or View: Closures .......... 23
SECTION 12.3. Entry Prior to End of Term ....................... 23
ARTICLE 13 DAMAGE OR DESTRUCTION .................................. 23
SECTION 13.1. Restoration ...................................... 23
SECTION 13.2. Rent Abatement ................................... 23
SECTION 13.3. Termination Rights ............................... 24
SECTION 13.4. Business Interruption ............................ 24
SECTION 13.5. Tenant's Property ................................ 24
SECTION 13.6. Waiver ........................................... 24
ARTICLE 14 EMINENT DOMAIN ......................................... 25
SECTION 14.1. Complete Taking .................................. 25
SECTION 14.2. Partial Taking ................................... 25
SECTION 14.3. Award ............................................ 25
SECTION 14.4. Temporary Taking ................................. 26
ARTICLE 15 SURRENDER OF PREMISES .................................. 26
SECTION 15.1. Surrender ........................................ 26
SECTION 15.2. Acceptance of Surrender .......................... 26
-ii-
<PAGE>
SECTION 15.3. No Holding Over .................................. 26
ARTICLE 16 EXCULPATION AND INDEMNIFICATION ........................ 27
SECTION 16.1. Exculpation ...................................... 27
SECTION 16.2. Indemnity ........................................ 27
SECTION 16.3. Transfers of Landlord's Interest ................. 28
SECTION 16.4. Recourse Limited to Premises ..................... 28
ARTICLE 17 SUBORDINATION AND ATTORNMENT ........................... 29
SECTION 17.1. Subordination .................................... 29
SECTION 17.2. Election to Subordinate .......................... 29
SECTION 17.3. Notice and Cure of Landlord's Default ............ 29
SECTION 17.4. Attornment ....................................... 30
ARTICLE 18 QUIET ENJOYMENT ........................................ 30
SECTION 18.1. Quiet Enjoyment .................................. 30
ARTICLE 19 ASSIGNMENT AND SUBLETTING .............................. 30
SECTION 19.1. Prohibition ...................................... 30
SECTION 19.2. Information to Landlord .......................... 31
SECTION 19.3. Consent by Landlord .............................. 31
SECTION 19.4. Miscellaneous .................................... 31
SECTION 19.5. Acceptance of Rent ............................... 32
SECTION 19.6. Assignment or Sublease to Affiliates ............. 33
SECTION 19.7. Profits .......................................... 33
ARTICLE 20 ESTOPPEL CERTIFICATES .................................. 33
SECTION 20.1. Estoppel Certificates ............................ 33
ARTICLE 21 BROKER ................................................. 34
SECTION 21.1. Broker ........................................... 34
ARTICLE 22 CONDITIONAL LIMITATIONS ................................ 34
SECTION 22.1. Conditional Limitations .......................... 34
SECTION 22.2. Remedies and Damages ............................. 36
SECTION 22.3. Waiver of Trial by Jury and Counterclaims ........ 38
SECTION 22.4. No Holdover by Tenant ............................ 38
SECTION 22.5. Landlord's Right to Cure ......................... 38
SECTION 22.6. Effects of Waivers of Breach; No Other Waiver .... 38
SECTION 22.7. Remedies Not Exclusive ........................... 39
SECTION 22.8. Payment of Landlord's Expenses ................... 39
ARTICLE 23 MISCELLANEOUS .......................................... 39
SECTION 23.1. No Recording ..................................... 39
SECTION 23.2. Entire Agreement ................................. 39
SECTION 23.3. Amendments ....................................... 39
SECTION 23.4. Successors ....................................... 39
SECTION 23.5. Force Majeure .................................... 40
-iii-
<PAGE>
SECTION 23.6. Signs ............................................ 40
SECTION 23.7. Interpretation ................................... 40
SECTION 23.8. Joint and Several Liability ...................... 40
SECTION 23.9. Submission of Lease .............................. 41
SECTION 23.10. Notices From One Party to the Other; Consents
and Approvals ................................... 41
SECTION 23.11. No Representations by Landlord ................... 41
SECTION 23.12. Ground Lease ..................................... 42
ARTICLE 24 CERTAIN DEFINITIONS .................................... 42
SECTION 24.1. Certain Definitions .............................. 42
ARTICLE 25 RENEWAL OPTION ......................................... 43
SECTION 25.1. Grant of Options ................................. 43
ARTICLE 26 RIGHT OF FIRST OFFER ................................... 46
SECTION 26.1. Procedure ........................................ 46
SECTION 26.2. No Effect ........................................ 46
ARTICLE 27 INDUSTRIAL DEVELOPMENT AGENCY APPROVALS ................ 46
SECTION 27.1. Lease Contingent on Approvals .................... 46
ARTICLE 28 LANDLORD'S FURNITURE AND PERSONAL PROPERTY ............. 47
SECTION 28.1. Use of Landlord's Personal Property .............. 47
EXHIBITS:
Exhibit A Floor Plan
Exhibit B Land
Exhibit C Delivery Schedule
Exhibit D Lease Commencement Letter
-iv-
<PAGE>
BUILDING LEASE
ARTICLE 1
FUNDAMENTAL LEASE PROVISIONS
SECTION 1.1. Fundamental Lease Provisions
DATE: August 18, 1997
LANDLORD: EAGLE INSURANCE COMPANY, a New Jersey
corporation.
ADDRESS OF LANDLORD: 999 Stewart Avenue
Bethpage, New York 11714
Telephone:(516) 222-8245
Facsimile:(516) 228-3217
TENANT: THE NPD GROUP, INC., a New York corporation.
ADDRESS OF
TENANT: 900 West Shore Road
Port Washington, New York 11050
Telephone:(516) 625-0700
Facsimile:(516) 625-2444
BUILDING: The office building known as 100 Charles
Lindbergh Boulevard, in the Town of Uniondale,
County of Nassau, and State of New York,
situated on the Land (as hereinafter defined),
as more particularly indicated on the floor plan
annexed hereto and made a part hereof as Exhibit
A.
LAND. The underlying land and all improvements,
sidewalks, curbs, plazas and other areas located
thereon, and all rights and interests
appurtenant thereto, more particularly described
on Exhibit B annexed hereto and made a part
hereof.
PREMISES: The Land and the Building, collectively.
RENTABLE AREA Approximately 70,400 square feet.
INITIAL BASE RENT: $704,000 per annum, which amount is equal to
$10.00 per square foot of Rentable Area of the
Premises per annum.
<PAGE>
PERMITTED USE: General office use and uses ancillary thereto
(including, without limitation, mail services,
printing (including offset printing), back
office, telephone interviewing and
telemarketing) and any other use permitted under
current zoning.
LEASE TERM: The term of this lease shall be a period of ten
(10) full Lease Years unless terminated earlier
pursuant to this Lease or applicable law or
renewed pursuant to Article 25 commencing as set
forth in Section 2.2. and terminating on the
last day of the tenth (10th) Lease Year.
RENT COMMENCEMENT
DATE: The one (1) month anniversary of the Term
Commencement Date.
ENTIRE PREMISES
DELIVERY DATE: The date Landlord has vacated and delivered
possession of the entire Premises to Tenant in
accordance with the provisions of this Lease.
BROKER: Sutton & Edwards, Inc.
1981 Marcus Avenue
Lake Success, New York
Telephone: (516) 328-6500
Facsimile: (516) 328-6749
GROUND LEASE: Lease Agreement between Landlord (as successor
to Belzona Molecular, Inc.) and County of
Nassau, as amended by that certain Agreement,
dated July 14, 1981, which leases the Land and
Building to Landlord.
SECTION 1.2. Definitional Provisions. References to "Articles",
"Sections", "Subsections", and "Clauses" shall be to Articles, Sections,
Subsections, and Clauses, respectively, of this Lease unless otherwise
specifically provided. The terms "hereto", "herein", "hereof', and "hereunder"
and words of similar import refer to this Lease generally, rather than to the
Article, Section, Subsection or Clause in which such term is used, unless
otherwise specifically provided. Any of the terms defined in Sections 1.1 and
24.1 may, unless the context otherwise requires, be used in the singular or the
plural depending on the reference. The term "including" shall mean "including,
but not limited to", except where the context requires otherwise.
-2-
<PAGE>
ARTICLE 2
PREMISES AND LEASE TERM
SECTION 2.1. Demise of Premises. Landlord hereby leases to Tenant, and
Tenant hereby hires from Landlord, the Premises pursuant to the provisions of
this Lease.
SECTION 2.2. Lease Term: Commencement Date. (a) The parties acknowledge
and confirm that Landlord shall vacate and make available to Tenant portions of
the Premises in accordance with the schedule described in Exhibit C annexed
hereto and made a part hereof; prior to the Entire Premises Delivery Date,
Landlord and Tenant shall share the use of Space D, as described on Exhibit C,
and, accordingly, Tenant shall pay only one-half of the Phase-in Rents and all
other costs and expenses associated with such Space D. Tenant agrees that
Landlord may keep its records in the vertical files located in Space A-1 until
February 1, 1998.
(b) The Lease Term: (y) shall commence on the date (the "Term Commencement
Date") on which the portions of the Premises designated as Space A and Space D
on Exhibit C are delivered to Tenant in the condition required by this Lease,
which date shall be no later than the day following the date of this Lease; and
(z) shall end at noon on the last day of the Lease Term (the "Expiration Date"),
unless sooner terminated as herein provided, in which event the Lease Term shall
end on the date of such termination. After the Term Commencement Date, upon
Landlord's request, Tenant shall promptly execute a Lease Commencement Letter in
substantially the form annexed hereto as Exhibit D (the "Lease Commencement
Letter"), which shall specify the calendar dates of the Term Commencement Date
and the Expiration Date. The failure by Tenant to execute a Lease Commencement
Letter when requested by Landlord shall not affect the occurrence of the Term
Commencement Date or Expiration Date.
SECTION 2.3. Preparation of Premises.
Landlord's Obligations. Landlord shall deliver the Premises to
Tenant on the Entire Premises Delivery Date with the heating, ventilating, air
conditioning, plumbing, mechanical, drainage and all other systems and equipment
in or servicing the Building in good working order and repair. Except as set
forth in the immediately preceding sentence, Tenant is leasing the Premises in
"as is" condition, and Landlord shall have no obligation to perform any work or
supply any materials whatsoever to prepare the Premises for Tenant's occupancy.
However, Landlord shall deliver possession of all portions of the Premises to
Tenant vacant, free of all tenancies and in broom clean condition.
Preparation of Premises. All Improvements made to the Premises to
prepare the Premises for occupancy by Tenant (the "Tenant Improvements") shall
be performed by Tenant at Tenant's sole cost and expense. The work necessary to
effectuate such Tenant Improvements shall be referred to herein as "Tenant's
Work".
-3-
<PAGE>
SECTION 2.4. Failure to Deliver Possession: Tenant's Waiver. Tenant waives
(a) any right to rescind this Lease under Section 223-a of the New York Real
Property Law (or any other law of like import, now or hereafter in force) and
(b) the right to recover any damages resulting from Landlord's failure to
deliver possession of the Premises on the Term Commencement Date or from any
delay in the occurrence of the Term Commencement Date for any reason whatsoever.
No such failure shall affect the validity of this Lease or the obligations of
Tenant hereunder. If permission is given to Tenant to enter into the possession
of the Premises prior to the Term Commencement Date, such occupancy shall be
deemed to be under all the provisions of this Lease, except the covenant to pay
Rents. Notwithstanding anything to the contrary set forth in this Section 2.4,
(i) if Landlord has not delivered (y) possession of Space A and Space D to
Tenant by the day after the date of this Lease or (z) the entire Premises by
June 1, 1998, in both instances in the condition required by this Lease, Tenant
may, in either case, terminate this Lease upon ten (10) days' notice to
Landlord, which termination shall take effect unless Space A and Space D, or the
entire Premises, as the case may be, are so delivered prior to the end of such
ten (10) day period, and (ii) if, for any reason, Landlord fails to deliver any
portion of the Premises on or before the date specified opposite such space on
Exhibit C, then Tenant shall be entitled to receive a credit in an amount equal
the product of two (2) times the Phase-in Rents and Rents then payable by Tenant
for such portion of the Premises not so delivered for each day of delay in the
delivery of such space. Such credit or credits may be offset against any payment
of Rents then due or thereafter accruing under this Lease.
SECTION 2.5. Early Delivery. If Landlord shall deliver to Tenant any
portion of the Premises in the condition required by this Lease prior to the
date specified in Exhibit C for delivery of such portion, such space shall be
deemed part of the Premises as of such delivery date for all purposes of this
Lease.
ARTICLE 3
OWNERSHIP OF IMPROVEMENTS
SECTION 3.1. Ownership of Improvements. Any flied improvement in, to or
upon the Premises made by or for Tenant or occupant (the "Improvements") shall
at the end of the Lease Term become the property of Landlord (regardless whether
they were installed by Tenant or at Tenant's expense) and shall remain upon and
be surrendered with the Premises as a part thereof, unless (i) at the time
Tenant initially submitted plans to Landlord for the installation of such
Improvement(s), Landlord notified Tenant that Tenant may be required to remove
such Improvement(s) upon the expiration or termination of the Lease and (ii)
Landlord notifies Tenant at least sixty (60) days prior to the expiration or
earlier termination of the Lease to remove such Improvement(s).
-4-
<PAGE>
ARTICLE 4
RENTS
SECTION 4.1. Rents. (a) Commencing on the Term Commencement Date and
continuing thereafter until the day preceding the Entire Premises Delivery Date,
Tenant shall pay to Landlord the following rents for the Premises (collectively,
the "Phase-in Rents"): (i) a base rent per annum in an amount equal to the
product of Ten ($10.00) Dollars multiplied by the rentable square foot area of
the portion of the Premises then occupied by Tenant, and (ii) a pro rata portion
of the ground lease rent (the "Ground Lease Rent") described in Section 4.6
based upon the Tax and Operating Expense Formula (as hereinafter defined).
(b) Subject to the second sentence of Section 4.3 commencing on the Entire
Premises Delivery Date and continuing thereafter during the Lease Term, Tenant
shall pay to Landlord the following rents for the Premises: (i) a base rent per
annum (the "Base Rent") in an amount equal to the Initial Base Rent, to be
adjusted hereafter as set forth in Section 4.5 and (ii) additional charges
("Additional Rent") consisting of all other sums payable by Tenant under the
provisions of this Lease. In addition to the foregoing, Tenant shall pay the
Ground Lease Rent in accordance with Section 4.6 directly to the landlord (the
"Ground Lease Landlord") under the Ground Lease (and Tenant shall provide
Landlord with copies of checks, or other proof reasonably satisfactory to
Landlord, showing the payment thereof). The Phase-in Rents, the Base Rent, and
the Additional Rent are, collectively, hereinafter referred to as the "Rents".
SECTION 4.2. Payment of Rents. Tenant shall pay the Rents when due,
without notice or demand, and without any abatement, deduction or set-off,
except for notices, demands, abatements, deductions and set-offs expressly
provided for elsewhere in this Lease. Tenant shall pay the Rents to Landlord by
check payable to the order of Landlord, or such agent as Landlord may from time
to time designate for payment of Rents, in lawful money of the United States at
the Address of Landlord or such other place as Landlord may designate by notice
to Tenant.
SECTION 4.3. Payment of Base Rent. Tenant shall pay the annual Base Rent
and the annual Phase-in Rents in equal monthly installments in advance on the
first day of each calendar month of the Lease Term, except that the first
installment of the Phase-in Rents shall be paid upon the execution of this
Lease. Notwithstanding anything to the contrary contained in this Lease, the
Phase-in Rents, Base Rent and Ground Lease Rent shall be abated until the Rent
Commencement Date.
SECTION 4.4. Rent for a Partial Month. The Phase-in Rents and the Base
Rent for any portion of a calendar month included in the Lease Term shall be
prorated in the ratio that the number of days in such portion bears to the
number of days in such month.
-5-
<PAGE>
SECTION 4.5. Adjustment of Base Rent. Effective as of the first day of the
Second Lease Year and on the first day of each Lease Year thereafter the Base
Rent shall be increased to the following amounts:
2nd Lease Year: $725,120.00 per annum
3rd Lease Year: $746,873.60 per annum
4th Lease Year: $769,279.81 per annum
5th Lease Year: $792,358.20 per annum
6th Lease Year: $816,128.95 per annum
7th Lease Year: $840,612.82 per annum
8th Lease Year: $865,831.20 per annum
9th Lease Year: $891,806.14 per annum
10th Lease Year: $918,560.32 per annum
SECTION 4.6. Ground Lease Rent. Commencing on the Entire Premises Delivery
Date and continuing thereafter during the term of this Lease, Tenant shall pay
to the Ground Lease Landlord the Ground Lease Rent then due and payable pursuant
to the provisions of the Ground Lease. Landlord represents that the Ground Lease
Rent shall not exceed $63,000.00 per annum prior to the expiration of the Lease
Term.
SECTION 4.7. Interest. If any payment of Rent is not received by Landlord
within five (5) days of the due date thereof or if any payment by Tenant of
Ground Lease Rent is not received by the Ground Lease Landlord by the date such
payment is due under the Ground Lease or if any payment by Tenant of Taxes is
not received by the appropriate taxing or other governmental authority by the
date such payment is due, Tenant shall pay Landlord interest on such payment
from the due date thereof until the date of receipt thereof by Landlord (or the
Ground Lease Landlord, as the case may be) at a rate (the "Interest Rate") equal
to the lesser of (a) two percent (2%) above the then current "prime" or "base"
rate of Citibank, NA or its successor, from time to time in effect in New York,
New York or (b) the maximum rate of interest chargeable under applicable law.
SECTION 4.8. Payment of Additional Rent. Unless another time shall be
herein expressly provided for the payment of Additional Rent, the same shall be
due and payable within ten (10) days of demand therefor, and Landlord shall have
the same remedies for failure to pay Additional Rent as for non-payment of Base
Rent.
SECTION 4.9. Partial Payment. No payment by Tenant or receipt or
acceptance by Landlord of a lesser amount than the full Rents due shall be
deemed to be other than a payment on account, nor shall any endorsement or
statement on any check or any letter accompanying any check or payment be deemed
an accord and satisfaction, and Landlord may accept such check or payment
without prejudice to Landlord's right to recover the balance, treat such partial
payment as a default and/or pursue any remedy provided in this Lease or at law
or in equity. If at any time Tenant
-6-
<PAGE>
shall pay Landlord less than the full amount of such Rents then due, Landlord
shall have the right to apply such payment to any item or items of Rents that
Landlord, in its discretion, deems appropriate.
SECTION 4.10. Late Charge. If any payment of Rent is not received by
Landlord within ten (10) days after the due date thereof or if any payment by
Tenant of Ground Lease Rent is not received by the Ground Lease Landlord within
ten (10) days after the due date thereof or if any payment by Tenant of Taxes is
not received by the appropriate taxing or other governmental authority within
ten (10) days after the due date thereof, Tenant shall pay to Landlord, as
Additional Rent, a late charge (the "Late Charge") of three cents ($.03) for
each dollar so overdub to defray Landlord's administrative costs in handling
such late payments. Acceptance of the Late Charge by Landlord shall not cure or
waive Tenant's default, nor prevent Landlord from exercising, before or after
such acceptance, any of the remedies for a default provided by this Lease, at
law or in equity.
ARTICLE 5
TAX AND OPERATING EXPENSE ADJUSTMENTS
SECTION 5.1. Tax and Operating Expense Definitions.
5.1.1."Taxes", means the aggregate amount of all (a) real property taxes
now or hereinafter imposed against the Premises by any governmental authority
having jurisdiction, which real property taxes presently includes general, town,
and county real property taxes and school taxes, which shall be levied,
assessed, imposed, or become due and payable, or liens upon, or arise in
connection with, the use, occupancy or possession of the Building and (b)
general or specific assessments and other taxes, governmental impositions,
duties, charges and levies of every kind, character and nature whatsoever,
extraordinary and ordinary, foreseen and unforeseen which shall be levied,
assessed, imposed, or become due and payable, or liens upon, or arise in
connection with, the use, occupancy or possession of the Building. Nothing in
the preceding sentence shall be construed to include as Taxes any inheritance,
estate, succession, transfer, gift, franchise, corporation, income or profit tax
or capital levy that is imposed upon Landlord. If, however, at any time during
the Lease Term the methods of taxation prevailing on the date hereof shall be
altered so that in lieu of, or as a substitute for or in addition to the whole
or any part of the Taxes now levied, assessed or imposed on real estate or upon
Landlord with respect to the Building, the Premises or the land underlying the
Building there shall be levied, assessed or imposed any other tax, fee, charge,
imposition or assessment, however denominated, including (i) a tax on the rents
received from such real estate, (ii) a license fee measured by the rents
receivable by Landlord from the Building, (iii) a tax or license fee imposed
upon Landlord that is otherwise measured by, or based upon, the Building or the
Premises or (iv) a payment in lieu of taxes, then such other tax, fee, charge,
imposition or assessment, computed as if the amount of such tax, fee, charge
imposition or assessment so payable was that which would be due if the Building
or the Premises were the only property of Landlord subject thereto, shall be
included in Taxes.
-7-
<PAGE>
5.1.2. "Lease Year" means any full twelve month period falling within the
Lease Term commencing as noted below and "Partial Lease Year" means any partial
year at the beginning or end of the Lease Term. The first Lease Year shall
commence on the Term Commencement Date but shall continue for twelve full months
from the first day of the calendar month following the Term Commencement Date,
unless the Term Commencement Date is the first day of the month, in which case
the first Lease Year shall commence on the Term Commencement Date. Any reference
in this Lease to a Lease Year shall, unless the context clearly indicates
otherwise, be deemed to be a reference to a Partial Lease Year if the period in
question involves a Partial Lease Year.
5.1.3.Operating Expenses" for any Lease Year, means the aggregate of all
costs, expenses and disbursements of every kind and nature paid or incurred
during such Lease Year with respect to the operation, repair, cleaning,
maintenance, management and security of the Building.
5.1.3.1. Operating Expenses - Inclusions. Without in any way limiting the
generality of Section 5.1.3. Operating Expenses shall include the following:
(a) salaries and wages, relating to the employees of Landlord or its
agents or contractors engaged in the operation, repair, cleaning, maintenance,
management and security of the Building, including, without limitation, snow
plowing and sanding;
(b) the cost of electricity, gas, steam or other fuel, operation of
elevators and security systems; heating, cooling, air conditioning and
ventilating; chilled water; hot and cold water; sewer and other utilities;
utility taxes, water rates and charges and sewer rental;
(c) the cost of painting, security (including uniforms) and other
services and replacement of tubes, bulbs, lamps and ballasts required for
building lighting located in the Building;
(d) the cost of all appropriate insurance, including Worker's
Compensation, property, casualty, liability and fidelity insurance;
(e) the cost of repairs to, and maintenance of, the Building
(including Space D prior to the Entire Premises Delivery Date) and Building
Equipment, including, without limitation, the cost of snow plowing and sanding;
(f) the cost of interior and exterior landscaping;
(g) the cost of building and cleaning goods, supplies and equipment;
(h) the cost for, or rental charges of, machinery, equipment, tools,
maintenance facilities or systems used in the operation, safety, repairing,
cleaning, maintenance, management and security of the Building, including any
Building systems, and any sales and other taxes thereon;
-8-
<PAGE>
(i) fees and charges payable under service agreements on equipment;
(j) fees for and costs of licenses, permits and inspections; and
(k) the cost of operating the Cafeteria.
5.1.3.2.Operating Expenses - Exclusions. Subject to the provisions of the
penultimate sentence of Section 10.1. the term Operating Expenses excludes:
(a) all expenses and costs for structural repairs or replacements at
the Building, and all expenses relating to the repair of the roof, including the
roof membrane, of the Building.
(b) all expenses and costs for repair of the heating, ventilating
and air conditioning systems at the Building during the first Lease Year.
SECTION 5.2. Payment of Taxes and Operating Expenses.
5.2.1.Payment of Taxes.
5.2.1.1. (a) Except as otherwise expressly provided to the contrary in
clause (b) of this Section 5.2.1.1 and in Section 5.2.1.2 hereof, on and after
the Entire Premises Delivery Date, Tenant shall pay, as Additional Rent,
throughout the Term of this Lease, directly to the appropriate taxing or other
governmental authorities having jurisdiction, at least ten (10) days before the
first day on which any interest or penalty will accrue or be assessed as a
result of nonpayment, all Taxes levied or imposed upon or relating to, or a lien
against, all or part of the Premises, or arising from or levied against the
ownership, leasing, operation, use, occupancy or possession of all or part of
the Premises, and all interest, penalties or like charges in connection
therewith. In each case, Tenant shall submit to Landlord on or before the date
upon which such payment is required hereunder, the originals or true copies of
official receipts, or other proof reasonably satisfactory to Landlord, showing
the payment thereof. Any refund with respect to Taxes paid by Tenant and any
interest accrued thereon shall be the property of Tenant.
(b) Prior to the Entire Premises Delivery Date, Landlord shall pay all
Taxes levied or imposed upon or relating to all or part of the Premises, or
arising from or levied against the ownership, leasing, operation, use, occupancy
or possession of all or part of the Premises, and all interest, penalties or
like charges in connection therewith. Prior to the Entire Premises Delivery
Date, Tenant shall pay Landlord within ten (10) days after Tenant receives
Landlord's bill therefor, but not earlier than ten (10) days prior to the last
day to pay such Taxes without interest or penalty, for its pro rata portion of
such Taxes based on a formula (the "Tax and Operating Expense Formula"), the
numerator of which shall be the rentable square foot area of the portion of the
Premises then demised to Tenant (it being understood that only one-half of the
rentable
-9-
<PAGE>
square foot area of Space D shall be included) and the denominator of which
shall be 70,400.
5.2.1.2. Taxes, whether or not a lien upon the Premises, shall be
apportioned between Landlord and Tenant at the beginning and at the expiration
or sooner termination of the Term of this Lease, so that Tenant shall pay only
the portion of such Taxes which are allocable to the Term of this Lease.
5.2.1.3.Landlord shall, at Tenant's request (made not earlier than
December 1 in any year), notify Tenant whether or not it will contest the amount
or validity of Taxes for any tax year within 15 days after Tenant's request. If
Tenant has made such request and Landlord does not notify Tenant that it will
contest the amount or validity of any Taxes for any year within such 15-day
period, Tenant, at its own cost and expense after notice to Landlord, may
contest the amount or validity of any Taxes in any manner permitted by law, in
Tenant's name, and whenever necessary, in Landlord's name, provided that Tenant
does so with due diligence and in good faith. Landlord shall prosecute any
contests pending on the commencement date of this Lease, with reasonable
diligence, provided that Landlord may settle or discontinue such contest on
notice to Tenant if Landlord believes in good faith that such settlement or
discontinuance is advisable. If there shall be any refund of the Taxes which are
the subject of such pending contest or any other contest brought by Landlord
during the term of this Lease, such refund, together with any interest thereon
paid by the taxing authority, plus the expenses incurred by Landlord in
obtaining such refund, shall be apportioned between Landlord and Tenant based
upon the portion of Taxes paid by each party for the year for which such refund
was made. If no refund is made but Taxes are reduced, Tenant shall reimburse
Landlord for Tenant's pro rata portion of all customary and reasonable expenses
actually incurred by Landlord in obtaining such refund. Landlord will cooperate
with Tenant and execute any documents or pleadings reasonably required for a
contest by Tenant, provided that the same shall be without cost, liability or
expense to Landlord. Such contest by Tenant may include appeals from any
judgment, decree or order until a final determination is made by a court or
governmental department or authority having final jurisdiction in the matter.
5.2.1.4. The certificate, advice or bill of the appropriate official,
designated by law to make or issue the same or to receive payment of any Taxes,
may be relied upon by Landlord as prima facie evidence that such Taxes are due
and unpaid at the time of the making or issuance of such certificate, advice or
bill.
5.2.2. Payment of Operating Expenses.
5.2.2.1.(a) For any period prior to the Entire Premises Delivery Date,
Landlord shall pay all Operating Expenses. Tenant shall for each Lease Year or
portion thereof, pay its pro rata share of such Operating Expenses based upon
the Tax and Operating Expense Formula within ten (10) days after Tenant receives
a bill from Landlord therefor, which bill may be sent on a monthly or quarterly
basis at Landlord's option. For any period after the Entire Premises Delivery
Date, Tenant shall pay all Operating Expenses.
-10-
<PAGE>
(b) After the Entire Premises Delivery Date, Tenant shall promptly make
all repairs, interior and exterior, nonstructural (but not structural), ordinary
as well as extraordinary, foreseen as well as unforeseen, necessary to keep the
Premises or the sidewalks and curbs adjacent thereto in good and lawful order
and condition; said repairs shall be at least equal in quality and class to the
original work. When used in this section, the term "repairs" as applied to the
Building equipment, shall be deemed to include replacements, restorations and/or
renewals when necessary. In any event, Tenant shall have the right, at any time
and from time to time, to remove and dispose of Building equipment which may
become obsolete or unfit for use or which is no longer useful in the operation
of the Premises. If any Building equipment shall be removed, Tenant shall
promptly replace the same with other equipment, not necessarily of the same
character but of at least equal utility and value, except that if Landlord
agrees that (a) by reason of technological or other developments in the
operation and maintenance of buildings of the general character of the Building,
no replacement of the Building equipment so removed or disposed of is necessary
or desirable in the proper operation and maintenance of the Building, or (b) the
portion of the Building in which that Building equipment is located or which it
serves is to be demolished, Tenant shall not be required to replace the same.
Tenant shall have the right to sell or otherwise dispose of any Building
equipment which it replaces pursuant to the provisions of this Section, and may
retain as its sole property the proceeds of any such sale or disposition. The
provisions and conditions of Section 5.2.2.1 shall apply to repairs required to
be done by Tenant under this Article. Tenant shall keep and maintain all
portions of the Premises and the curbs and sidewalks adjoining the Premises, in
a clean and orderly condition, free of accumulation of dirt, rubbish, snow and
ice, and Tenant shall not permit or suffer any overloading of the floors of the
Building. Except as otherwise provided in Article 8, nothing herein contained
shall be construed to prevent Tenant or any subtenant, sublessee, or other
occupant claiming under or through Tenant from removing from the Premises its
fixtures, furniture and equipment (other than Building equipment), on the
condition, however, that Tenant shall do so without cost or expense to Landlord.
Tenant hereby agrees to promptly repair or cause to be repaired any and all
damages to the Premises resulting from or caused by such removal. If Tenant
desires to remove any work station furniture delivered by Landlord to Tenant on
the Term Commencement Date, tenant may remove and dispose of such furniture at
Tenant's cost and expense.
ARTICLE 6
SERVICES AND UTILITIES
SECTION 6.1. Electricity.
6.1.1. Direct Supply. On and after the Entire Premises Delivery Date,
Tenant shall arrange to obtain electrical energy from the utility company
furnishing electrical energy to the Building. The costs of such service shall be
paid by Tenant directly to such utility company, and a default by Tenant in the
timely payment of any bill or charge of such utility company shall be deemed a
default by Tenant under this Lease.
-11-
<PAGE>
Prior to the Entire Premises Delivery Date, Landlord shall provide electric
current to the Building and Tenant shall reimburse Landlord for its pro rata
share of such electric current provided to the Building based upon the Tax and
Operating Expense Formula within ten (10) days of Tenant's receipt of Landlord's
bill therefor.
6.1.2. Requirements Applicable to Tenant. Tenant shall at all times comply
with the rules, regulations, tariffs, terms and conditions applicable to
service, equipment and wiring and other requirements of the utility company
supplying electricity to the Building if they apply to portions of the Premises
then occupied by Tenant.
6.1.3. Failure of Supply. Landlord shall not be liable to Tenant for any
loss, damage or expense that Tenant may incur by reason of any failure or defect
in the supply or character of electricity furnished to the Premises for any
reason, except for any actual damages incurred by Tenant as a result of the
gross negligence or willful misconduct of Landlord. In no event shall Landlord
be liable to Tenant or any other Person for consequential damages.
SECTION 6.2. Water. After the Entire Premises Delivery Date, Tenant shall
pay for all water consumed on the Premises within five (5) days after bills are
rendered, together with any sewer rent or charge or any other tax, rent, levy or
charge, now or hereafter assessed, imposed or that may become a lien upon the
Premises or the Building pursuant to any laws made or issued in connection with
the use, consumption, maintenance or supply of water or any water system or
sewage connection or system.
6.2.1. Failure of Water Supply. Landlord shall not be liable or
responsible to Tenant for any loss, damage or expense that Tenant may sustain or
incur by reason of any failure, inadequacy or defect in the character, quantity,
quality or supply of water furnished to the Premises or the Building except for
actual damage suffered by Tenant by reason of any such failure, inadequacy or
defect resulting from the gross negligence or willful misconduct of Landlord.
SECTION 6.3. Cleaning. On and after the Entire Premise's Delivery Date,
Tenant shall provide and pay for the cleaning of the Premises. Prior to the
Entire Premises Delivery Date, Landlord shall clean the Premises and Tenant
shall reimburse Landlord for its pro rata share of cleaning the Premises, based
upon the Tax and Operating Expense Formula within ten (10) days after Tenant
receives Landlord's bill therefor.
ARTICLE 7
INSURANCE
SECTION 7.1. Use of Premises. Tenant shall use the Premises for the
Permitted Uses only. Tenant shall not do or permit anything to be done in or
about the Premises (or the portion of the Premises other than Space D then
occupied by Tenant if prior to the Entire Premises Delivery Date) that is likely
to: (a) subject Landlord to any liability or responsibility for personal injury
or death or property
-12-
<PAGE>
damage; (b) result in insurance companies of good standing refusing to insure
the Premises or the Building in amounts satisfactory to Landlord; (c) result in
the cancellation of any policy covering or relating to the Premises or the
Building; or (d) result in the assertion of any defense by the insurer in whole
or in part to claims under any of such policies.
SECTION 7.2. Property Insurance. Landlord shall maintain, at Tenant's
expense, at all times during the Lease Term, All-Risk property insurance at
commercially reasonable rates covering all physical loss to the Building in the
Premises for their full replacement value and rent insurance for a period of one
(1) year covering the Rents, the Ground Lease Rent and Taxes. For any period
prior to the Entire Premises Delivery Date, Tenant shall for each Lease Year or
portion thereof, pay its pro rata share of such expenses based upon the Tax and
Operating Expense Formula within ten (10) days after Tenant receives a bill from
Landlord therefor.
SECTION 7.3. Liability Insurance. Tenant shall maintain, at Tenant's
expense, at all times during the Lease Term, comprehensive general liability
insurance, written on a per occurrence basis with blanket contractual liability
coverage, broad form property damage and such other coverage as Landlord may
reasonably require with respect to the Premises, its use and occupancy and the
conduct or operation of its business therein, with combined single-limit
coverage of not less than Five Million Dollars ($5,000,000), of which Three
Million Dollars ($3,000,000) may be by means of an excess coverage umbrella
policy aggregate per location and per project. Landlord may, from time to time,
but not more frequently than once every year, increase the policy amount to be
maintained by Tenant under this Section 7.3 as Landlord deems reasonably
necessary in order to maintain adequate liability coverage.
SECTION 7.4. Other Insurance. Tenant shall maintain, at Tenant's expense,
at all times during the Lease Term: worker's compensation insurance at statutory
limits, employer's liability coverage in an amount not less than Five Hundred
Thousand Dollars ($500,000) and New York State Disability insurance as required
by law, covering all employees.
SECTION 7.5. Waiver of Subrogation.
7.5.1. Waiver of Subrogation - Landlord. Landlord shall endeavor to secure
an appropriate clause in, or an endorsement upon, each property or casualty
insurance policy insuring the Building pursuant to which the insurance company
waives subrogation against Tenant, its agents and employees ("Tenant Waiver
Parties" and individually a "Tenant Waiver Party") or permits the insured, prior
to any loss, to agree with a third party to waive any claim it might have
against said Tenant Waiver Parties without invalidating the coverage under the
insurance policy. If such a clause or endorsement is obtainable only upon
payment of an additional premium, unless Tenant pays such additional premium
within ten (10) days after Landlord's request, Landlord shall thereafter be free
of its waiver of subrogation so long as an additional cost is required under the
policy in question.
-13-
<PAGE>
7.5.2. Waiver of Subrogation - Tenant. Tenant shall endeavor to secure an
appropriate clause in, or an endorsement upon, each property or casualty
insurance policy insuring the Improvements or Tenant's Property pursuant to
which the insurance company waives subrogation against Landlord, any Senior
Interest Holder, the managing agent of the Building and its or their employees
and agents ("Landlord Waiver Parties" and, individually, a "Landlord Waiver
Party") or permits the insured, prior to any loss, to waive any claim it may
have against said Landlord Waiver Parties without invalidating the coverage
under the insurance policy. If such a clause or endorsement is obtainable only
upon payment of an additional premium, unless Landlord pays such additional
premium within ten (10) days after Tenant's request, Tenant shall thereafter be
free of its waiver of subrogation so long as an additional cost is required
under the policy in question.
7.5.3. Landlord's Waiver. Landlord hereby waives, for itself and those
claiming through or under it, any right of recovery against any Tenant Waiver
Party for any loss occasioned by fire or other insured casualty, whether or not
arising from the negligence of such Tenant Waiver Party, (a) covered by an
insurance policy maintained by or for Landlord which includes a clause or
endorsement of the type described in Section 7.5.1 or (b) coverable under a
standard All-Risk insurance policy, but, as to which Landlord is a self-insurer;
provided, however, that if, in any instance such clause or endorsement shall not
extend to all Tenant Waiver Parties, the waiver set forth above shall extend
only to the Tenant Waiver Parties to whom such clause or endorsement extends.
7.5.4. Tenant's Waiver. Tenant hereby waives, for itself and those
claiming through or under it, any right of recovery against any Landlord Waiver
Party, for any loss occasioned by fire or other insured casualty, whether or not
arising from the negligence of such Landlord Waiver Party, (a) covered by an
insurance policy maintained by or for Tenant which includes a clause or
endorsement of the type described in Section 7.5.2 or (b) coverable under a
standard All-Risk insurance policy but as to which Tenant is a self-insurer;
provided, however, that if, in any instance such clause or endorsement shall not
extend to all Landlord Waiver Parties, the waiver set forth above shall extend
only to the Landlord Waiver Parties to whom such clause or endorsement extends.
7.5.5. Limitation on Waiver. Except to the extent expressly provided in
this Section 7.5. nothing contained in this Lease shall relieve either party of
any liability to the other or to its insurance carriers that such party may have
under law or the terms of this Lease in connection with any damage to the
Building by fire or other casualty.
SECTION 7.6. Policy Requirements. Landlord and its agents and employees,
and any Senior Interest Holder whose name and address shall have been furnished
to Tenant, shall be designated as additional insureds or loss payees, as
appropriate, on any insurance policy required by Section 7.3. Tenant shall
deliver to Landlord fully paid-for policies or duplicates thereof and
certificates of insurance for the insurance coverage required by this Article 7.
in form and providing for deductibles reasonably satisfactory to Landlord,
issued by the insurance company or its authorized agent, prior to the
-14-
<PAGE>
Term Commencement Date. Tenant shall procure and pay for renewals of such
insurance from time to time before the expiration thereof, and Tenant shall
deliver to Landlord such renewal policy or certificate of renewal at least
thirty (30) days before the expiration of any existing policy. All policies
shall be issued by companies of recognized responsibility, licensed to do
business in the State of New York, reasonably acceptable to Landlord, and
maintaining a rating of A-/X or better in Best's Insurance
Reports-Property-Casualty (or an equivalent rating in any successor index
adopted by Best's or its successor). All policies shall provide that (i) they
may not be canceled, terminated or modified unless Landlord and all additional
insureds and loss payees are given at least thirty (30) days prior written
notice of such cancellation or modification and (ii) that no act or failure to
act of Tenant shall invalidate the coverage afforded to Landlord hereunder. If
Tenant fails to procure or maintain any insurance required by this Lease and to
pay all premiums and charges thereunder, Landlord may (but shall not be
obligated to) obtain and pay for the same, and Tenant shall reimburse Landlord,
within five (5) days after demand, for all such sums paid by Landlord. The
proceeds of policies providing "All-Risk" property insurance on the Improvements
shall be payable to Landlord, each Senior Interest Holder and Tenant, as their
interests may appear. Tenant may carry any insurance coverage required of it
hereunder pursuant to blanket policies of insurance so long as the coverage
afforded Landlord and the other additional insureds or loss payees, as the case
may be, thereunder shall not be less than the coverage that would be provided by
direct policies.
SECTION 7.7. Premium Increase. Prior to the Entire Premises Delivery Date,
if by reason of (a) any default by Tenant under this Lease, (b) any Improvement
installed, or Tenant Property used, in the Premises or (c) the use or occupancy
of the Premises by Tenant for other than the Permitted Use, the premiums for any
insurance on the Building (including rent insurance) are higher than they
otherwise would be, Tenant shall reimburse Landlord, within five (5) days after
demand, as Additional Rent, for that part of the premiums attributable to such
default, such Improvements, such Tenant Property or such use or occupancy. A
schedule or statement of rates for the Building issued by the insurance
companies insuring the Building, or by a fire insurance rating organization such
as the New York Fire Insurance Exchange or other similar body making rates for
insurance for the Building, shall be conclusive evidence of the facts therein
stated and of the several items and charges in the insurance rate then
applicable to the Building.
SECTION 7.8. Cancellation. If any such insurance shall be canceled by the
insurance carrier due to the occupancy or use of the Premises by Tenant for
other than office use or Tenant's failure to occupy the Premises or abandonment
thereof, then, in addition to any other rights or remedies that Landlord may
have under this Lease, Tenant shall indemnify, defend and hold Landlord harmless
against any loss that would have been covered by such insurance.
-15-
<PAGE>
ARTICLE 8
ALTERATIONS
SECTION 8.1. Conditions
8.1.1. Tenant may from time to time, without first obtaining the consent
of Landlord, at its expense, make such Alterations in and to the Premises as
Tenant may desire, provided that (i) the cost of each such Alteration does not
exceed $150,000, (ii) such Alteration does not affect the certificate of
occupancy for the Building and (iii) such Alteration does not affect any of the
structural members of the Building nor adversely affect the heating,
ventilating, air conditioning, plumbing or electrical systems. If Tenant desires
to make an Alteration of the type permitted by this Section 8.1.1, Tenant shall
provide written notice to Landlord of its intent to make such Alteration and
comply with the provisions of Sections 8.4 through 8.7 of this Lease. Prior to
the commencement of any Alteration of the type permitted by this Section 8.1.1
and which, in Tenant's reasonable judgment, will cost more than $20,000, other
than any Alteration which is of a purely decorative nature or which involves
painting or carpeting in the Premises, Tenant shall provide Landlord with plans
and specifications for such Alteration, it being understood that the submission
of such plans and specifications shall not create any consent or approval right
for Landlord.
8.12. To the extent Tenant desires to make Alterations to the Building
other than those permitted pursuant to Section 8.1.1 Tenant may, with the prior
approval of Landlord, which approval shall not be unreasonably withheld or
delayed, and at its sole cost and expense, make such Alterations in and to the
Premises as Tenant may desire, provided that the procedures set forth in
Sections 8.2 through ii are complied with.
SECTION 8.2. Approval of Plans and Specifications. Before proceeding with
any Alteration for which Landlord's consent is required pursuant to Section
8.1.2 Tenant shall submit for approval a sufficient number of copies of the
Plans and Specifications for such Alteration to Landlord. The term "Plans and
Specifications" with respect to any Alteration shall mean architectural,
mechanical and engineering plans and specifications prepared and sealed by an
architect or professional engineer licensed to practice as such in the State of
New York and reasonably satisfactory to Landlord ("Tenant's Architect") (a)
sufficient to secure all required governmental approvals and permits, (b)
sufficient for a contractor to perform the work covered thereby and shown
thereon and (c) sufficient to determine (i) if the materials to be used by
Tenant are acceptable to Landlord, (ii) if the Alteration is likely to comply
with all applicable laws and (iii) the effect of the Alteration on the
structural components, service systems and facilities of the Building. Landlord
shall approve or disapprove (stating in reasonable detail the reasons for any
disapproval) such plans within (15) days of its receipt of such plans. In the
event Landlord fails to approve or disapprove such plans with said fifteen (15)
day period, such plans shall be deemed approved.
8.2.1. Any revisions to the Plans and Specifications which have been
approved by Landlord (the "Final Plans") which are made prior to or after
commencement of any
-16-
<PAGE>
Alteration shall be subject to review and approval or disapproval by Landlord in
accordance with the requirements of the preceding paragraphs of this Section
8.2.
8.2.2. The review and approval by Landlord, its agents, consultants and/or
contractors of any Alteration or of Plans and Specifications are solely for the
benefit of Landlord, and neither Landlord nor any of its agents, consultants or
contractors shall have any duty toward Tenant, nor shall Landlord or any of its
agents, consultants and/or contractors be deemed to have made any representation
or warranty to Tenant, or have any liability, with respect to the safety,
adequacy, correctness, efficiency or compliance with laws of the Plans and
Specifications, the Alteration, or any other matter relating thereto.
8.2.3. Reimbursement. Tenant shall reimburse all reasonable actual
out-of-pocket costs incurred by Landlord for architects and engineers in
reviewing arid plans and specifications submitted by Tenant for any Alteration;
provided, that such costs shall be commercially competitive.
SECTION 8.3. Other Items to be submitted Prior to Commencement. Tenant
shall not commence any Alteration for which Landlord's consent is required
pursuant to Section 8.1.2 until Landlord has approved or deemed to have approved
the Plans and Specifications therefor in accordance with Section 8.2. In
addition, Tenant shall not commence any such Alteration until Tenant has
submitted to Landlord (a) copies of all governmental approvals and permits
required for the commencement and prosecution thereof and (b) certificates of
insurance coverage evidencing that all insurance required by Section 8.5.2 has
been obtained.
SECTION 8.4. Governmental Approvals and Permits. Tenant, at Tenant's sole
cost and expense, shall prepare and file with the appropriate governmental
authorities all applications and other documents, including Plans and
Specifications, required for the lawful performance and completion of any
Alteration, and shall secure and maintain all necessary permits and approvals,
including all required final approvals following completion of such Alteration.
Tenant shall deliver copies of all such permits and approvals to Landlord
promptly upon obtaining the same.
SECTION 8.5. General Conditions for Alterations.
8.5.1. Performance. Tenant shall perform all work substantially in
accordance with the Plans and Specifications (as the same may have been revised
in accordance with this Article 8) and in accordance with applicable law. The
work shall be diligently performed in a good and workmanlike manner, using new
materials and equipment that are not subject to any security interests or liens.
Upon completion of any Alteration which costs more than $20,000, other than any
Alteration which is of a purely decorative nature or which involves painting or
carpeting in the Premises, Tenant shall provide Landlord with as-built drawings
of such Alteration or, if the Alteration has been made strictly in accordance
with plans previously delivered to Landlord, Tenant
-17-
<PAGE>
may, at its option, give Landlord a certification of Tenant's architect that
said plans constitute "as-built" plans.
8.5.2. Insurance.
8.5.2.1. Generally. Throughout the performance of work on any Alteration,
Tenant shall carry, or cause to be carried, with insurers of recognized
responsibility, licensed to do business in the State of New York, reasonably
acceptable to Landlord, and maintaining a rating of A-/X or better in Best's
Insurance Reports-Property-Casualty (or an equivalent rating in any successor
index adopted by Best's or its successor), the insurance specified in Section
8.5.2.2 and any other insurance that Landlord may reasonably require. Landlord
and the persons specified in Section 7.5.2 shall be designated as additional
insureds on the insurance policies. Tenant shall furnish Landlord with evidence
satisfactory to Landlord that such insurances is in effect before the
commencement of work on any Alteration, and, on request of Landlord during
construction, Tenant shall provide evidence satisfactory to Landlord that the
insurance remains in effect.
8.5.2.2. Required Insurance. Throughout the performance of work on any
Alteration, Tenant shall carry, or cause to be carried, the following insurance:
(a) workers' compensation insurance in statutory limits and employer's liability
coverage in an amount not less than Five Hundred Thousand Dollars ($500,000)
covering all persons employed in connection with such work; (b) All-Risk
builder's risk property insurance, with vandalism and malicious mischief
endorsements, completed value form, covering all physical loss (including any
loss of or damage to supplies, machinery and equipment) in connection with the
performance of work on such Alteration; (c) broad-form commercial liability
insurance, with a completed operations endorsement and a contractual liability
endorsement, covering any occurrence in or about the Premises or the Building in
connection with such Alteration, with single limits of Ten Million Dollars
($10,000,000) for injury, death and property damage, of which Eight Million
Dollars ($8,000,000) may be by means of an excess coverage umbrella policy
aggregate per location and per project; and (d) comprehensive automobile
liability insurance covering the use of all owned, non-owned and hired vehicles
with a bodily injury and property damage liability limit of not less than One
Million Dollars ($1,000,000). Landlord may, from time to time, but not more
frequently than once every year, adjust the minimum limits set forth above.
8.5.3. Inspection. Landlord or its agents shall have the right to inspect
any Alteration at any and all times, and may reject work that, in their
respective reasonable opinions, does not (a) strictly conform with applicable
laws or with the Final Plans as to any matter that might affect the structural
components or service systems and facilities of the Building or (b) conform in
any material respect with the Final Plans.
-18-
<PAGE>
SECTION 8.6. Violations and Liens.
8.6.1. Discharge of Liens and Violations. Tenant, at its expense, and with
diligence and dispatch, shall procure the cancellation or discharge of all
notices of violation arising from or otherwise connected with any Alteration, or
any other work, labor, services or materials done for or supplied to Tenant, or
any person claiming through or under Tenant, which shall be issued by any public
authority. Tenant shall defend, indemnify and hold Landlord harmless from and
against any and all mechanics liens and other liens and encumbrances or claims
of liens or encumbrances filed in connection with any Alteration, or any other
work, labor, services or materials done for or supplied to Tenant, or any person
claiming through or under Tenant; and against all costs, expenses and
liabilities incurred in connection with any such lien or encumbrance, or claim
of lien or encumbrance. Tenant, at its expense, shall satisfy or discharge of
record each lien or encumbrance within thirty (30) days after it is filed. If
Tenant does not so timely satisfy or discharge any such lien or encumbrance,
Landlord may (but shall not be obligated to) satisfy or discharge the same.
Tenant shall reimburse Landlord within five (5) days after demand for the costs
and expenses incurred by Landlord in satisfying or discharging such lien or
encumbrance pursuant to the foregoing, without regard for any defense or offset
that Tenant may have had against the claimant.
8.6.2. Tenant's Right to Contest Liens. Notwithstanding anything to the
contrary contained in this Section 8.6. Tenant shall have the right to contest
in good faith and with diligence the correctness or the validity of any lien,
encumbrance or claim therefor provided Tenant discharges of record any lien or
encumbrance in accordance with Section 8.6.1.
SECTION 8.7. Indemnity. Tenant shall be directly responsible to Landlord
for the performance of any Alteration, and shall indemnify, defend and hold
harmless Landlord from any cost, expense, claim, lien, loss, damage or liability
arising therefrom, including any cost, expense claim, lien, loss, damage or
liability arising from Tenant's failure to: (a) obtain any permit, authorization
or license; (b) comply with this Lease or applicable law; or (c) pay in full all
contractors, subcontractors, employees and materialmen performing work on any
Alteration; provided, however, that in no event shall Tenant be required to
indemnify Landlord to the extent that such cost, expense, claim, lien, loss,
damage or liability arises out of the gross negligence or intentional misconduct
of Landlord or its agents, employees or contractors.
ARTICLE 9
TENANT'S PROPERTY
SECTION 9.1. Tenant's Property. All office equipment that is installed in
the Premises by or for the account of Tenant without expense to Landlord,
whether or not attached to or built into the Premises, and that may be removed
without substantial damage to the Premises or the Building, and all furniture,
furnishings and
-19-
<PAGE>
other articles of movable personal property owned by Tenant and located in the
Premises shall remain the property of Tenant ("Tenant's Property") and may be
removed by Tenant at any time during the Lease Term. Tenant shall repair, at its
sole expense, any damage to the Premises or to the Building resulting from the
installation or removal of Tenant's Property.
SECTION 9.2. Abandonment. Landlord may consider items of Tenant's Property
that remain in the Premises after the expiration or earlier termination of the
Lease Term to have been abandoned. Landlord may, at its option, either (a)
retain such abandoned items as its property or dispose of them without
accountability in such manner as Landlord shall determine, all at Tenant's
expense, or (b) remove and store such abandoned items for Tenant, at Tenant's
expense.
SECTION 9.3. Taxes on Tenant's Use and Occupancy. Tenant shall pay to any
taxing authority, in a timely manner, any fee, tax or charge levied, assessed or
imposed by any governmental agency or authority in connection with Tenant's use
and occupancy of the Premises.
ARTICLE 10
REPAIRS AND MAINTENANCE
SECTION 10.1. Landlord's Obligations. Landlord, at its expense, shall make
all repairs and replacements necessary to keep the structural members of the
Building (including, without limitation, the foundation, load-bearing walls,
structural steel and roof supports), roof and roof membrane of the Building in
proper order and good repair. In addition, during the first Lease Year, Landlord
shall make all repairs and replacements necessary to keep the heating,
ventilating and air conditioning system at the Building in proper order and good
repair. If, however, any of the foregoing repairs and replacements shall be
required due to any acts or failures to act of Tenant, its guests, servants,
employees, contractors or invitees, Landlord shall make such repairs at Tenant's
reasonable cost and expense. Landlord shall have no responsibility whatsoever to
repair any of Tenant's Property.
SECTION 10.2. Tenant's Obligations. As more specifically set forth in
Section 5.2.2, Tenant shall, at its expense, throughout the Lease Term, take
good care of the Premises (or the portion of the Premises then occupied by
Tenant other then Space D if prior to the Entire Premises Delivery Date) and the
Building equipment therein and make all repairs and replacements necessary to
keep the same in proper order and good repair. Tenant shall be responsible for
the cost of all repairs, maintenance and replacement of wall and floor coverings
in the Premises (or the portion of the Premises then occupied by Tenant other
than Space D if prior to the Entire Premises Delivery Date) and for the repair,
replacement and maintenance of all fixtures, installations and equipment in the
Premises (or the portion of the Premises then occupied by Tenant other than
Space D if prior to the Entire Premises Delivery Date). Except as set forth in
Section 10.1 Tenant shall be responsible for all maintenance, replacements and
-20-
<PAGE>
repairs, interior and exterior, ordinary and extraordinary, of the Premises, the
Building and the Building equipment, made necessary by: (a) the performance of
any Alteration; (b) the installation or use of Tenant's Property in the
Premises; (c) the moving of Tenant's Property into or out of the Building; (d)
any act or omission of Tenant or its officers, partners, principals, employees,
agents, subtenants, contractors or invitees; or (e) Tenant's use or occupancy of
the Premises. Tenant shall promptly make, at Tenant's expense, all repairs in or
to the Premises for which .Tenant is responsible pursuant to the foregoing
provisions of this Section 10.2 and in accordance with Article 8 of this Lease.
If any such repair work shall constitute an Alteration, the same shall be
subject to the provisions of Article 8 regarding Alterations.
SECTION 10.3. Exculpation of Landlord for Repairs. Except as otherwise
expressly provided in this Lease, Landlord shall have no liability to Tenant and
Tenant's obligations under this Lease shall not be reduced or abated by reason
of any inconvenience, annoyance, interruption or injury to business arising from
Landlord making any maintenance, repairs, alterations, additions or improvements
in or to any portion of the Building or the Premises or in or to the fixtures,
equipment or appurtenances of the Building or the Premises that Landlord is
required or permitted to make by this Lease or that are required by law.
Landlord may erect scaffolding and barricades in the Premises and the Building,
for purposes of such repairs, provided that such structures do not prevent
access to the Premises.
ARTICLE 11
USE AND COMPLIANCE WITH LAW
SECTION 11.1. Use. Tenant shall use and occupy the Premises for the
Permitted Use and for no other purpose. Landlord represents that the Certificate
of Occupancy of the Building allows the use of the Premises for the Permitted
Use.
SECTION 11.2. licenses and Permits. Tenant, at its expense, shall procure
and at all times comply with the terms and conditions of any license or permit
required for the proper and lawful conduct of its business in the Premises.
SECTION 11.3. Prohibited Uses. Tenant shall not at any time use or occupy
or allow any Person to use or occupy the Premises (or, if prior to the Entire
Premises Delivery Date, the portion of the Premises, other than Space D, then
occupied by Tenant), or do or permit anything to be done or kept in or about the
Premises (or, if prior to the Entire Premises Delivery Date, the portion of the
Premises, other than Space D, then occupied by Tenant), that: (a) violates any
certificate of occupancy in force for the Building or (b) causes or is likely to
cause damage to the Building, the Premises or any equipment, facilities or other
systems therein.
11.3.1. Neither Tenant nor any of its officers, partners, employees,
agents, subtenants, contractors or invitees shall cause or permit asbestos or
any other Hazardous Material to be used, stored, released, handled, produced or
installed in, on
-21-
<PAGE>
or from the Premises or the Building, except that, to the extent not prohibited
by law, Tenant may store and use in the Premises minor quantities of cleaning
agents and similar substances used in the cleaning or maintenance of the
Premises. In the event of a breach of the covenants contained in this paragraph,
and in addition to all of its rights and remedies under this Lease and pursuant
to law, Landlord, at its election, may either require Tenant to remove or to
reimburse Landlord for the costs of removing such Hazardous Material. In the
event Tenant or any of its officers, partners, employees, agents, subtenants,
contractors or invitees causes or permits a material to be used, stored,
released, handled, produced or installed and such material is subsequently found
to be a Hazardous Material, Tenant, at Tenant's expense, shall comply with all
laws with respect thereto and Landlord, at its election, may either require
Tenant to remove or to reimburse Landlord for the costs of removing such
Hazardous Materials. The provisions of this paragraph shall survive the
expiration or earlier termination of this Lease.
SECTION 11.4. Compliance by Tenant. Tenant shall promptly forward to
Landlord a copy of any notice it receives of the violation of any law involving
the Premises. Tenant shall, at Tenant's expense, comply with all applicable laws
now or hereafter existing that impose any obligation, order or duty on Landlord
or Tenant, arising from or related to: (a) Tenant's specific use of the
Premises; (b) the manner of conduct of Tenant's business or operation of its
equipment therein; (c) any cause or condition created by or at the instance of
Tenant; (d) breach of any of Tenant's obligations hereunder; or (e) any
Hazardous Material brought into the Building by Tenant, any subtenant or any
agent, contractor or invitee of either, whether or not such compliance requires
work which is structural or non-structural, ordinary or, extraordinary, foreseen
or unforeseen. Tenant shall pay, within ten (10) days after demand therefor, all
the costs, expenses, fines, penalties and damages that may be imposed upon
Landlord by reason of or arising out of Tenant's failure to comply with the
provisions of this Section 11.4. If any work performed by Tenant pursuant to
this Section 11.4 shall constitute an Alteration the same shall be subject to
the provisions of Article 8 regarding Alterations.
ARTICLE 12
RIGHTS OF LANDLORD
SECTION 12.1. Entry by Landlord. Landlord and its agents shall have the
right to enter the Premises: (a) to examine the Premises and during Business
Hours to show them to actual and prospective lenders, Senior Interest Holders,
purchasers, and tenants of the Building; (b) to operate and maintain and to
make repairs and alterations in the Premises and the Building and their
respective systems, facilities and equipment; (c) to read any utility meters
located therein; and (d) during the period of twelve (12) months, prior to the
expiration of the Lease Term, to exhibit the Premises to prospective tenants.
Any entry by Landlord shall be made on reasonable advance oral notice and during
Business Hours, except in emergency situations. In exercising its rights under
this Section 12.1. Landlord shall take reasonable commercial measures
-22-
<PAGE>
to avoid unnecessary interference with Tenant's use and occupancy of the
Premises. Landlord shall have a pass key (or similar entry device) to the
Premises and shall be allowed to bring materials and equipment into the Premises
as required in connection with maintenance, repairs and Alterations, without any
liability to Tenant and without any reduction of Tenant's obligations. The
foregoing shall not require Landlord to incur any overtime charges or premium
payments.
SECTION 12.2. Obstructions of Light or View: Closures.
12.2.1. If at any time any windows of the Building are temporarily
darkened, bricked up or the light, air or view therefrom is obstructed (a) on a
temporary basis by reason of any repairs, improvements or maintenance in or
about the Building or on a permanent basis by reason of a requirement of law or
(b) by reason of any structure that may be erected on lands in the vicinity of
the Building, the same shall be without liability to Landlord and without any
reduction or diminution of Tenant's obligations under this Lease and shall not
be deemed to constitute an eviction.
SECTION 12.3. Entry Prior to End of Term. If during the last month of the
Lease Term Tenant has removed all or substantially all of Tenant's Property from
the Premises, Landlord may, without notice to Tenant, immediately enter the
Premises and alter, renovate and decorate the same, however, Tenant's obligation
to pay Rent shall cease as of such date.
ARTICLE 13
DAMAGE OR DESTRUCTION
SECTION 13.1. Restoration. If the Building or the Premises is partially or
totally damaged by fire or other casualty, then so long as neither Landlord nor
Tenant has exercised any right to terminate this Lease under this Article 13 and
subject to the rights of Senior Interest Holders, if any, Landlord shall repair
the damage and restore or rebuild the Building or the Premises (but excluding
Tenant's Property), as the case may be, with reasonable dispatch but without the
incurrence of overtime or premium pay labor rates, after notice to Landlord of
the damage or destruction. Notwithstanding anything to the contrary in the
preceding sentence, Landlord shall not be obligated to so repair any such damage
caused by such casualty and to restore or rebuild the Building or the Premises
until Landlord shall have collected substantially all of the insurance proceeds
receivable on account of the casualty, provided, however, that in no event shall
Landlord be required to expend on such restoration amounts in excess of the
total insurance proceeds (net of the costs of collection) collected on account
of the casualty.
SECTION 13.2. Rent Abatement. Subject to the provisions of Section 13.3 if
fire or other casualty damages, destroys or renders the Premises or any portion
thereof untenantable or deprives Tenant of access to the Premises, then the
Phase-in Rents, Base Rent and Ground Lease Rent attributable to such portion
shall be abated and the
-23-
<PAGE>
Additional Rent payable under Article 5 shall be reduced by the proportion that
the Rentable Area of such portion of the Premises bears to the total Rentable
Area of the Premises, for the period beginning on the date of the damage or
destruction and ending on the earlier of (a) the date on which any damage to the
Premises has been substantially repaired and Tenant has reasonable access to the
Premises and (b) the date on which Tenant reoccupies such portion of the
Premises.
SECTION 13.3. Termination Rights.
13.3.1. Landlord's Election to Terminate. If (a) the Building is so
damaged by fire or other casualty that Landlord elects not to restore the
Building, or (b) less than two (2) years remains in the Lease Term at the time
of a fire or other casualty and the time necessary to rebuild or repair the
Building, in the opinion of a reputable contractor, would exceed ninety (90)
days, or (c) Landlord would be required under Section 13.2 to abate or reduce
the Phase-in Rents, Base Rent, Ground Lease Rent and Additional Rent for a
period in excess of six (6) months if rebuilding or repairs were undertaken,
then, in any of such case, Landlord may terminate this Lease by giving Tenant
notice to such effect within ninety (90) days after the date of the casualty.
This Lease shall terminate on the thirtieth (30th) day after the date that such
termination notice from Landlord is given, and the Rents shall be prorated as of
such termination date.
13.3.2. Tenant's Election to Terminate. If the Building or the Premises is
destroyed by fire or other casualty and (i) Landlord shall not commence to
re-build or repair such damage within sixty (60) days of the date of such fire
or other casualty, or (ii) Landlord shall, for any reason, fail to complete such
re-building or repair within one (1) year of the date of the fire or other
casualty, then in any such event Tenant may, at its option, terminate this Lease
by giving Landlord notice. This Lease shall terminate on the tenth (10th) day
after the date that such termination notice from Tenant is given unless the
Landlord shall commence such re-building or repair or complete such restoration,
as the case may be, within such ten (10) day period, and the Rents shall be
prorated as of such termination date.
SECTION 13.4. Business Interruption. Tenant shall not be entitled to
terminate this Lease, and no damages, compensation or claim shall be payable by
Landlord, for inconvenience, loss of business or annoyance arising from any
repair or restoration of any portion of the Premises or of the Building pursuant
to this Article 13. Landlord shall exert reasonable efforts to make (or to cause
to be made) such repair or restoration promptly and in such manner as not to
interfere unreasonably with Tenant's use and occupancy of the Premises, but
Landlord shall have no obligation to perform such work on an overtime or
premium-pay basis.
SECTION 13.5. Tenant's Property. Landlord shall not be obligated to repair
any damage to, or to replace, Tenant's Property. Tenant shall restore any damage
to Tenant's Property with reasonable dispatch after such damage or destruction
at Tenant's sole cost and expense.
-24-
<PAGE>
SECTION 13.6. Waiver. Tenant hereby waives the application of any law to
any case of damage to or destruction of the Building or the Premises by fire or
other casualty, or to a taking of all or part of the Building or the Premises
subject to the provisions of Article 14 below. This Article 13 constitutes an
express agreement governing damage or destruction of the Premises or the
Building by fire or other casualty, and neither Section 227 of the Real Property
Law of the State of New York nor any other laws of similar import now or
hereafter in effect shall have any application in any such case.
ARTICLE 14
EMINENT DOMAIN
SECTION 14.1. Complete Taking. If all or substantially all of the Premises
is taken by condemnation, sale in lieu of condemnation or in any other manner
for any public or quasi-public use or purpose ("Eminent Domain"), this Lease and
the term and estate hereby granted shall terminate as of the date of vesting of
title on such taking or the date that the condemning or purchasing authority
takes possession, whichever is earlier (the "Date of the Taking"), and the Rents
shall be prorated and adjusted as of such date.
SECTION 14.2. Partial Taking. If part of the Building or the Premises is
taken by Eminent Domain, this Lease shall be unaffected by such taking, except
that if more than twenty-five percent (25%) of the Rentable Area of the Building
shall be taken, or if so much of the Building shall be taken that Tenant
reasonably determines that the Building cannot be restored, reconstructed or
replaced in a suitable manner so that the Building may continue to be used for
the purposes intended Tenant may, at its option, terminate this Lease by giving
Landlord notice to that effect within one hundred eighty (180) days after the
Date of the Taking. This Lease shall terminate on the tenth (10th) day after the
date that any such termination notice is given, and the Rents shall be prorated
and adjusted as of such termination date. Upon a partial taking, where this
Lease continues in force as to any part of the Premises, (i) the Phase-in Rents,
Base Rent and Ground Lease Rent shall be reduced by the percentage that the
Rentable Area of the portion of the Premises taken bears to the Rentable Area of
the Premises prior to the taking, and (ii) Landlord shall repair or restore the
remaining portions of the Building with reasonable dispatch after collection of
substantially all of the award attributable to the taking by Eminent Domain;
provided, however, that Landlord shall not be required to expend on such repair
or restoration amounts in excess of the total awards (net of the costs of
collection) collected by it on account of the taking.
SECTION 14.3. Award. Landlord shall be entitled to receive the entire
award or payment in connection with any taking of the Premises without deduction
for any estate vested in Tenant by this Lease. Tenant hereby expressly assigns
to Landlord all of its right, title and interest in and to every such award or
payment. Tenant shall be entitled to claim and receive any award or payment from
the condemning authority
-25-
<PAGE>
expressly granted for the taking of Tenant's Property, the interruption of its
business or moving expenses, but only if such award or payment shall be made in
addition to Landlord's award and if Tenant's claim does not adversely affect or
result in any reduction of Landlord's award or interfere with the prosecution of
a claim for the taking by Landlord.
SECTION 14.4. Temporary Taking. If all or any portion of the Premises is
taken by Eminent Domain for a limited period of time, this Lease shall remain in
full force and effect, and Tenant shall continue to perform all of Tenant's
obligations under this Lease, including, without limitation, the payment of
Rents. Tenant shall be entitled to claim and receive only that portion of the
award or payment from the condemning authority expressly granted for any such
temporary taking of the Premises attributable to any period within the Lease
Term and that portion of the award, if any, for damage to Tenant's Property.
ARTICLE 15
SURRENDER OF PREMISES
SECTION 15.1. Surrender. On the last day of the Lease Term, upon any
earlier termination of this Lease, or upon any re-entry by Landlord upon the
Premises, Tenant shall quit and surrender the Premises to Landlord broom clean
and in good order, condition and repair (ordinary wear and tear and any damage
or destruction caused by fire or other casualty that Tenant is not obligated by
this Lease to repair excepted). Upon expiration of the Lease Term or earlier
termination of this Lease, all of Tenant's right, title and interest in the
Premises and the Building shall cease.
SECTION 15.2. Acceptance of Surrender. Prior to the expiration or earlier
termination of this Lease in accordance with the terms hereof, no act or thing
done by Landlord or its agents (including accepting the keys or similar access
devices to the Premises) shall be deemed an acceptance of surrender of the
Premises, and no agreement to accept such surrender shall be valid unless in
writing and signed by Landlord.
SECTION 15.3. No Holding Over. There shall be no holding over by Tenant
after the expiration or earlier termination of this Lease and the failure by
Tenant to deliver possession of the Premises to Landlord shall be an unlawful
holdover. During any period in which Tenant so holds over, the rental value of
the Premises, payable from the date immediately following the date on which
Tenant was to deliver the Premises through and including the last day of the
calendar month in which Tenant so delivers the Premises, shall be deemed to be
equal to the greater of (a) the product of (i) one hundred fifty percent (150%)
and (ii) the sum of (x) the Base Rent and Ground Lease Rent payable immediately
preceding the expiration or earlier termination of this Lease and (y) all other
items of Additional Rent that would have been otherwise payable hereunder had
this Lease not expired or been terminated and (b) the then fair market rental
value of the Premises. Acceptance by Landlord of any such Rent during
-26-
<PAGE>
the period in which Tenant so holds over shall not cure or waive Tenant's
default, nor prevent Landlord from exercising, before or after such acceptance,
any of the remedies provided by this Lease or at law or in equity. Payment of
any such Rent and other sums during any period in which Tenant holds over shall
not excuse Tenant's obligation to vacate and surrender the Premises on the date,
and in the manner and condition, required under this Lease nor create any
tenancy from month-to-month or otherwise.
ARTICLE 16
EXCULPATION AND INDEMNIFICATION
SECTION 16.1. Exculpation. Neither Landlord, nor any Senior Interest
Holder, nor any partner, principal, director, officer, agent or employee of any
of the foregoing (hereinafter collectively referred to as "Landlord Parties")
shall be liable to Tenant or its partners, principals, directors, officers,
contractors, agents, employees, invitees, sublessees, licensees or any other
Person claiming through or under Tenant, for any loss, injury or damage to
Tenant or to any other Person, or to its or their property (nor shall Tenant or
any other Person be entitled to any abatement or suspension of its obligation to
pay Rents or be construed to be constructively or otherwise evicted),
irrespective of the cause of such loss, injury or damage, including claims
resulting from: (a) any equipment or appurtenances becoming out of repair; (b)
injury done or occasioned by weather conditions; (c) any defect in or failure of
plumbing, heating or air conditioning equipment, gas, water, and steam pipes,
stairs, railings or walks; (d) broken glass; (e) the backing up of any sewer
pipe or downspout; (f) the bursting, leaking or running of any tank, tub,
washstand, water closet, waste pipe, drain or any other pipe or tank in, upon or
about the Building or the Premises; (g) the escape of steam or hot water; (h)
water, snow or ice being upon or coming through the roof or any skylight,
trapdoor, stair, doorway, window, walk or any other place upon or near the
Building or the Premises or otherwise; (i) the falling of any fixture, plaster,
tile or stucco; (j) the failure to provide any of the services or utilities to
which Tenant is entitled pursuant to the terms of this Lease; and (k) any act,
omission or negligence of other tenants or occupants of the Building or of
adjoining or contiguous buildings or of owners of adjacent or contiguous
property, unless caused by or resulting from the gross negligence or willful
misconduct of Landlord or its employees or agents in the operation or
maintenance of the Premises or the Building. Further, in no event shall Landlord
or any Landlord Party be liable for any indirect, consequential or punitive
damages arising out of any loss of the use of the Premises or any equipment or
facilities therein by Tenant or any Person claiming through or under Tenant,
including loss of profits.
SECTION 16.2. Indemnity. Tenant shall defend, indemnify and hold harmless
Landlord and all Landlord Parties from and against any and all claims, demands,
liability, loss, damage, costs and expenses (including reasonable attorneys'
fees and disbursements) arising from or in connection with: (a) the conduct or
management of the Premises (or the portion of the Premises, other than Space D,
then occupied by
-27-
<PAGE>
Tenant, if prior to the Entire Premises Delivery Date) or of any business
therein, or any work or act whatsoever done, or any condition created (other
than by the gross negligence or willful misconduct of Landlord or any of the
Landlord Parties) occurring on or about the Premises (or the portion of the
Premises, other than Space D, then occupied by Tenant, if prior to the Entire
Premises Delivery Date) during the Lease Term and/or the period of time, if any,
prior to the Term Commencement Date during which Tenant may have been given
access to the Premises or during any holdover by Tenant after the expiration or
earlier termination of this Lease; (b) any act, omission or negligence of Tenant
or any of its subtenants or licensees or its or their partners, principals,
directors, officers, agents, invitees, employees or contractors; (c) any
accident, injury or damage whatever (unless caused by the gross negligence of
Landlord or any of the Landlord Parties occurring in or about the Premises); and
(d) any breach or default by Tenant in the full and prompt payment and
performance of Tenant's obligations under this Lease. If any claim, action or
proceeding is brought against any of the Persons indemnified under this Section
16.2 for a matter covered by this indemnity, Tenant, upon notice from the
indemnified Person, shall defend such claim, action or proceeding by counsel
reasonably satisfactory to Landlord and the indemnified Person.
SECTION 16.3. Transfers of Landlord's Interest. The term "Landlord" shall
mean only the owner at the time in question of the present Landlord's interest
in the Building and in the event of (a) a sale or transfer of all or any part of
the Building which includes the Premises (by operation of law or otherwise),
(b) the lease of all or substantially all of the Building or (c) a sale or
transfer (by operation of law or otherwise) of the leasehold estate under any
such lease, the grantor, transferor or lessor, as the case may be, shall be and
hereby is (to the extent of the interest or portion of the Building or leasehold
estate sold, transferred or leased) automatically and entirely released and
discharged, from and after the date of such sale, transfer or lease, of all
liability in respect of the performance of any of the terms of this Lease on the
part of Landlord thereafter to be performed; it being intended that Landlord's
obligations hereunder shall be binding on Landlord, its successors and assigns
only during and in respect of their respective successive periods of ownership.
In the event of such a sale, transfer or lease, the covenants and agreements of
Landlord shall thereafter be binding upon the transferee of Landlord's interest.
SECTION 16.4. Recourse Limited to Premises. Tenant shall look solely to
Landlord's estate and interest in the Premises for the satisfaction of any right
of Tenant for the collection of a judgment or other judicial process or
arbitration award requiring the payment of money by Landlord, and no other
property or assets of Landlord, Landlord's agents, incorporators, subscribers,
shareholders, officers, directors, partners, principals (disclosed or
undisclosed) or affiliates shall be subject to levy, lien, execution,
attachment, or other enforcement procedure for the satisfaction of Tenant's
rights and remedies under or with respect to this Lease, the relationship of
Landlord and Tenant hereunder or under law, or Tenant's use and occupancy of the
Premises or any other liability of Landlord to Tenant.
-28-
<PAGE>
ARTICLE 17
SUBORDINATION AND ATTORNMENT
SECTION 17.1. Subordination. This Lease, and all rights of Tenant
hereunder, are subordinate and subject to all present and future leases of the
Building and any mortgages upon the Building and to all advances thereunder and
renewals, replacements, modifications, consolidations and extensions thereof
(all of the foregoing, collectively, the "Senior Interests", and holders of
Senior Interests shall be referred to as "Senior Interest Holders"), unless any
Senior Interest Holder elects that this Lease shall be superior to its lease or
mortgage pursuant to Section 17.2. This Section 17.1 shall be self-operative and
no further instrument of subordination shall be required. In confirmation of
subordination, Tenant shall promptly execute, acknowledge and deliver any
instrument that Landlord, any Senior Interest Holder or any of their respective
successors in interest may reasonably request to evidence such subordination. If
Tenant fails to execute, acknowledge or deliver any such instrument within ten
(10) days after request therefor, such failure shall constitute a default under
this Lease. Tenant hereby irrevocably appoints Landlord as Tenant's
attorney-in-fact, coupled with an interest, to execute, acknowledge and deliver
any such instrument for and on behalf of Tenant in the event of such a default
by Tenant, but exercise by Landlord of its power-of-attorney shall not cure the
default. Landlord shall, following execution of this Lease, request
non-disturbance and attornment agreements, in form reasonably satisfactory to
Tenant, from each Senior Interest Holder holding a senior leasehold or mortgage
on the Building or the Premises as of the date of this Lease; it being
understood that Landlord shall not be required to pay any consideration to such
Senior Interest Holder unless Tenant, at Tenant's option, elects to pay such
consideration on Landlord's behalf. The failure or refusal of any Senior
Interest Holder to provide such non-disturbance and attainment agreement shall
not affect the provisions of this Article or this Lease.
SECTION 17.2. Election to Subordinate. By written notice to Tenant, any
Senior Interest Holder may elect to subordinate its interest to this Lease.
SECTION 17.3. Notice and Cure of Landlord's Default. If any act or
omission of Landlord would give Tenant the right, immediately or after the
giving of notice and/or a lapse of time, to cancel or terminate this Lease, or
to claim a partial or total eviction, Tenant shall not exercise such right
until: (a) it has given written notice of the act or omission to Landlord and
each Senior Interest Holder whose name and address shall have been furnished to
Tenant, which notice shall specifically refer to this Section 17.3 and shall
describe Landlord's default with reasonable detail, specifying the section of
this Lease as to which Landlord is in default; and (b) a reasonable period for
remedying the act or omission shall have elapsed following the giving of such
notice and following the time during which each Senior Interest Holder would be
entitled to remedy the act or omission (which reasonable period shall in no
event be shorter than the period during which Landlord would be entitled under
this Lease or otherwise, after similar notice, to effect such remedy). If within
such reasonable period any Senior Interest Holder gives Tenant notice of its
intention to remedy the act or omission, and
-29-
<PAGE>
thereafter diligently commences the required remedial action and pursues it to
completion, Tenant shall have no right to terminate this Lease on account of the
act or omission.
SECTION 17.4. Attornment. Any Senior Interest Holder who succeeds to the
rights of Landlord under this Lease, whether through exercise of remedies or by
operation of law, is in this Section 17.4 called a "Successor Landlord." Upon
the Successor Landlord's succession to the rights of Landlord under this Lease,
at the option of the Successor Landlord, Tenant shall attorn to and recognize
the Successor Landlord as Tenant's landlord under this Lease and shall promptly
execute and deliver any instrument that such Successor Landlord may reasonably
request to evidence the attornment.
ARTICLE 18
QUIET ENJOYMENT
SECTION 18.1. Quiet Enjoyment. So long as Tenant timely pays all the Rents
and performs all of Tenant's other obligations hereunder within the time periods
permitted under this Lease, Tenant shall peaceably and quietly hold and enjoy
the Premises during the Lease Term without hindrance or ejection by Landlord or
any person lawfully claiming through or under Landlord, subject, nevertheless,
to the provisions of this Lease.
ARTICLE 19
ASSIGNMENT AND SUBLETTING
SECTION 19.1. Prohibition. Tenant shall not assign or otherwise transfer
this Lease or sublet the Premises or any part thereof, without first obtaining
Landlord's consent, which consent shall not be unreasonably withheld or delayed.
Unless Tenant proposes to sublease all or any portion of the Premises, or to
assign this Lease, (i) to an Affiliate, or (ii) as part of a sale, assignment or
other transfer of the equity interest of Tenant or a sale, assignment or
transfer of assets of Tenant in addition to the Lease and Tenant's interest in
the Premises, Tenant shall give Landlord notice of its intention to enter into
such assignment or sublease and such notice shall be deemed an offer from Tenant
to Landlord whereby Landlord may (A) terminate this Lease with respect to such
space as Tenant proposes to sublease if the term of such sublease is for the
balance of the Lease Term, upon the terms and conditions hereinafter set forth,
or (B) if the proposed transaction is an assignment of this Lease, to terminate
this Lease with respect to the entire Premises. Such option may be exercised by
notice from Landlord to Tenant within thirty (30) days after Landlord's receipt
of Tenant's notice. If Landlord exercises this option to terminate all or a
portion of this Lease pursuant to this Section 19.1, (x) this Lease shall end
and expire with respect to all or a portion of the Premises, as the case may be,
on the date that which is 75 days after Landlord's receipt of Tenant's notice,
(y) Tenant's Rents shall be apportioned, paid or refunded as of such date, and
(z) Tenant, upon Landlord's request, shall enter into an amendment
-30-
<PAGE>
of this Lease ratifying and confirming such total or partial termination, and
setting forth any appropriate modifications to the terms and provisions hereof.
If Landlord shall not exercise its right to terminate pursuant to this Section,
then if such assignment or sublease shall not be consummated within nine (9)
months from the giving of such notice by Tenant, Landlord's right to terminate
shall be reactivated and the foregoing provisions of this Section 19.1 shall
apply to any future assignment or sublease.
SECTION 19.2. Information to Landlord. If Landlord does not exercise its
option to terminate pursuant to Section 19.1, Tenant shall give written notice
to Landlord of any proposed assignment or sublease accompanied by: (a) a
conformed or photostatic copy of the proposed assignment or sublease; (b) a
statement setting forth in reasonable detail the identity of the proposed
assignee or sublessee, the nature of its business and (for a proposed sublease)
the space to be sublet; and (c) current financial information with respect to
the proposed assignee or sublessee satisfactory to Landlord, including its most
recent financial report.
SECTION 19.3. Consent by Landlord. If Landlord does not exercise its
option to terminate pursuant to Section 19.1, Landlord shall not unreasonably
withhold its consent to the proposed assignment or sublease, provided that the
conditions set forth below are met. Landlord shall notify Tenant in writing
whether or not it consents to the proposed assignment or sublease within twelve
(12) days after the later to occur (i) Landlord's receipt of notice of the
proposed assignment or sublease, and (ii) Landlord's receipt of all of the
information set forth in Section 19.2. In the event Landlord fails to notify
Tenant within said twelve (12) day period, Landlord shall be deemed to have
consented to such sublease or assignment.
19.3.1 Use. The business of the proposed assignee or subtenant and its use
of the Premises, or the relevant portion thereof, must be consistent with the
Permitted Use.
19.32. Identity. The proposed assignee or subtenant must be a reputable
Person of good character with sufficient assets and income, in Landlord's
reasonable judgment, to bear the financial responsibilities of Tenant under this
Lease, and Landlord must be furnished with reasonable proof thereof.
SECTION 19.4. Miscellaneous.
19.4.1 General Terms. Tenant shall reimburse Landlord on demand for any
actual, out-of-pocket costs that Landlord may incur in connection with any
proposed assignment or sublease, including, without limitation, the costs of
making investigations as to the acceptability of the proposed assignee or
subtenant and legal costs incurred in connection with any request for consent;
provided, that such costs shall be commercially competitive. Any assignment of
this Lease to which Landlord gives its consent shall not be valid or binding on
Landlord unless and until the assignee executes
-31-
<PAGE>
an agreement enforceable by Landlord in form and substance satisfactory to
Landlord whereby the assignee assumes and agrees to be bound by all of the
provisions of this Lease and to perform all of the obligations of Tenant
hereunder.
19.4.2. Tenant Remains Liable. Notwithstanding any assignment or sublease,
Tenant shall remain fully liable for the payment of Rents and for the
performance of all the other obligations of Tenant contained in this Lease. Any
act or omission of an assignee or subtenant or any Person claiming under or
through any of them that violates this Lease shall be deemed a violation of this
Lease by Tenant.
19.4.3. Effect of Consent. The consent by Landlord to any assignment or
sublease shall not relieve Tenant or any Person claiming through or under Tenant
of the obligation to obtain the consent of Landlord, pursuant to the provisions
of this Article 19, to any future assignment or sublease. Landlord shall not, by
consenting to a sublease, be deemed to have approved any of the terms of the
sublease and in the event of any discrepancy between the terms of this Lease and
the terms of the sublease, the terms of this Lease shall be controlling.
19.4.4. General Sublease Provisions. With respect to each and every
sublease consented to by Landlord under the provisions of this Article 19, it is
further agreed that:
(a) The term of the sublease must end no later one day prior to the
last day of the Lease Term;
(b) No sublease shall be valid, and no subtenant shall take
possession of the Premises or any part thereof, until a fully executed
counterpart of such sublease has been delivered to Landlord; and
(c) Each sublease shall provide that (i) it is subject and
subordinate to this Lease and all interests to which this Lease is
subordinate and subtenant shall agree not to violate any provision of this
Lease; (ii) Landlord may enforce the provisions of the sublease, including
collection of rents; and (iii) on termination of this Lease or re-entry or
repossession of the Premises by Landlord, Landlord may, at its option,
take over all of the right, title and interest of Tenant, as sublessor,
under such sublease, and such subtenant shall, at Landlord's option,
attorn to Landlord but that nevertheless Landlord shall not be: (x) liable
for any previous act or omission of Tenant under such sublease; (y)
subject to any defense or offset previously accrued in favor of the
subtenant against Tenant; or (z) bound by any previous modification of
such sublease made without Landlord's written consent or by any previous
prepayment of more than one (1) month's rent.
19.4.5. Material Modification. No material modification or amendment shall
be made to a sublease without the prior written consent of Landlord.
-32-
<PAGE>
SECTION 19.5. Acceptance of Rent. If this Lease is assigned, whether or
not in violation of the provisions of this Lease, Landlord may collect rent from
the assignee. If the Premises or any part thereof are sublet, whether or not in
violation of this Lease, Landlord may, after default by Tenant and expiration of
Tenant's time to cure such default, collect rent from the sublessee. In either
event, Landlord may apply the net amount collected to payment of Rents, but no
such assignment, subletting or collection shall be deemed a waiver of any of the
provisions of this Lease, an acceptance of the assignee or sublessee as a
lessee, or a release of Tenant from the performance by Tenant under this Lease.
SECTION 19.6. Assignment or Sublease to Affiliates. Notwithstanding
anything to the contrary contained in this Article 19, Tenant may assign this
Lease or sublet all or any portion of the Premises to any Affiliate of Tenant,
in each case subject to the provisions of this Article 19 but without complying
with the provisions of Sections 19.1-19.3. Tenant shall give Landlord at least
thirty (30) days' prior notice of any such assignment or subletting to an
Affiliate of Tenant, and shall deliver to Landlord a photocopy of the assignment
agreement or sublease, as the case may be, within five (5) days after the
execution and delivery of the same by the parties thereto.
SECTION 19.7. Profits. If Tenant shall enter into any assignment or
sublease permitted hereunder or consented to by Landlord other than an
assignment or sublease to a parent, subsidiary or affiliate of Tenant, Tenant
shall, in consideration of such assignment or subletting, pay to Landlord:
(a) In the case of an assignment, on the effective date of the
assignment, an amount equal to 50% of all sums and other consideration
paid to Tenant by the assignee for or by reason of such assignment after
first deducting Tenant's reasonable brokerage fees, marketing and legal
expenses, architectural fees, any out-of-pocket costs paid by Tenant in
order to prepare the Premises (or any portion thereof) for occupancy and
any other reasonable market concessions paid, incurred or granted by
Tenant in connection with such transaction; or
(b) In the case of a sublease, 50% of any consideration received
under the sublease by Tenant from the subtenant which exceeds, on a per
square foot basis, the Ground Lease Rent and Rents accruing during the
term of the sublease in respect of the subleased space, after first
deducting Tenant's reasonable brokerage fees, marketing and legal
expenses, free rent periods, lease take-over costs, architectural fees,
and any out-of-pocket costs paid by Tenant in order to prepare the
Premises (or any portion thereof) for occupancy, and any other reasonable
market concessions paid, incurred or granted by Tenant in connection with
such transaction. The sums payable under this clause shall be paid by
Tenant to Landlord as and when paid by the subtenant to Tenant.
-33-
<PAGE>
ARTICLE 20
ESTOPPEL CERTIFICATES
SECTION 20.1. Estoppel Certificates. Within ten (10) days after any
request by Landlord or Tenant therefor, the other party shall execute and
deliver to the requesting party an estoppel certificate, in form and substance
reasonably satisfactory to the other, addressed to the requesting party or such
Persons as it may designate, certifying: (a) that this Lease is unmodified and
in full force and effect (or if there have been modifications, that the same is
in full force and effect as modified, and stating the modifications); (b) as to
the Term Commencement Date, the Rent Commencement Date and the Expiration Date
and that there are no agreements with Landlord to extend or renew the Lease Term
or to permit any holding over (or if there are any such agreements, describing
them and specifying the periods of extension or renewal or holdover); (c) the
amount of Rents payable hereunder and dates through which Rents have been paid;
(d) as to whether, to the knowledge of the other party, the requesting party is
in default in performance of any of its obligations under this Lease, and
specifying each default of which it has knowledge; (e) as to whether, to the
knowledge of the other party, any event has occurred that, with the giving of
notice or passage of time, or both, would constitute a default by the requesting
party under this Lease and, if such an event has occurred, specifying each such
event; (f) as to whether Tenant is entitled to any abatement or refund of, or
credit or offset against, payment of Rents, and, if so, describing them; (g)
that Tenant has no rights or options to purchase the Premises or the Building;
(h) that Tenant is the only occupant of the Premises, or if there are other
occupants, subtenants or assignees, the identity of such Persons; (i) as to
whether Tenant has accepted possession of the Premises; and (j) any other matter
the requesting party may reasonably request.
ARTICLE 21
BROKER
SECTION 21.1. Broker. Landlord and Tenant each represent to the other that
it dealt with no broker in connection with this transaction other than Broker;
and Landlord agrees to pay the fee to Broker pursuant to a separate agreement.
Tenant does hereby indemnify the Landlord against the claims of any broker
(other than Broker) not employed by Landlord with whom Tenant may have dealt in
connection with the leasing of the Premises to Tenant and to indemnify, defend
and hold Landlord harmless from and against any such claims. Landlord does
hereby indemnify, defend and hold Tenant harmless from and against any claims
with respect to this Lease made against Tenant by any person (including Broker)
not employed by Tenant in connection with the leasing of the premises to Tenant
and from and against all costs, expenses and liabilities incurred in connection
with such claims, including attorneys' fees and disbursements.
-34-
<PAGE>
ARTICLE 22
CONDITIONAL LIMITATIONS
SECTION 22.1. Conditional Limitations. The following shall constitute
Events of Default:
22.1.1 Failure to Pay Rents. If Tenant shall fail to pay any portion of
Base Rent, Ground Lease Rent, Taxes or Additional Rent when due and such failure
shall continue for five (5) days after notice thereof by Landlord to Tenant; or
22.1.2. Failure to Take Possession: Abandonment. If Tenant shall fail to
take possession of the Premises within fifteen (15) days after tendered by
Landlord, or if Tenant shall abandon the Premises; or
22.1.3. Failure to Perform Under This Lease. If Tenant shall fail to
observe and perform any provision of this Lease other than the failure to pay
Rents as provided in Section 22.1.1 to be observed or performed by Tenant and
such failure continues for twenty (20) days after notice thereof by Landlord to
Tenant, unless, if the nature of such failure is such that it cannot reasonably
be cured within such twenty (20) day period, (a) within such twenty (20) day
period Tenant notifies Landlord in writing that it intends to cure such failure
and actually commences to cure such failure, and (b) Tenant thereafter
diligently proceeds to complete such cure; or
22.1.4. Voluntary Proceeding. If Tenant shall commence or institute any
case, proceeding or other action (a) seeking relief on its behalf as debtor or
to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors or (b) seeking appointment of a receiver,
trustee, custodian or other similar official for it or for any part of its
Property or
22.1.5. General Assignment. If Tenant shall make an assignment for the
benefit of creditors; or
22.1.6. Involuntary Proceeding. If any case, proceeding or other action
shall be commenced or instituted against Tenant (a) seeking to have an order for
relief entered against Tenant as debtor or to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts under any existing or future law of any jurisdiction, relating to
bankruptcy, insolvency, reorganization or relief of debtors or (b) seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or any part of its property, which either results in any such entry
of an order for relief, adjudication of bankruptcy or insolvency or such an
appointment or the issuance or entry of any other order having a similar effect
or remains undismissed for a period of sixty (60) days; or
-35-
<PAGE>
22.1.7. Appointment of Trustee. If a trustee, receiver or other custodian
is appointed for any substantial part of the assets of Tenant which appointment
is not vacated or effectively stayed within thirty (30) days; or
22.1.8. Tenant's Acquiescence. If Tenant shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in Sections 22.1.6 or 22.1.7; or
22.1.9. Hypothecation, Assignment or Subletting. If this Lease shall be
hypothecated or assigned or if the Premises shall be sublet, or if there shall
be attempts at such actions, in violation of the provisions of Article 19;
SECTION 22.2. Remedies and Damages.
22.2.1. Surrender and Re-Entry. If (a) an Event of Default shall occur as
provided in Section 22.1.1 through Section 22.1.9, inclusive, and not be cured
within the applicable grace periods provided therein; or (b) if Tenant commences
a cure pursuant to Section 22.1.3 and fails to diligently proceed therewith
after five (5) days' notice from Landlord, then Landlord may terminate this
Lease by giving Tenant a three (3) day notice of termination and upon the
expiration of said three (3) days, this Lease shall terminate and Tenant shall
immediately quit and peacefully surrender the Premises to Landlord, and Landlord
and its agents may immediately, or at any time thereafter, without further
notice, re-enter the Premises, either by summary proceedings or by any other
applicable action or proceeding or otherwise, and remove all Persons and
property from the Premises. The removed property may be stored in a public
warehouse or elsewhere at the cost of and for the account of Tenant. The terms
"re-enter," "re-entry" or "re-entered" as used in this Lease shall not be deemed
to be restricted to their technical legal meanings.
22.2.2. If Landlord shall have re-entered the Premises or this Lease shall
have terminated and expired as provided in Section 22.2.1, then, in either such
case, Landlord may relet the Premises from time to time, either in the name of
Landlord or otherwise, to such tenant or tenants, for such term or terms ending
before, on or after the Expiration Date, at such rental or rentals and upon such
other conditions (that may include concessions and free rent periods) as
Landlord may determine; provided, however, that Landlord shall not be liable for
refusal or failure to relet the Premises, or, in the event of any such
reletting, for refusal or failure to collect any rent due upon any such
reletting, and no such refusal or failure shall operate to relieve Tenant of any
liability under this Lease or otherwise affect any such liability. Landlord may
make such repairs, replacements, alterations, additions, improvements,
decorations and other physical changes in and to the Premises as Landlord, in
its sole discretion, considers advisable or necessary in connection with any
such reletting or proposed reletting, without relieving Tenant of any liability
under this Lease or otherwise affecting any such liability.
-36-
<PAGE>
22.2.3. Waiver of Notice and Redemption. Tenant hereby waives (a) the
service of any notice of intention to re-enter and (b) all rights of Tenant to
redeem the Premises or to restore the operation of this Lease, after (i) Tenant
shall have been dispossessed or ejected by a judgment or by warrant of any
court, (ii) any re-entry by Landlord or (iii) any expiration or termination of
this Lease and the Lease Term, whether such dispossession, ejection, re-entry,
expiration or termination shall be by operation of law or pursuant to the
provisions of this Lease.
22.2.4. Damages. If this Lease and the Lease Term shall terminate as
provided in Section 22.2.1 or if Landlord shall re-enter the Premises as
provided in Section 22.2.1 hereof, then, in any of such events:
(a) Tenant shall pay to Landlord all Base Rent, Ground Lease Rent and
Additional Rent to the date upon which this Lease and the Lease Term shall have
expired or to the date of re-entry upon the Premises by Landlord, as the case
may be;
(b) Tenant also shall pay to Landlord, as damages, any deficiency (a
"Deficiency") between the Rents for the period that otherwise would have
constituted the unexpired portion of the Lease Term and the net amount, if any,
of rents collected under any reletting effected pursuant to the provisions of
Section 22.2.2 for any part of such period (first deducting from the rents
collected under any such reletting all of Landlord's expenses in connection with
the termination of this Lease, Landlord's re-entry upon the Premises and with
such reletting including all repossession costs, brokerage commissions,
attorneys' fees and disbursements, alteration costs and other expenses of
preparing the Premises for such reletting). Any such Deficiency shall be paid in
monthly installments by Tenant on the days specified in this Lease for payment
of installments of Base Rent, and Landlord shall be entitled to recover from
Tenant each monthly Deficiency as the same shall arise, and no suit to collect
the amount of the Deficiency for any month shall prejudice Landlord's right to
collect the Deficiency for any subsequent month by a similar proceeding; and
(c) Whether or not Landlord shall have collected any monthly Deficiency as
aforesaid, Landlord may elect, at any time, to recover from Tenant, and Tenant
shall pay to Landlord on demand, in lieu of any further Deficiency as and for
liquidated damages, a sum equal to the amount by which the Rents for the period
that otherwise would have constituted the unexpired portion of the Lease Term
exceeds the then fair market rental value of the Premises for the same period,
both discounted to present value at the rate of six percent (6%) per annum less
the aggregate amount of Deficiencies theretofore collected by Landlord for the
same period.
22.2.5. Rents from Reletting. If the Premises shall be relet together with
other space in the Building, the rents collected or reserved under any such
reletting and the expenses of any such reletting shall be equitably apportioned.
Tenant shall not be entitled to any rents collected or payable under any
reletting, whether or not such rents shall exceed the Rents reserved in this
Lease. Nothing contained in this Article 22 shall be deemed to limit or preclude
the recovery by Landlord from Tenant of the maximum
-37-
<PAGE>
amount allowed to be obtained as damages by any laws, or of any sums or damages
to which Landlord may be entitled in addition to the damages set forth in
Section 22.2.
22.2.6. Monies Received. Any monies received by Landlord from or on behalf
of Tenant during the pendency of any proceedings between Landlord and Tenant
shall be deemed paid as compensation for the use and occupancy of the Premises,
and the acceptance of any such compensation by Landlord shall not be deemed an
acceptance of Rents or a waiver on the part of Landlord of any rights hereunder.
22.2.7. Equitable Remedies. Following a breach or threatened breach by
Tenant of any of the provisions hereof, Landlord shall have the right to seek
injunctive relief and the right to invoke any remedy allowed at law or in
equity.
SECTION 22.3. Waiver of Trial by Jury and Counterclaims. Landlord and
Tenant each waive trial by jury in any action, proceeding or counterclaim
brought by either of them against the other on any matters not relating to
personal injury or property damage but otherwise arising out of or in any way
connected with this Lease, the relationship of Landlord and Tenant or Tenant's
use or occupancy of the Premises or the operation, maintenance or control of the
Building. Tenant shall not interpose any counterclaim it may otherwise assert in
any summary proceeding whether such summary proceeding is based on nonpayment of
Rents or on Tenant's holding over after expiration of the Lease Term or on any
other basis pursuant to Article 7 of the New York Real Property Actions and
Proceedings Law, nor will Tenant seek to consolidate any such action or
proceeding with any other action or proceeding, unless by not interposing such
counterclaim or such action or proceeding, as the case may be, Tenant would be
barred from asserting such counterclaim or such action or proceeding, as the
case may be, in a separate action or proceeding. The provisions of this Section
22.3 shall survive the expiration or earlier termination of this Lease.
SECTION 22.4. No Holdover by Tenant. Tenant waives any rights under
Section 2201 of the New York Civil Practice Law and Rules in connection with any
holdover proceedings that Landlord may institute against Tenant. If the Premises
are not surrendered upon the expiration or earlier termination of this Lease
with respect to all or any portion of the Premises, Tenant hereby indemnifies
Landlord against any loss, cost, injury, damage, claim, expense or liability
(including attorneys' fees and disbursements) resulting from delay by Tenant in
so surrendering the Premises or such portion thereof. Tenant's obligations under
this Section 22.4 shall survive the expiration or earlier termination of the
Lease Term.
SECTION 22.5. Landlord's Right to Cure. Landlord may, but shall not be
obligated to, cure any default by Tenant under this Lease at any time after
notice and the lapse of any cure period, if any, included within the conditional
limitation to which such default relates, but without further notice. Whenever
Landlord so elects, all costs and expenses incurred by Landlord in curing any
such default, including attorneys' fees and disbursements, together with
interest on the amount of costs and expenses so
-38-
<PAGE>
incurred at the Interest Rate, shall be paid by Tenant to Landlord on demand, as
Additional Rent.
SECTION 22.6. Effects of Waivers of Breach; No Other Waiver. No consent or
waiver, express or implied, by Tenant or Landlord of any breach of any
obligation of the other party shall be construed as a consent or waiver to or of
any other breach of the same or any other obligation. The failure of Landlord at
any time to insist upon the strict performance of any obligation of Tenant or to
exercise any right or remedy herein contained shall not be construed as a waiver
or relinquishment of the performance of such obligation or of the right to
exercise any right or remedy in the future. Without limiting the generality of
the foregoing, the receipt or acceptance by Landlord of Rents or the payment by
Tenant of Rents with knowledge of a breach by the other party of any term of
this Lease shall not be deemed a waiver of such breach;
SECTION 22.7. Remedies Not Exclusive. The rights and remedies of Landlord
provided in this Lease for a breach by Tenant are cumulative and not exclusive,
and the exercise by Landlord of any other right or remedy it may have shall not
preclude the concurrent or subsequent exercise of any other right or remedy it
may have pursuant to this Lease, at law or in equity.
SECTION 22.8. Payment of Landlord's Expenses. Any expenses incurred by
Landlord in connection with any performance by it for the account of Tenant and
all costs and expenses, including reasonable attorneys' fees, involved in
collecting Rents or enforcing the obligations of Tenant under this Lease,
including the cost and expense of instituting and prosecuting legal proceedings
or recovering possession of the Premises after breach by Tenant or upon
expiration or earlier termination of this Lease, shall be due and payable by
Tenant, on demand, as Additional Rent.
ARTICLE 23
MISCELLANEOUS
SECTION 23.1. No Recording. Tenant may record a memorandum of this Lease.
Upon the expiration or termination of this Lease, Tenant shall execute,
acknowledge and deliver to Landlord such documents and instruments, in form
suitable for recording, as Landlord shall reasonable request to evidence the
termination of such memorandum of Lease. Tenant shall, at Landlord's request,
execute a notice of termination of memorandum of Lease to be held in escrow
until such termination or expiration of this Lease.
SECTION 23.2. Entire Agreement This Lease contains all of the agreements
and understandings related to the leasing of the Premises and the respective
obligations of Landlord and Tenant in connection therewith. All prior agreements
and understandings between the parties have merged into this Lease.
-39-
<PAGE>
SECTION 23.3. Amendments. No agreement shall be effective to amend,
change, modify, waive, release, discharge or terminate this Lease, in whole or
in part, unless such agreement is in writing, refers expressly to this Lease,
and is signed by Landlord and Tenant.
SECTION 23.4. Successors. Except as otherwise expressly provided herein,
the obligations of this Lease shall bind and benefit the successors and assigns
of the parties hereto; provided, however, that no assignment, sublease or other
transfer in violation of the provisions of Article 19 shall operate to vest any
rights in any putative assignee, sublessee or transferee of Tenant.
SECTION 23.5. Force Majeure. Landlord shall have no liability whatsoever
to Tenant on account of the inability of Landlord to timely fulfill any of
Landlord's obligations under this Lease by reason of any strike, lockout or
other labor trouble; inability to obtain labor, materials, coal, oil, or other
suitable fuel or reasonable substitutes therefor or the failure of the supply of
any thereof; acts of God, fire or other casualty; governmental preemption of
priorities or other controls in connection with a public emergency; governmental
restrictions or requirements of laws; enemy or hostile governmental action;
civil commotion; or any other cause beyond Landlord's reasonable control (the
foregoing events are collectively referred to as "Force Majeure"). If this Lease
specifies a time period for performance of an obligation of Landlord, that time
period shall be extended by the period of any delay in Landlord's performance
caused by any of the events of Force Majeure.
SECTION 23.6. Signs. Landlord may, at its option, elect to remove The
Robert Plan sign from the front of the Building.
SECTION 23.7. Interpretation.
23.7.1. Governing Law. This Lease shall be governed by, and be construed
in accordance with, the laws of the State of New York.
23.7.2. Invalidity. If any provision of this Lease or the application
thereof to any Person or circumstance shall be invalid or unenforceable, the
remainder of this Lease and the application of that provision to other Persons
or circumstances shall not be affected but rather shall be enforced to the
fullest extent permitted by law.
23.7.3. Captions. The Table of Contents, captions, headings and titles of
this Lease are solely for convenience of reference and shall not affect its
interpretation.
23.7.4. Presumptions. This Lease shall be construed without regard to any
presumption or other rule requiring construction against the party drafting a
document. It shall be construed neither for nor against Landlord or Tenant, but
shall be given a reasonable interpretation in accordance with the plain meaning
of its terms and the intent of the parties.
-40-
<PAGE>
23.7.5. Number and Gender. All words used in this Lease, regardless of the
number or gender in which they are used, shall be deemed to include any other
number and any other gender as the context may require.
23.7.6. Exhibits. All exhibits appended to this Lease are incorporated
herein and by this reference made a part hereof.
SECTION 23.8. Joint and Several Liability. If at any time during the Lease
Term, Tenant comprises more than one Person, all such Persons shall be jointly
and severally liable for payment of Rents and for performance of every
obligation of Tenant under this Lease.
SECTION 23.9. Submission of Lease. The submission of this Lease to Tenant
or its broker, agent or attorney for review or signature does not constitute an
offer to Tenant to lease the Premises or the granting of an option to do so.
This instrument shall have no binding force or effect until its execution and
delivery by both Landlord and Tenant.
SECTION 23.10. Notices From One Party to the Other; Consents and
Approvals.
(a) Any notice or demand which, under the terms of this Lease must or may
be given or made by the parties herein, shall be in writing, and shall be given
or made by mailing the same, by certified or registered mail, return receipt
requested, or by delivering same by hand (with receipt) or by Federal Express or
other similar overnight commercial carrier addressed:
(i) if to Landlord, to the Address for Landlord, Attention: Mr. Steven
Berger, with a copy to the Address for Landlord, Attention:
Corporate Counsel;
with a copy by regular mail to:
CERTILMAN BALIN ADLER & HYMAN, LLP
90 Merrick Avenue
East Meadow, New York 11554
Attention: Louis Soloway, Esq.
(ii) if to Tenant, at the Address for Tenant.
(b) Either party may designate in writing such new or other address to
which such notice or demand shall thereafter be so given, made or mailed. Any
notice given hereunder shall be deemed delivered when received by the party to
whom same is addressed or when the party sending the same receives notification
from the post office or carrier that same cannot be delivered or is unclaimed.
Notices given by the attorney for either party shall be deemed given by such
party.
-41-
<PAGE>
SECTION 23.11. No Representations by Landlord. Landlord and Landlord's
agents have made no representations, warranties or promises whatsoever with
respect to the Premises, the Building, the land underlying the Building, the
rents, leases, Taxes, expenses of operation or any other matter or thing, except
as herein expressly set forth, and no rights, easements or licenses are acquired
by Tenant by implication or otherwise except as expressly set forth in this
Lease. Tenant represents and warrants that it is fully familiar with the
Premises and the Building and has thoroughly inspected same. The taking of
possession of the Premises by Tenant shall be conclusive evidence that the
Premises and the Building of which the same form a part were in good and
satisfactory condition at the time such possession was so taken, except as to
any latent defects.
SECTION 23.12. Ground Lease. This Lease is subject and subordinate to the
Ground Lease. Tenant shall not do any act or thing which may constitute a breach
or violation of any provision of the Ground Lease. Landlord covenants that its
shall not amend, modify or terminate the Ground Lease without the prior consent
of Tenant. Landlord shall promptly give Tenant a copy of any default notice
given or received in connection with the Ground Lease.
ARTICLE 24
CERTAIN DEFINITIONS
SECTION 24.1. Certain Definitions. Whenever used in this Lease, the
following terms shall have the indicated meanings:
Affiliate: As to any party, means a Person who directly or indirectly
controls, is controlled by, or is under common control with, such party.
Alteration: Any improvement, repair, change or alteration to the Premises,
including, without limitation, Tenant Improvements.
Building Equipment: All machinery, apparatus, equipment, personal
property, fixtures and systems of every kind and nature whatsoever now or
hereafter attached to, or used in connection with the operation or maintenance
of, the Building, including all electrical, heating, mechanical, sanitary,
sprinkler, utility, power, plumbing, cleaning, fire prevention, refrigeration,
ventilating, air cooling, air conditioning, and any and all renewals and
replacements, but excluding (i) Tenant's Property, (ii) property of any other
tenant or Landlord, (iii) property of contractors servicing the Building and
(iv) water, gas, steam and electricity and other similar equipment owned by any
public utility company or any governmental agency or body.
Business Days: Monday through Friday, other than Federal or New York State
legal holidays, and such other days as shall be designated as holidays by the
applicable operating engineers' union or building service employees' union
contract.
Business Hours: From 8:00 a.m. to 6:00 p.m. on Business Days.
-42-
<PAGE>
Hazardous Material: Any chemical, material, element, compound, solution,
mixture, substance or other matter of any kind which is a hazardous substance,
hazardous material or words to similar effect as defined in any law, or to which
exposure is prohibited, limited or regulated by law.
law(s): The terms "law," "laws," "provisions of law," "requirements of
law," and words of similar import shall mean present and future laws, statutes,
ordinances, codes (including building and fire codes), rules, regulations,
requirements, judgments, arbitration awards or decisions, rulings, decrees,
executive, judicial and other orders and directives of any or all of the
federal, state, county and city governments and all agencies, authorities,
bureaus, courts, departments, subdivisions, or offices thereof, and of any other
governmental, public or quasi-public authorities (including the board of fire
underwriters or other insurance body) having jurisdiction over the Building or
the Premises, and the direction of any public officer pursuant to law, whether
now or hereafter in force. References to specific statutes include (a) successor
statutes of similar purpose and import and (b) all rules, regulations and orders
made thereunder.
Lease Year: As defined in Section 5.1.2.
Person: A natural person, firm, corporation, partnership, joint venture,
trust (including any beneficiary thereof), association, unincorporated
association or other form of business or legal entity, as the case may be.
Termination Date: The Expiration Date or any earlier date on which the
Lease Term terminates.
ARTICLE 25
RENEWAL OPTION
25.1. Grant of Option. Tenant shall have the option to extend the Lease
Term subject to and upon the terms and conditions contained in this Article 25
as follows:
25.1.1. Option. Tenant shall have the option (the "Option") to extend the
Lease Term for an additional term of ten (10) years (the "Renewal Term"),
commencing on the day immediately following the Expiration Date (the "Renewal
Term Commencement Date") and ending on the day immediately preceding the tenth
(10th) anniversary of the commencement of the Renewal Term.
25.1.2. Generally. The Renewal Term shall be upon the same terms and
conditions as are provided for in this Lease, except that:
(a) there shall be no further option to renew pursuant to this
Article 25 or otherwise;
-43-
<PAGE>
(b) the Base Rent payable for the Renewal Term (the "Renewal Base
Rent") shall be equal to the Fair Market Rental Value of the Premises
determined pursuant to Section 25.1.5;
(c) Landlord shall not be obligated to perform any work, supply any
materials or incur any expense (including the granting of any allowance to
Tenant with respect thereto) in connection with the renewal; and
(d) Tenant shall not be entitled to a credit against Base Rent, or
other rent concession or to an abatement of Base Rent in connection with
the renewal.
25.1.3. Exercise. The Renewal Option may be exercised only by giving
written notice thereof (the "Renewal Notice") to Landlord before the first day
of the twelfth (12th) month prior to the Renewal Term Commencement Date.
25.1.4. Fair Market Rental Value. The "Fair Market Rental Value" of the
Premises for the Renewal Term shall be the rental value of the Premises as of
the first day of such Renewal Term expressed as an amount of money per square
foot of Rentable Area determined as if the Premises were available in the then
current rental market for comparable space, and assuming that Landlord has had a
reasonable time to locate a tenant who rents and that neither Landlord nor the
prospective tenant is under any compulsion to rent, but taking into account the
following factors and additional assumptions:
(a) the lease will be for a term equal to the Renewal Term;
(b) Tenant will pay Taxes and Operating Expenses;
(c) to the extent the Premises are compared with other space, the
rentable area of such other space shall be measured in the same manner as
the Rentable Area of the Premises; and
(d) the Fair Market Rental Value shall be calculated as if Landlord
will be bearing the expense of a standard brokerage commission in the then
current rental market for a term equal to the Renewal Term.
(e) Landlord will not be providing any tenant concessions.
The term "tenant concessions" shall include, without limitation,
free rent, moving expenses, standard tenant improvement allowances or work
letter, Landlord's assumption or buy-out of existing leases and any other
Landlord contributions.
25.1.5. Determination of Fair Market Rental Value. Within sixty (60) days
after Landlord's receipt of the Renewal Notice, Landlord shall notify Tenant
("Landlord's Notice") of Landlord's opinion of the Fair Market Rental Value of
the
-44-
<PAGE>
Premises for the Renewal Term. If Tenant, within thirty (30) days of its receipt
of Landlord's Notice, does not dispute the same by notice to Landlord, then
Landlord's notice shall be binding on Tenant and the amount set forth therein
shall constitute the Fair Market Rental Value.
25.1.5.1. If Tenant shall timely dispute Landlord's Notice and Landlord
and Tenant are unable to agree upon the Fair Market Rental Value within thirty
(30) days of the date Tenant disputed Landlord's Notice, then, within ten (10)
days thereafter, Landlord and Tenant each shall give notice to the other setting
forth the name and address of an arbitrator appointed by the party giving such
notice. If either party shall fail to give notice of such designation, then the
arbitrator chosen shall make the determination alone. If two arbitrators have
been designated, such two arbitrators shall consult with each other and shall,
not later than the ninetieth (90th) day after the date Tenant disputed
Landlord's Notice, make their determinations of the Fair Market Rental Value in
writing and give notice thereof to each other and to Landlord and Tenant. Such
two arbitrators shall have thirty (30) days after the receipt of notice of each
other's determination to confer with each other and to attempt to reach
agreement as to the determination of the Fair Market Rental Value. If such two
arbitrators shall concur as to the determination of the Fair Market Rental
Value, such determination shall be final and binding upon Landlord and Tenant.
If such two arbitrators shall fail to concur, then such two arbitrators, within
the next twenty (20) days, shall designate a third arbitrator. If the two
arbitrators shall fail to agree upon the designation of such third arbitrator
within such twenty (20) day period, then either party may apply to the American
Arbitration Association or any successor thereto having jurisdiction for the
designation of such arbitrator. All arbitrators shall be independent and have
had at least ten (10) years experience in the business of appraising or leasing
commercial office space in Nassau County. The third arbitrator shall conduct
such hearings and investigations on an expedited basis as such arbitrator may
deem appropriate and shall, within thirty (30) days after his designation,
choose one of the determinations (and no other) of the two arbitrators
originally selected by the parties and that choice by the third arbitrator shall
be binding upon Landlord and Tenant.
25.1.5.2. Each party shall pay its own counsel fees and expenses, if any,
in connection with any arbitration under this Section 25.1.5, including the
expenses and fees of any arbitrator appointed by it in accordance with the
provisions of this Section 25.1.5, and the parties shall share equally all other
expenses and fees of any third arbitrator. The award in arbitration rendered in
accordance with this Section 25.1.5 shall be final, conclusive and binding in
fixing the Fair Market Rental Value. Such award shall not be appealable. The
arbitrators shall not have the power to add to, modify or change any of the
provisions of this Lease. Any arbitration under this Section 25.1.5 shall be
conducted (a) in the County of Nassau, State of New York, and (b) except as
otherwise provided in this Section 25.1.5, in accordance with the rules of the
American Arbitration Association (or its successor).
25.1.6. Renewal Term Interim Rent. If for any reason the Fair Market
Rental Value and, accordingly, the Base Rent, shall not have been determined
prior to the
-45-
<PAGE>
Renewal Term Commencement Date, then until such Fair Market Rental Value and,
accordingly, such Base Rent shall have been finally determined, the Base Rent
shall be equal to the product of (a) the Rentable Area of the Premises
multiplied by (b) the then current Base Rent per square foot of Rentable Area
(the "Renewal Term Interim Base Rent"). Promptly after such final determination,
an appropriate retroactive adjustment shall be made reconciling the amount of
Base Rent determined to have been payable by Tenant from and after the Renewal
Term Commencement Date and the amount Tenant actually paid to Landlord as
Renewal Term Interim Base Rent prior to such final determination, and the party
owing the other party pursuant to such reconciliation shall promptly make
payment therefor with interest thereon at the Interest Rate from the date Tenant
actually paid such Renewal Term Interim Base Rent until the date such
reconciliation payment is made.
ARTICLE 26
RIGHT OF FIRST OFFER
SECTION 26.1. Procedure. If at any time during the term of this Lease
Landlord shall desire to sell all or any portion of the Premises, Landlord shall
give to Tenant written notice (the "Sale Notice") of such intention and the
terms and conditions (set forth with reasonable specificity) on which it will
offer the same for sale. Tenant shall have the right to make such purchase on
the terms and conditions set forth in Landlord's Sale Notice, to be exercised by
written notice to Landlord within thirty (30) days after the giving of the Sale
Notice, accompanied by a certified check payable to Landlord equal to ten (10%)
percent of the purchase price. If Tenant shall exercise such right within said
30-day period, the closing of title shall be held on a date to be set forth in
Tenant's notice of exercise, which shall be not less than 30 days nor more than
120 days after the date of Tenant's notice. If Tenant shall not exercise such
right within said 30 day period or shall notify Landlord within such period that
it has waived such right, and within nine (9) months after the giving of the
Sale Notice, Landlord receives a bona fide offer from a purchaser to make such
purchase at a price which is not less than 95% of the price and otherwise on
terms not materially less favorable to Landlord than those set forth in the Sale
Notice, Landlord shall be free to sell to such purchaser on such terms; provided
that if such sale shall not be consummated within nine (9) months of the giving
of such Sale Notice, Tenant's first right to purchase shall be re-activated and
the foregoing provisions of this Section 26.1 shall apply to any future sale.
Tenant's right of first offer shall not survive a sale of the Premises by
Landlord in accordance with this Section 26.1.
SECTION 26.2. No Effect. Any sale or transfer in violation of Section 26.1
shall be of no force or effect.
-46-
<PAGE>
ARTICLE 27
INDUSTRIAL DEVELOPMENT AGENCY APPROVALS
SECTION 27.1. Lease Contingent on Approvals. Notwithstanding anything
contained in this Lease to the contrary, this Lease and Tenant's obligation to
perform hereunder is subject to and contingent upon Tenant's receipt of an
inducement resolution from the Town of Hempstead Industrial Development Agency
or Nassau County Industrial Development Agency granting (a) abatements of sales
taxes for a ten-year period for the personal property to be acquired after the
date of such resolution and utilized at the Premises, and (b) abatements of real
estate taxes for a period of ten years resulting from any increase in the
assessed value of the Premises over that existing on the date hereof which are
based upon the improvements to be made to the Premises by Landlord in accordance
with the provisions of this Lease and any improvements made by Tenant during the
term of the Lease. In the event such resolution is not enacted and delivered to
Tenant by September 30, 1997, Tenant may terminate this Lease upon ten (10) days
notice to Landlord. Upon Landlord's request, Tenant shall promptly execute a
letter in form reasonably acceptable to Tenant which shall confirm the receipt
of such resolution.
ARTICLE 28
LANDLORD'S FURNITURE AND PERSONAL PROPERTY
SECTION 28.1. Use of Landlord's Personal Property. The Rent set forth
herein includes payment by Tenant for the right to use the Landlord's furniture
and personal property set forth on Exhibit C attached hereto. Throughout the
Term of this Lease, Tenant shall maintain such personal property in the
condition in which it exists on the Term Commencement Date, reasonable wear and
tear excepted. Landlord shall leave such personal property at the Premises so
that all such property is in the Premises on the Term Commencement Date.
-47-
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have hereunto executed this Lease
by their respective duly authorized representatives as of the day and year first
above written.
LANDLORD: EAGLE INSURANCE COMPANY,
a New Jersey corporation.
By: /s/ Robert M. Wallach
-------------------------------
Name: Robert M. Wallach
-------------------------
Title: CEO
------------------------
TENANT: THE NPD GROUP, INC.
a New York corporation.
By: /s/ Lanny Catz
-------------------------------
Name: Lanny Catz
-------------------------
Title: Sr. Vice President
------------------------
-48-
<PAGE>
EXHIBIT A
Floor Plan
<PAGE>
[Floor Plan]
[GRAPHIC OMITTED]
<PAGE>
EXHIBIT B
Land
<PAGE>
DESCRIPTION 0F 5.682 ACRE PARCEL
SITUATED AT UNIONDALE
ALL THAT CERTAIN PART, PIECE OR PARCEL OF LAND LYING, BEING AND SITUATE AT
UNIONDALE, TOWN OF HEMPSPEAD, COUNTY OF NASSAU, STATE OF NEW YORK
BEING MORE PARTICULARLY BOUNDED AND DESCRIBED AS FOLLOWS:
BEGINNING at a point on the easterly side of Charles Lindbergh Boulevard,
said portion of Charles Lindbergh Boulevard running in a generally north-south
direction and being the southerly extension of Quentin Roosevelt Boulevard, said
Point of Beginning being the point of curvature of an arc connecting the
easterly side of Charles Lindbergh Boulevard (running north-south) and the
southerly side of Charles Lindbergh Boulevard (running generally east-west);
RUNNING thence from said Point of Beginning, along the easterly side of
Charles Lindbergh Boulevard, in a northeasterly direction, along the arc of a
curve, bearing to the right, having a radius of 276.00 feet, a distance of
435.90 feet to the southerly side of Charles Lindbergh Boulevard;
RUNNING thence easterly along the southerly side of Charles Lindbergh
Boulevard, North 73(degrees) 24' 46" East, 54.99 feet to a point;
<PAGE>
Running thence easterly along the new southerly side of Charles Lindbergh
Boulevard the following two courses and distances:
1) Along the arc of a curve bearing to the right, having a radius of
396.00 feet, a distance of 54.80 feet to a point.
2) Along the arc of a curve bearing to the right, having a radius of
676.00 feet, a distance of 65.23 to a point and Land of the County
of Nassau.
RUNNING thence southerly along said land South 17(degrees) 04' 40.5" East,
568.24 to a point;
RUNNING thence westerly, still along Land of the County of Nassau South
72(degrees) 55' 19.5" West, 451.91 feet to the easterly side of Charles
Lindbergh Boulevard;
RUNNING thence northerly along the easterly side of Charles Lindbergh
Boulevard North 17(degrees) 04' 40.5" West, 309.62 feet to the Point or Place of
Beginning.
All other clauses in the aforementioned lease shall remain in full force
and effect.
<PAGE>
EXHIBIT C
Delivery Schedule
<PAGE>
[Floor Plan]
[GRAPHIC OMITTED]
<PAGE>
<TABLE>
==============================================================================================================
ROBERT PLAN/NPD SPACE SCHEDULE
- --------------------------------------------------------------------------------------------------------------
<S> <C>
BUILDING SIZE 70,400 square feet
- --------------------------------------------------------------------------------------------------------------
RENT PER SQ FT $10
- --------------------------------------------------------------------------------------------------------------
ANNUAL $704,000
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
POSSESSION PRO RATA RENT
- --------------------------------------------------------------------------------------------------------------
SECTION SIZE DATE SHARE Areas A&D* Start 30 days from Lease Execution
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A 11,000 Lease execution 16% $110,000
- --------------------------------------------------------------------------------------------------------------
A-1 7,700 9/1/97 11% $77,000
- --------------------------------------------------------------------------------------------------------------
A-2 4,000 10/1/97 6% $40,000
- --------------------------------------------------------------------------------------------------------------
B 6,300 12/31/97 9% $63,000
- --------------------------------------------------------------------------------------------------------------
B-1 16,000 2/1/98 23% $160,000
- --------------------------------------------------------------------------------------------------------------
C 13,500 6/1/98 19% $135,000
- --------------------------------------------------------------------------------------------------------------
D 11,900 Lease Execution 17% $119,000
- -------------=================================================================================================
TOTAL 70,400 100% $704,000
- --------------------------------------------------------------------------------------------------------------
==============================================================================================================
*NOTE: Tenant to pay 50% of Area D commencing 30 days from Lease execution and
- --------------------------------------------------------------------------------------------------------------
balance upon full possession as follows
- --------------------------------------------------------------------------------------------------------------
Tenant Share $59,500 30 days
- --------------------------------------------------------------------------------------------------------------
$59,500 6/1/98
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
SECTION SQUARE AREA Furniture (Fixtures Remain)
- --------------------------------------------------------------------------------------------------------------
BREAKDOWNS FEET
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
A 11,000 Claims Remain (Workstations & Panels)
- --------------------------------------------------------------------------------------------------------------
A-1 2,400 Payroll Remain (Workstations & Panels)
- --------------------------------------------------------------------------------------------------------------
A-1 2,300 File & Mail Empty/Remove verticals by 2/1/98
- --------------------------------------------------------------------------------------------------------------
A-1 3,000 Human Resources Remain (Workstations & Panels)
- --------------------------------------------------------------------------------------------------------------
A-2 4,000 Purchasing Landlord Option
- --------------------------------------------------------------------------------------------------------------
subtotal 22,700
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
B 3,600 Quality Control Landlord Option
- --------------------------------------------------------------------------------------------------------------
B 2,700 M.I.S. Landlord Option
- --------------------------------------------------------------------------------------------------------------
B-1 13,000 Executive Landlord Option
- --------------------------------------------------------------------------------------------------------------
B-1 3,000 LWC Landlord Option
- --------------------------------------------------------------------------------------------------------------
subtotal 22,300
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
C 9,500 Finance Landlord Option
- --------------------------------------------------------------------------------------------------------------
2,500 Training Landlord Option
- --------------------------------------------------------------------------------------------------------------
1,500 1/2 Board/Media Room Landlord Option
- --------------------------------------------------------------------------------------------------------------
subtotal 13,500
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
D (Shared)
- --------------------------------------------------------------------------------------------------------------
Hallways 4,000
- --------------------------------------------------------------------------------------------------------------
Cafeteria 4,100 Remain (Chairs, Tables, Equipment)
- --------------------------------------------------------------------------------------------------------------
Reception 800 Landlord Option
- --------------------------------------------------------------------------------------------------------------
Computer 1,200 Remain Floors, Lieberts, UPS (excl. Phone/MIS)
- --------------------------------------------------------------------------------------------------------------
Board/1/2
Media Room 1,500 Landlord Option
- --------------------------------------------------------------------------------------------------------------
Loading 300 Remain
- --------------------------------------------------------------------------------------------------------------
subtotal 11,900
- --------------------------------------------------------------------------------------------------------------
TOTAL 70,400
==============================================================================================================
</TABLE>
<PAGE>
EXHIBIT D
LEASE COMMENCEMENT LETTER
EAGLE INSURANCE COMPANY
[address]
_____________, 19__
The NPD Group, Inc.
900 West Shore Road
Port Washington, NY 11050
Attention: _____________
Re: Lease dated August __, 1997 by and between Eagle Insurance
Company, Landlord, and The NPD Group, Inc., Tenant (the
"Lease").
Dear Sir or Madam:
We wish to confirm that the Term Commencement Date of the Lease is
__________, 1997, and that the Expiration Date is ____________, 20__.
If the above accurately reflects your understanding of the Term
Commencement Date and the Expiration Date, kindly countersign this letter where
indicated below and return the same to us at the above address.
Sincerely,
-------------------------
Name:
Title:
AGREED AND CONSENTED TO:
[TENANT]
By:
--------------------
Name:
Title:
Date
--------------------
<PAGE>
Exhibit 10.5.2
LEASE AGREEMENT
THIS LEASE AGREEMENT ("LEASE AGREEMENT"), made and entered into this 16th
day of May, 1997, by and between CARRIAGE HOUSE ASSOCIATES LIMITED PARTNERSHIP,
a Georgia limited partnership (hereinafter referred to as "Lessor"), and
RELEVANTKNOWLEDGE, INC. a Delaware Corporation (hereinafter referred to as
"Lessee").
W I T N E S S E T H:
1. Description of Premises
Lessor, in consideration of the covenants and agreements to be performed
by Lessee, and upon the terms and conditions hereinafter stated, does hereby
rent and lease unto Lessee, and Lessee does hereby rent and lease from Lessor,
that certain space (the "Demised Premises") known as Suite Number G-1 on the
Ground Floor and Suite Number 107 on the First Floor of the Carriage Works
Building (hereinafter referred to as "Building") containing approximately 7586
and 2889 rentable square feet respectively, said Building being located at 530
Means Street, in Atlanta, Fulton County, Georgia on that tract of land more
particularly described in "Exhibit A" attached hereto and by this reference made
a part hereof, with no easement for light or air included in the Demised
Premises, or being granted hereunder. Lessor hereby grants to Lessee the
non-exclusive right to use all common areas in and around the Building, subject
to payment of any applicable user fees, if any, and any rules and regulations
imposed by Lessor.
2. Term
Lessee takes and accepts from Lessor the Demised Premises upon the terms
and conditions herein contained and in their present condition and as suited for
the use intended by Lessee, to have and to hold the same for a term (the "Lease
Term") beginning on the date (the "Commencement Date") as verified by full
execution of a Lease Commencement Date Agreement attached hereto as Exhibit "C",
which shall be thirty (30) days from the date on which the Lessor delivers keys
to the Demised Premises to Lessee, and ending at midnight upon the last day of
the 36th consecutive calendar month thereafter (the "Termination Date") unless
sooner terminated as herein provided. In the event the Termination Date shall
occur on a Saturday, Sunday or national holiday the Lease Term shall be extended
to midnight of the next business day.
3. Possession
Acceptance of the keys to the Demised Premises by Lessee shall be deemed
conclusively to establish that the Demised Premises are in good and satisfactory
condition and are suitable for Lessee's intended use. Lessee may not take
possession of the Demised Premises for the purpose of conducting its business
operations prior to having demonstrated to Lessor's reasonable satisfaction,
including necessary, independent supporting data, that Lessee's capital in
Common Stock or other series of stock as Lessor may not reasonably object to is
not less than Two Million, Four Hundred, Twenty Eight Thousand and Five Hundred
Dollars ($2,428,500). Lessee shall be allowed to enter the Demised Premises for
the purpose of making or altering leasehold improvements prior to having
demonstrated its required capitalization.
4. Base Rent
Subject to Paragraph 5 below, Lessee shall pay to Lessor as rent, in legal
tender of the United States, in the manner hereinafter provided, annual rental
of One hundred and two thousand, four hundred and eleven and 00/100 Dollars
($102,411.00) for Suite G-1 and Forty-four thousand, seven hundred seventy nine
and 50/100 Dollars ($44,779.5O) for Suite 107 (the Base Rent together with any
additional rent payable under the Lease, hereinafter is referred to as "Rent"),
payable in equal monthly installments of Eight thousand, five hundred,
thirty-four and 25/100 Dollars ($8,534.25) and Three thousand, seven hundred,
thirty one and 63/100 Dollars, ($3,731.63) respectively, in advance on the first
day of every calendar month during the Lease Term, without offset or deduction
of any kind. A prorated monthly installment, based on the number of days within
the month, shall be paid in advance for any fraction of a month if the Lease
Term shall begin on any day except the first day or shall be terminated on any
day except the last day of the month.
5. Rent Escalation
As used in this Section 5, the term "Lease Year" shall mean the twelve
month period commencing on the Commencement Date which shall be the "first Lease
Year" for the purposes of determining Rent escalations, and each successive
twelve month period thereafter during the Lease Term. The term "Subsequent Year"
shall mean any Lease Year of the Lease Term following the first Lease Year. Base
Rent for each Subsequent Year shall be increased at the rate of four percent
(4%) per annum on the first day of each Subsequent Year throughout the Lease
Term (including any option periods).
Page 1 of 10 Pages
<PAGE>
6. Payments
All payments of rent, additional rent and other payments to be made to
Lessor shall be made as and when due in accordance with the terms of the Lease
and shall be payable to Lessor or as Lessor may otherwise designate by written
notice. All such payments shall be mailed or delivered to Lessor's principal
office at Suite 300, 1900 Emery Street, NW, Atlanta, Georgia 30318 Attention:
Property Management or at such other place as Lessor may designate from time to
time in writing. If mailed, all payments shall be mailed in sufficient time and
with adequate postage thereon to be received in Lessor's account by no later
than the due date for such payment. Lessee agrees to pay to Lessor Twenty
Dollars ($20.00) for each check presented to Lessor in payment of any obligation
of Lessee which is not paid by the bank on which it is drawn, together with
interest from and after the due date for such payment at the rate of 18% per
annum on the amount due.
7. Late Charges
Any rental or other amounts payable to Lessor under this Lease Agreement
shall incur a monthly service charge at the rate of 18% per annum from and after
the due date for such payment, if not paid by the fifth day of the month for
which such rent is due, or by the due date specified on any invoices from Lessor
for any other amounts payable hereunder. In no event shall the rate of interest
payable on any late payment exceed the legal limits for such interest
enforceable under applicable law.
8. Use Rules
The Demised Premises shall be used for executive, general administrative
and office space purposes and no other purposes and in accordance with the Rules
and Regulations attached hereto and made a part hereof and all laws and
ordinances (federal, state, county or municipal, including, without limitation,
environmental) as well as applicable orders and requirements. Lessee covenants
and agrees to abide by said Rules and Regulations in all respects as now set
forth and attached hereto or as hereafter promulgated by Lessor. Lessor shall
have the right at all times during the Lease Term to publish and promulgate and
thereafter enforce such rules and regulations or changes in the existing Rules
and Regulations as it may reasonably deem necessary in its sole discretion to
protect the tenantability, safety, operation and welfare of the Demised Premises
and of the Building or buildings of which the Demised Premises are a part.
Lessee's use, as described by Lessee to Lessor, does not violate any use
restrictions contemplated hereunder.
9. Repairs & Improvements by Lessor
(a) Lessor shall not be required to make any repairs or improvements to
the Demised Premises except structural repairs necessary for safety and
tenantability. Lessee shall make no alterations in, or additions to, the Demised
Premises without first obtaining, in writing, Lessor's consent for such
alterations or additions. All such alterations or additions shall be at the sole
cost and expense of Lessee and shall become a part of the Demised Premises and
shall be the property of Lessor.
(b) Lessor shall keep the Building and all common areas pertaining thereto
in proper repair according to the standards of comparable office buildings in
the Atlanta area. Lessor agrees to indemnify and hold harmless Lessee from
willful misconduct or gross negligence of Lessor, its agents or authorized
employees.
(c) Lessor agrees to take possession of the Demised Premises in its
current condition on an "as-is" basis with no contribution to Lessee's
improvements by Lessor. Any improvements to the Demised Premises made by Lessee
shall be undertaken only after written approval of such improvements by Lessor,
such approval not to be unreasonably withheld.
10. Repairs by Lessee
(a) Lessee covenants and agrees that it will take good care of the Demised
Premises, its fixtures and appurtenances, and suffer no waste or injury thereto
and keep and maintain same in good and clean condition, reasonable wear and tear
excepted.
(b) Lessee shall be liable for and shall hold Lessor harmless in respect
of: damage or injury to Lessor, Demised Premises, and property or persons of
Lessor's or other lessees, or anyone else, if due to wrongful act or neglect of
Lessee, or Lessee's agents, employees, licensees or invitees. Lessee shall use
its best efforts to at once report, in writing or by verbal notice to Lessor any
defective or dangerous condition known to Lessee and not otherwise known to
Lessor. Failure to so report any defective or dangerous condition known to
Lessee which should have been reported to Lessor and could not have been known
to Lessor except by report from Lessee shall make Lessee responsible and liable
for damages resulting from such defective condition.
11. Lessor's Right of Entry
Lessor shall retain duplicate keys to all doors of the Demised Premises
and Lessor and its agents, employees and independent contractors shall have the
right to enter the Demised Premises, upon twenty-four (24) hours prior written
notice, if possible, which notice shall not be required in the case of an
emergency, at reasonable hours to inspect and examine same, to make repairs,
additions, alterations, and improvements, to exhibit the Demised Premises to
prospective purchasers or lessees (provided that Lessor shall not exhibit the
Demised Premises to prospective lessees except during the last 180 days of the
Lease Term) and to inspect the Demised Premises to ascertain that Lessee is
complying with all of its covenants and obligations hereunder, all without being
liable to Lessee in any manner whatsoever for any damages arising therefrom
unless caused by Lessor's or Lessor's agents gross negligence. During such time
as such work as being carried on in or about the Demised Premises, the rent
provided herein shall not abate, and Lessee waives any claim or cause of action
against Lessor for damages by reason of interruption of Lessee's business or
loss of profits therefrom because of the execution of any such work or any part
thereof. Notwithstanding anything to the contrary contained in Article 11 of
this lease, if Lessee's
Page 2 of 10 Pages
<PAGE>
use and occupancy of the Demised Premises are substantially disrupted by any
repairs, additions, alterations, or improvements made by Lessor so that Lessee
is unable to operate its business therein for a period exceeding five (5)
consecutive business days, then Lessee shall thereafter be entitled to an
abatement of Base Rent until such work by Lessor is completed. Lessor shall
perform such work in a manner which shall minimize interference with Lessee's
operations within the Demised Premises provided such manner of performance shall
not increase the cost of such work.
12. Default
(a) The following events shall be deemed to be events of default by Lessee
under this Lease Agreement: (i) Lessee shall fail to pay any installment of Base
Rent additional rent, or any other charge or assessment against Lessee pursuant
to the terms hereof when due; (ii) Lessee shall fail to comply in every material
respect with any term, provision, covenant or warranty made under this Lease
Agreement by Lessee, other then the payment of the Base Rent or additional rent
or any other charge or assessment payable by Lessee, and shall not cure such
failure within fifteen (15) days after notice thereof to Lessee or if such
failure is not capable of being cured within 15 days, commence efforts to cure
within 15 days and pursue such efforts diligently to completion within 60 days;
(iii) Lessee or any guarantor of the Lease Agreement shall become insolvent, or
shall make a transfer in fraud of creditors or shall make an assignment other
than a collateral assignment in a financing transaction for the benefit of
creditors; (iv) Lessee or any guarantor of this Lease Agreement shall file a
petition under any Section or Chapter of the Federal Bankruptcy Code, as
amended, or under any similar law or statute of the United States or any State
thereof, or there shall be filed against the Lessee or any guarantor of this
Lease Agreement a petition in bankruptcy or insolvency or a similar proceeding
which is not dismissed within 90 days after Lessee receives notice thereof, or
Lessee or any guarantor shall be adjudged bankrupt or insolvent in proceedings
filed against Lessee or any such guarantor; (v) a receiver or trustee shall be
appointed for the Demised Promises or for all or substantially all of the assets
of Lessee or of any guarantor of this Lease Agreement; (vi) Lessee shall abandon
or vacate all or any portion of the Demised Premises or fail to take possession
thereof as provided in this Lease Agreement; or (vii) Lessee shall do, or permit
to be done anything which creates a lien upon the Demised Premises which lien is
not removed by payment or bond within 15 days after Lessee receives notice
thereof.
(b) Upon the occurrence of any of the aforesaid events of default, Lessor
shall have the option to pursue any one or more of the following remedies
without any notice or demand whatsoever: (i) terminate this Lease Agreement, in
which event Lessee shall immediately surrender the Demised Premises to Lessor
and if Lessee fails to do so, Lessor may without prejudice to any other remedy
which it may have for possession or arrearage in rent, enter upon and take
possession of the Demised Premises and expel or remove Lessee and any other
person who may be occupying said Demised Premises or any part thereof, by force,
if necessary, as permitted by Georgia law without being liable for prosecution
or any claim of damages therefor; Lessee hereby agreeing to pay to Lessor on
demand the amount of all Base Rent and other charges accrued through the date of
termination; (ii) enter upon and take possession of the Demised Premises and
expel or remove Lessee and any other person who may be occupying said Demised
Premises or any part thereof, by force, if necessary, as permitted by Georgia
law, without being liable for prosecution or any claim of damages thereof and,
if Lessor so elects, relet the Demised Premises on such terms as Lessor may
reasonably deem advisable, without advertisement, and by private negotiations
provided that in such event Lessor shall use reasonable efforts to relet the
Demised Premises at then-prevailing rental rates for comparable space in the
Building, and receive the rent therefor, Lessee hereby agreeing to pay to Lessor
the deficiency, if any, between all rent reserved hereunder and the total rental
applicable to the Lease Term hereof obtained by Lessor re-letting, and Lessee
shall be liable for Lessor's expenses in restoring the Demised Premises and all
costs incident to such re-letting; (iii) enter upon the Demised Premises by
force if necessary as permitted by Georgia law, without being liable for
prosecution or any claim of damages therefor, and do whatever Lessee is
obligated to do under the terms of this Lease Agreement; and Lessee agrees to
reimburse Lessor on demand for any expenses including, without limitation,
reasonable attorneys fees which Lessor may incur in thus effecting compliance
with Lessee's obligations under this Lease Agreement and Lessee further agrees
that Lessor shall not be liable for any damages resulting to Lessee from such
action, whether caused by negligence of Lessor or otherwise.
(c) Pursuit of any of the foregoing remedies shall not preclude pursuit of
any other remedy herein provided or any other remedy provided by law or at
equity, nor shall pursuit of any remedy herein constitute an election of
remedies thereby excluding the later election of an alternate remedy, or a
forfeiture or waiver of any Base Rent, additional rent or other charges and
assessments payable by Lessee and due to Lessor hereunder or of any damages
accruing to Lessor by reason of violation of any of the terms, covenants,
warranties and provisions herein contained. No action taken by or on behalf of
Lessor shall be construed to be an acceptance of a surrender of this Lease
Agreement. Forbearance by Lessor to enforce one or more of the remedies herein
provided upon an event of default shall not be deemed or construed to constitute
a waiver of such default. In determining the amount of loss or damage which
Lessor may suffer by reason of termination of this Lease Agreement or the
deficiency arising by reason of any reletting of the Demised Premises by Lessor
as above provided, allowance shall be made for expense of repossession.
Page 3 of 10 Pages
<PAGE>
13. Waiver of Breach
No waiver of any breach of the covenants, warranties, agreements,
provisions or conditions contained in this Lease Agreement shall be construed as
a waiver of said covenant warranty, provision, agreement or condition or of any
subsequent breach thereof, and if any breach shall occur and afterwards be
compromised, settled or adjusted, this Lease Agreement shall continue in full
force and effect as if no breach had occurred.
14. Assignment and Subletting
Lessee shall not, without the prior written consent of Lessor, which shall
not be unreasonably withheld or delayed (Lessor's consent will take into account
the identity, business reputation, and net worth of the proposed assignee),
assign this Lease or any interest herein or in the Demised Premises, or
mortgage, pledge, encumber, hypothecate or otherwise transfer or sublet the
Demised Premises or any part thereof or permit the use of the Demised Premises
by any party other than Lessee. Lessee shall have the right to make a collateral
assignment of its interest hereunder to a reputable financial institution,
provided such institution shall agree in a form satisfactory to Lessor to assume
all duties and obligations of Lessee in the event that such institution shall
exercise its right under said collateral assignment. Consent to one or more such
transfers or subleases shall not destroy or waive this provision and all
subsequent transfers and subleases shall likewise be made only upon obtaining
the prior written consent of Lessor, sublessees or transferees shall become
directly liable to Lessor for all obligations of Lessee hereunder, without
relieving Lessee (or any guarantor of Lessee's obligations hereunder) of any
liability therefor, and Lessee shall remain obligated for all liability to
Lessor arising under this Lease Agreement during the entire remaining Lease Term
including any extensions thereof, whether or not authorized herein.
Notwithstanding anything to the contrary contained in Article 14 of this Lease,
Lessee shall be permitted, without the necessity of obtaining Lessor's prior
written consent, to assign Lessee's interest hereunder to a parent, subsidiary
or affiliated corporation of Lessee, provided Lessee shall remain liable
hereunder, or to assign Lessee's interest hereunder to the parent, subsidiary,
affiliate or surviving corporation of any merger provided said surviving
corporation shall assume all of Lessee's obligations hereunder and shall have a
net worth not less than the net worth of Lessee immediately prior to the merger.
15. Destruction
(a) If the Demised Premises are partially or totally destroyed by fire or
other casualty insurable under standard fire insurance policies with extended
coverage endorsement so as to become partially or totally untenantable, the same
shall be repaired or rebuilt as speedily as practical under the circumstances at
the expense of the Lessor, unless Lessor elects not to repair or rebuild as
provided in Subparagraph (b) and (c) of this Article 15.
(b) If the Demised Premises are (i) rendered totally untenable by reason
of an occurrence described in Subparagraph (a) or (ii) damaged or destroyed as a
result of a risk which is not insured under standard fire insurance policies
with extended coverage endorsement, or (iii) damaged to such an extent that the
Demised Premises cannot be repaired or rebuilt within 90 days from the date of
such occurrence, or if the Building is damaged in whole or in part (whether or
not the Demised Premises are damaged), to such an extent that the Building
cannot, in Lessor's judgment, be operated economically as an integral unit, then
and in any such events either party may at its option terminate this Lease
Agreement by notice in writing to the other party within sixty (60) days after
the date of such occurrence. Unless either party gives such notice, this Lease
Agreement will remain in full force and effect and Lessor shall repair such
damage at its expense as expeditiously as possible under the circumstances.
(c) If Lessor should elect or be obligated pursuant to Subparagraph (a)
above to repair or rebuild because of any damage or destruction, Lessor's
obligation shall be limited to the original Building and any other work or
improvements which may have been originally performed or installed at Lessor's
expense. If the cost of performing Lessor's obligation exceeds the actual
proceeds of insurance paid or payable to Lessor on account of such casualty,
either party may terminate this Lease Agreement unless Lessee, within fifteen
(15) days after demand therefor, deposits with Lessor a sum of money sufficient
to pay the difference between the cost of repair and the proceeds of the
insurance available for such purpose. Lessee shall replace all work and
improvements not originally installed or performed by Lessor at its expense.
(d) In no event shall either party be liable for any loss or damage
sustained by the other party by reason of casualties mentioned hereinabove or
any other accidental casualty.
16. Removal of Fixtures, Equipment & Effects
Lessee may upon the expiration or termination of the Lease Term or any
renewal thereof, remove all personalty and equipment not attached to the Demised
Premises which it has placed upon the Demised Premises, provided Lessee restores
the Demised Premises to the condition immediately preceding the time of
installation thereof reasonable wear and tear excepted. If Lessee does not
remove all such personalty and equipment, then Lessor within ten (10) days after
the expiration of the Lease Term, shall have the right to notify Lessee to
remove any or all such personalty and equipment and thereupon restore the
Demised Premises to the condition immediately preceding the time of installation
thereof reasonable wear and tear excepted. If Lessee shall fail or refuse to
remove all effects, personalty and equipment from the Demised Premises upon the
expiration or termination of this Lease Agreement for any cause whatsoever,
Lessor may, at its option, remove the same in any manner that Lessor shall
choose and store said effects, equipment and personally without liability for
any loss or damage thereto. Lessee shall pay Lessor on demand any and all
expenses incurred by Lessor in such removal and storage, including, without
limitation, court costs, attorneys fees, and storage charges. Lessor, at its
option, may without notice, sell said effects, equipment and personalty or any
part thereof at public or private sale and without legal process for such price
as Lessor may obtain and apply the proceeds of such sale to any amounts due
under this Lease Agreement from Lessee to Lessor after first paying the expense
incident to the removal, storage and sale of said effects, equipment and
personalty. Any proceeds remaining after payment of all amounts due under this
Lease Agreement and all expenses, including reasonable attorneys
Page 4 of 10 Pages
<PAGE>
fees, incident to the removal, storage and sale of such items shall be paid
Lessee. The covenants and conditions of this Article 18 shall survive any
expiration or termination of this Lease Agreement.
17. Lessor's Lien
Lessor shall at all times have a valid lien upon all of the personal
property of Lessee situated in the Demised Premises to secure payment of Base
Rent additional rent and other sums and charges due hereunder from Lessee to
Lessor and to secure the performance by Lessee of each and all of the covenants,
warranties, agreements and conditions hereof. Said personal property shall not
be removed from the Demised Premises without the consent of Lessor which shall
not be unreasonably withheld or delayed until all arrearage in Base Rent,
additional rent and other charges as well as any and all other sums of money due
hereunder shall first have been paid and discharged and until this Lease
Agreement and all of the covenants, conditions, agreements and provisions hereof
have been fully performed by Lessee, provided, further, that the lien herein
granted may be foreclosed in the manner and form provided by law for the
foreclosure of security instruments or chattel mortgages, or in any other manner
provided by law. Provided that Lessee is not in default of the Lease and
provided that Lessee's payment record with regard to Base Rent and any other
amounts owed pursuant to the Lease indicates timely payment of said Base Rent
and other amounts owed. Lessor agrees, upon the written request of Lessee and no
sooner than 6 months after the Commencement Date, to subordinate its interest in
Lessee's personal property situated in the Demised Premises to any mortgagee of
Lessee involved in the financing of said personal property. Lessor agrees to
execute documents relating to said financing, the form of which must be approved
by Lessor, such approval not to be unreasonably withheld.
18. Services By Lessor
Lessor hereby covenants that, at the proper season, during reasonable
hours (8:00 A.M. to 6:00 P.M. Monday through Friday, 8:00 A.M. to 1:00 P.M.
Saturdays, except holidays observed by national banks in Atlanta, Georgia as
legal holidays) Lessor shall furnish air conditioning and heat in its judgment
sufficient to reasonably heat or cool the Demised Premises, cessation caused by
strike, accident, or reasonable necessity excepted. Lessee shall pay to Lessor
an additional charge at the rate of $45 per hour for each additional hour of air
conditioning and heat requested by Lessee. Lessor shall provide replacement
bulbs for standard building lighting fixtures. All other bulb replacement shall
be the responsibility of Lessee. Lessor will furnish ordinary and customary
janitorial and cleaning services to the Demised Premises, cessation caused by
strike, accident, or reasonable necessity excepted. Lessor will pay the water
rates for water reasonably used on the Demised Premises for common lavatory,
drinking and cleaning purposes. Lessor will provide parking in the existing
parking areas for Lessee, its employees and visitors at no additional charge.
Lessor will provide security services as it deems necessary at no additional
charge to the Lessee. Lessor will furnish electric current to the Demised
Premises, but only for lighting and business machines such as electric
typewriters, personal computers and printers, adding and small calculating
machines and other standard automated office equipment and systems, provided
that Lessee's demand for electric current shall not at any time exceed the
Building's standard capacity of four watts per month per rentable square foot of
space in the Demised Premises without Lessor's prior written consent. Lessee
shall pay to Lessor as additional charges hereunder the costs incurred by Lessor
to furnish any additional electrical current, including the cost of submetering
the Demised Premises. In no event shall Lessee connect any other electrical
distribution system or make any alterations or additions to the electrical
system of the Demised Premises. Lessor shall in no event be liable for damages
from the temporary stoppage of elevator service for service or repair or for the
elevators or any of the fixtures or equipment in the Building or buildings of
which the Demised Premises are a part being temporarily out of repair, or for
injury to person or property caused by any defects in the heating, electric,
elevator, air conditioning equipment or water apparatus, or for any damages
arising out of failure to furnish said heating or air conditioning, water,
elevator, janitorial, or security service, or any other service provided herein
provided that Lessor shall have attempted in good faith to provide such
services. Lessor also reserves the right to interrupt, curtail or suspend the
services required to be furnished by this Article 18 when necessary or advisable
by reason of accident, emergency, mechanical breakdown, the inability to obtain
or prohibitive costs of obtaining sufficient quantities of energy, the
requirement of any authority or for any cause beyond the reasonable control of
Lessor. In the event of disruption of any service required to be furnished by
Lessor hereunder, Lessor shall use its best efforts to restore full service as
soon as reasonably practicable.
19. Attorneys' Fees
In the event of litigation commenced by either Lessor or Lessee to enforce
any obligation of the other party hereunder, all reasonable attorneys' fees and
expenses of the prevailing party in such litigation shall be paid by the party
against whom an adverse final, nonappealable judgment is entered.
20. Time
Time is of the essence of this Lease Agreement and whenever a certain day
is stated for payment or performance of any obligation of Lessee, or Lessor, the
same enters into and becomes a part of the consideration hereof.
21. Subordination & Attornment
(a) Lessee agrees that this Lease Agreement shall be subordinate to any
mortgage now or hereafter encumbering the Demised Premises or the Building or
buildings of which the Demised Premises may be a part or any component thereof,
and to all advances made or hereafter to be made upon the security thereof. The
terms of this provision shall be self-operative and no further instrument of
subordination shall be required by any mortgagee. Lessee, however, upon request
of any party in interest shall execute promptly such instrument or certificates
as may be reasonably required to carry out the
Page 5 of 10 Pages
<PAGE>
intent hereof, whether said instrument is that of Lessor or any other
party in interest, including, without limitation, mortgages.
(b) If any mortgagee elects to have this Lease Agreement superior to its
mortgage and signifies its election in the instrument creating its lien or by
separate recorded instrument, then this Lease Agreement shall be superior to
such mortgage. The term "mortgage" as used herein, includes any deed to secure
debt, deed or trust or security deed and any other instrument creating a lien in
connection with any other method of financing or refinancing. The term
"mortgagee" refers to the holder of the indebtedness secured by a mortgage.
(c) Within ten (10) days after request therefor by Lessor, Lessee agrees
to execute and deliver to Lessor in recordable form an estoppel certificate
addressed to any mortgagee or assignee of Lessor's interest in or purchase of
the Demised Premises or the Building or buildings of which the Demised Premises
may be a part or any part thereof, certifying (if such be the case) that this
Lease Agreement is unmodified and is in full force and effect (and if there have
been modifications, that the same is in full force and effect as modified and
stating said modifications); that there are no defenses or offsets against the
enforcement thereof or stating those claimed by Lessee; and stating the date to
which Base Rent, additional rent and other charges have been paid. Such
certificate shall also include such other information as may reasonably be
required by such mortgagee, proposed mortgagee, assignee, purchaser or Lessor.
(d) In the event any proceedings are brought for the foreclosure of, or in
the event of exercise of the power of sale under, any mortgage made by Lessor
covering the Demised Premises or the Building or buildings of which the Demised
Premises are a part, or in the event of termination of any lease under which
Lessor may hold title, Lessee shall attorn to the purchaser at foreclosure or
under power of sale, or to the assignee or transferee of Lessor's interest or to
the lessor of the Lessor upon such lease termination, as the case may be, and
shall recognize such person as the Lessor under this Lease Agreement provided
such purchaser, assignee, transferee or other party in interest shall agree in a
form reasonably acceptable to Lessee not to disturb Lessee's tenancy hereunder.
Lessee agrees that the institution of any suit, action or other proceeding by
any mortgagee to realize on Lessor's interest in the Demised Premises or the
Building or buildings of which the Demised Premises may be a part pursuant to
the powers granted to a mortgagee under its mortgage, shall not by operation of
law or otherwise, result in the cancellation or termination of the obligations
of the Lessee hereunder. Lessor and Lessee agree that notwithstanding that this
Lease Agreement is expressly subject and subordinate to any mortgages, any
mortgagee, its successors and assigns, or other holder of a mortgage or of a
note secured thereby, may sell the Demised Premises or the Building or buildings
of which the Demised Premises are a part, in the manner provided in the mortgage
and may, at the option of such mortgagee, its successors and assigns, or other
holder of the mortgage or note secured thereby, make such sale of Demised
Premises or Building or buildings of which the Demised Premises are a part
subject to this Lease Agreement. In addition, Lessor and Lessee covenant and
agree that Lessor's right to transfer or assign Lessor's interest in and to the
Demised Premises, or any part or parts thereof, shall be unrestricted, and that
in the event of any such transfer or assignment by Lessor which includes the
Demised Premises, Lessor's obligation to Lessee hereunder shall cease and
desist. Lessee looking only and solely to Lessor's assignee or transferee for
performance thereof, provided, that such assignee or transferee assumes Lessor's
obligations hereunder and agrees to be bound by the terms of this Lease.
22. No Estate
This Lease Agreement shall create the relationship of landlord and tenant
only between Lessor and Lessee and no estate shall pass out of Lessor. Lessee
shall have only a leasehold interest, not subject to lien, levy and sale and not
assignable in whole or in part by Lessee except as provided herein. Lessor
acknowledges that Lessee's interest hereunder is not lienable and agrees that
any asserted lien claim thereon shall not constitute an event of default
hereunder.
23. Cumulative Rights
All rights, powers and privileges conferred hereunder upon the parties
hereto shall be cumulative to, but not restrictive of, or in lieu of those
conferred by law.
24. Holding Over
If Lessee remains in possession after expiration or termination of the
Lease Term with or without Lessor's written consent, Lessee shall become a
tenant-at-sufferance, and there shall be no renewal of this Lease Agreement by
operation of law. During the period of any such holding over, all provisions of
this Lease Agreement shall be and remain in effect except that the monthly
rental shall be double the amount of rent (including any adjustments as provided
herein) payable for the last full calendar month of the Lease Term including
renewals or extensions. The inclusion of the preceding sentence in this Lease
Agreement shall not be construed as Lessor's consent for Lessee to hold over.
25. Surrender of Premises
Upon the expiration or other termination of this Lease Agreement Lessee
shall quit and surrender to Lessor the Demised Premises, broom clean in the same
condition as at the commencement of the original Lease Term, reasonable wear and
tear only excepted, and Lessee shall remove all of its personalty from the
Demised Premises. Lessee's obligation to observe or perform this covenant shall
survive the expiration or other termination of this Lease Agreement.
26. Notices
All notices required or permitted to be given hereunder shall be in
writing and shall be deemed given, whether actually received or not, on the
third business day after such notice is hand-delivered or deposited, postage
prepaid, in the United States Mail, certified, return receipt requested, and
addressed to
Page 6 of 10 Pages
<PAGE>
Lessor or Lessee at their respective addresses set forth below or at such other
address as either party shall have theretofore given to the other by notice as
herein provided.
If to Lessor Carriage House Associates Limited Partnership
C/O Winter Properties, Inc.
1900 Emery Street, NW
Suite 300
Atlanta, Georgia 30318
If to Lessee: RelevantKnowledge, Inc.
Suite G-1
530 Means Street, NW
Atlanta, Georgia 30318 - 5793
Attention: Jeffrey C. Levy, CEO
With a copy to: Peter M. Hartman
Altman, Krilzer & Levick, P.C.
8400 Powers Ferry Road, NW, Suite 224
Atlanta, Georgia 30339
27. Damage or Theft of Personal Property
All personal property brought into the Demised Premises by Lessee, or
Lessee's employees or business visitors, shall be at the risk of Lessee only,
and Lessor shall not be liable for the theft thereof or any damage thereto
occasioned by any act of co-lessees, occupants, invitees or other users of the
Building or buildings of which the Demised Premises may be a part or any other
person. Lessor shall not at any time be liable for damage to any property in or
upon the Demised Premises, which results from gas, smoke, water, rain, ice or
snow which issues or leaks from or forms upon any part of the Building or
buildings of which the Demised Premises may be a part, or from the pipes or
plumbing work of the same, or from any other place whatsoever, unless such
damage results from defects or conditions of which Lessee has given Lessor
written notice and Lessor has failed to perform Lessor's obligation to correct
same in a prompt and timely manner.
28. Eminent Domain
(a) If title to any part of the Demised Premises is taken for any public
or quasi-public use by virtue of the exercise of the power of eminent domain or
private purchase in lieu thereof, or if title to so much of the Building
(greater than 10%) or buildings of which the Building may be a part is taken
that a reasonable amount of reconstruction thereof will not in Lessor's sole
discretion result in the Demised Premises, or the Building or such other
buildings of which the Demised Premises are a part, being reasonably suitable
for use for the purpose for which they are designed, then, in either event, this
Lease Agreement shall terminate, at the option of Lessor, on the date that the
condemning authority actually takes possession to the part so condemned or
purchased. If title to the whole of the Demised Premises or such Building or
buildings is taken by eminent domain or private purchase in lieu thereof, then
this Lease Agreement shall terminate as of the date possession is so taken by
the condemning authority.
(b) If this Lease Agreement is terminated under the provisions of this
Article 28, rent shall be apportioned and adjusted as of the date of
termination. Lessee shall have no claim against Lessor or against the condemning
authority for the value of any leasehold estate or for the value of the
unexpired Lease Term. However, Lessee may claim any unamortized costs of
leasehold improvements made by Lessee (excluding those costs paid by the
construction allowance hereunder) and any relocation expenses recoverable under
applicable law.
(c) If there is a partial taking of the Demised Premises, the Building or
such other buildings and this Lease Agreement is not thereupon terminated under
the provisions of this Article 28, then this Lease Agreement shall remain in
full force and effect, and Lessor shall, within a reasonable time thereafter,
repair and restore the remaining portion of the Demised Premises, should they be
affected, to the extent necessary to render the same tenantable, and shall
repair or reconstruct the remaining portion of the Building to the extent
necessary to make the same a complete architectural unit; provided that such
work shall not exceed the scope of the work required to be done by Lessor in
originally constructing such Building or the Demised Premises. Lessor shall not
be required to expend more than the net proceeds of the condemnation award which
are paid to Lessor in complying with its obligations under this Subparagraph
28(c).
(d) All compensation awarded or paid upon a total or partial taking of the
Demised Premises or the Building or such other buildings shall belong to and be
the property of Lessor without any participation by Lessee (except as otherwise
provided in subparagraph (b) hereinabove or as hereafter provided). Nothing
herein shall be construed to preclude Lessee from prosecuting any claim directly
against the condemning authority from loss of business, damage to, and cost of
removal of, trade fixtures, furniture and other personal property belonging to
Lessee; provided, however, that no such claim shall diminish or adversely affect
Lessor's award.
(e) After any partial taking of the Demised Premises which does not result
in a termination of this Lease Agreement, the Base Rent (as escalated) for the
remainder of the Lease Term shall be reduced by the same percentage as the floor
area of the space taken bears to the total floor area originally in the Demised
Premises, and any other charges provided for hereunder shall be equitably
adjusted.
Page 7 of 10 Pages
<PAGE>
29. Parties
The term "Lessor", as used in this Lease Agreement, shall include Lessor
and its assigns and successors in title to the Demised Premises. The term
"Lessee" shall include Lessee and its heirs, legal representatives and
successors, and shall also include Lessee's assignees and sublessees, if this
Lease Agreement shall be validly assigned or the Demised Premises validly sublet
for the balance of the Lease Term or any renewals or extensions thereof.
30. Liability of Lessee
Lessee hereby indemnifies Lessor from and agrees to hold Lessor harmless
against, any and all liability, loss, cost, damage or expense arising from
injury to Lessee or Lessee's servants or employees or any other invitees or
business visitor or person while in or upon the Demised Premises unless same
results from the negligence or willful misconduct of Lessor. Lessee hereby
indemnifies Lessor and agrees to hold Lessor harmless from and against all
claims for damages to persons or property arising by reason of the negligence or
willful misconduct of Lessee in the use or occupancy of the Demised Premises,
including all attorney's fees and other expenses incurred by Lessor as a result
thereof. Lessee hereby further indemnifies Lessor and agrees to hold Lessor
harmless in connection with damage or injury to Lessor, the Demised Premises, or
property or persons of Lessor's other lessees or any other party or parties,
person or persons, if due to wrongful act or neglect of Lessee, or any of its
employees, servants, agents, representatives or invitees, or otherwise occurring
in connection with any default of Lessee hereunder. The provisions of this
Article 30 shall survive any termination of this Lease Agreement.
31. Relocation of the Premises
There shall be no relocation of the Demised Premises unless otherwise
agreed to by Lessor and Lessee in writing.
32. Force Majeure
In the event of strike, lockout, labor trouble, civil commotion, Act of
God, or any other cause beyond either party's control (collectively "force
majeure") resulting in such party's inability or delay to supply the services or
perform the other obligations required hereunder, this Lease Agreement shall not
terminate and such performance shall be excused for a reasonable time given the
nature of the cause. Nothing contained herein shall be construed to provide for
an abatement of Base Rent, additional rent or any other charge or sum due and
payable by Lessee hereunder.
33. Lessor's Liability
Lessor shall have no personal liability with respect to any of the
provisions of this Lease Agreement. If Lessor is in default with respect to its
obligations under this Lease Agreement, Lessee shall look solely to the equity
of Lessor in and to the Building for satisfaction of Lessee's remedies, if any.
It is expressly understood and agreed that Lessor's liability under the terms of
this Lease Agreement shall in no event exceed the amount of its interest in and
to the Building.
34. Security Deposit
As security for the faithful performance by Lessee throughout the Lease
Term of all the terms and conditions of the Lease Agreement on the part of
Lessee to be performed, Lessee has deposited with Lessor the sum equal to
$12,265.88. Such amount shall be returned to Lessee, without interest, on the
day set forth for the expiration of the Lease Term, provided Lessee has fully
and faithfully observed and performed all of the terms, covenants, agreements,
warranties, and conditions hereof. Lessor shall have the right to apply all or
any part of said deposit toward cure of any default of Lessee.
35. Submission of Lease
The submission of this Lease Agreement for examination does not constitute
an offer to lease and this Lease Agreement shall be effective only upon
execution hereof by Lessor and Lessee.
36. Severability
If any clause or provision of the Lease Agreement is illegal, invalid or
unenforceable under present or future laws, the remainder of the Lease Agreement
shall not be affected thereby, and in lieu of each clause or provision of this
Lease Agreement which is illegal, invalid or unenforceable, there shall be added
as a part of this Lease Agreement a clause or provision as nearly identical to
the said clause or provision as may be legal, valid and enforceable.
37. Guaranty
The undersigned guarantors hereby jointly and severally irrevocably
guarantee the payment of the rent and all other sums to be paid by Lessee under
and pursuant to the Lease Agreement, as well as the proper performance by Lessee
of all corresponding terms, conditions, covenants and agreements to be performed
by Lessee thereunder, and the undersigned jointly and severally promise to pay
all of Lessor's expenses, including, but not limited to, reasonable attorneys'
fees, incurred in enforcing any obligations of Lessee under the Lease Agreement
or incurred in enforcing the Lease Agreement or this guaranty. The undersigned
hereby agree that Lessor (without in any way limiting or relieving the liability
of the undersigned hereunder) may at any time to time, and in reliance on this
guaranty, without notice to or further consent from the undersigned, retain,
obtain or release any collateral securing any of Lessee's obligations under the
Lease Agreement, retain, obtain or release any party primarily or secondarily
liable with respect to any of Lessee's obligations under the Lease Agreement and
extend, renew or modify any
Page 8 of 10 Pages
<PAGE>
of Lessee's obligations under this Lease Agreement, regardless of whether or not
said extension, renewal or modification might be deemed to increase the risk of
the undersigned hereunder. The undersigned expressly waive the right to require
Lessor to take action against Lessee as provided for in O.C.G.A. ss.10-7-24, as
amended, and further waive and renounce any and all homestead or exemption
rights they or their families may have under or by virtue of the constitution or
laws of Georgia, any other State or United States, as against the liability
hereby created.
38. Entire Agreement
This Lease Agreement contains the entire agreement of the parties and no
representations, inducements, promises or agreements, oral or otherwise between
the parties not embodied herein shall be of any force or effect. No failure of
either party to exercise any power given such party hereunder, or to insist upon
strict compliance with any obligation hereunder, and no custom or practice of
the parties at variance with the terms hereof, shall constitute a waiver of
either party's right to demand exact compliance with the terms hereof.
39. Obligation to Insure
On or before the Commencement Date and thereafter during the Lease Term,
or any renewals or extensions thereof, on or before the first day of the first
month of each Lease Year, Lessee shall deliver to Lessor a certificate of a
policy or renewal policy of public liability insurance insuring Lessor and
Lessee, and their officers, employees, agents and representatives against loss
or damage arising from injury to persons or property occurring within the
Demised Premises, which policy, or renewal policy, shall (a) provide that it is
noncancellable without thirty (30) days prior written notice to Lessor, (b) have
such limits as may be satisfactory to Lessor, (c) name Lessor as an additional
Insured; and (d) be accompanied by proof of payment of the premium therefor.
Lessor shall maintain casualty and public liability insurance with such
coverages and limits as Lessor deems reasonable and appropriate. Lessee's and
Lessor's insurance required hereunder is more specifically described in Exhibit
"D" attached hereto and made a part hereof.
40. Tax Escalation
Lessee shall pay upon demand, as additional rent during the term of this
lease and any extension or renewal thereof, the amount by which all taxes
(including, but not limited to, ad velorem taxes, special assessments and any
other government charges) on the Demised Premises for each tax year exceeds all
taxes on the Demised Premises for the year 1997 (hereafter referred to as "Base
Year"). Lessor has represented to Lessee that pursuant to Georgia law as of the
date of this lease the taxes payable for the building should remain constant
until January 1, 2000. In the event the taxes payable for the Building increase
prior to January 1, 2000 due to a change in legislation or new legislation
Lessee shall pay its prorated share of all taxes from the effective date of such
increase. In the event the Demised Premises are less than the entire property
assessed for such taxes for any such tax year, then the tax for any such year
applicable to the Demised Premises shall be determined by proration on the basis
that the rentable floor area of the Demised Premises set forth in Paragraph 1
hereof bears to the rentable floor area of the entire property assessed. If the
final year of the Lease Term fails to coincide with the tax year, then any
excess for the tax year during which the term ends shall be reduced by the
prorata part of such tax year beyond the Lease Term. If such taxes for the year
in which the Lease Agreement terminates are not ascertainable before payment of
the last month's rental, then the amount of such taxes assessed against the
property for the previous tax year shall be used as the basis for determining
the prorata share, if any, to be paid by Lessee for that portion of the last
lease year. Lessee's prorata portion of increased taxes, as provided herein,
shall be payable within fifteen (15) days after receipt of notice from Lessor as
to the amount due.
41. Renewal Option
Provided Lessee is not in default in the performance of its covenants
under the Lease, Lessee is hereby granted one (1) option, "Renewal Option" to
renew the term of the Lease for an additional period of three (3) consecutive
years, "Renewal Option Term". Said Renewal Option Term shall commence upon the
expiration of the initial term of the Lease, and shall expire thirty-six (36)
months thereafter. Lessee shall exercise the Renewal Option by delivering
written notice of such election to Lessor at least one hundred eighty (180) days
prior to expiration of the initial Lease Term. The renewal of the Lease shall be
upon the same terms and conditions of the Lease, except for the following:
i) The base rent for the Renewal Option Term shall be calculated based on
the prevailing Market Base Rental Rate (see definition below) no more than
six months prior to the Renewal Option Term.
"Market Base Rental Rate" shall be determined as the
prevailing gross rental rate then being charged in office
buildings in the Atlanta, Georgia metropolitan area for space
comparable to the Lessee's existing Premises (taking into
consideration use, location and/or floor level within the
applicable building, the definition of rentable area,
leasehold improvements provided, remodeling credits or
allowances granted, quality, age and location of applicable
building, rental concessions, size of tenant, relative
operating expenses, relative services being provided, etc. It
is hereby agreed that bona fide written offers to lease
comparable space located elsewhere in the Building to or from
third parties (at arms length) may be used by Lessor as an
indication of "Market Base Rental Rate".
ii) Lessee shall have no option to renew this Lease beyond the expiration of
the Renewal Option Term.
Page 9 of 10 Pages
<PAGE>
42. Prohibited Use
Lessee agrees that the Demised Premises may not be used for any business
devoted exclusively to creating or owning consumer media internet web sites for
local, city or national specialty sites the revenues from which are derived
wholly from advertising and/or subscription income.
43. Headings
The use of headings herein is solely for the convenience of indexing the
various paragraphs hereof and shall in no event be considered in construing or
interpreting any provision of this Lease Agreement.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals as
of the day and year first above written.
"LESSOR"
CARRIAGE HOUSE ASSOCIATES
LIMITED PARTNERSHIP
By: /s/ [ILLEGIBLE]
---------------------------
Its: Manager
---------------------------
"LESSEE"
RELEVANTKNOWLEDGE, INC.
By: /s/ [ILLEGIBLE]
---------------------------
Its: CEO
Attest: /s/ [ILLEGIBLE]
---------------------------
Its: President
---------------------------
"GUARANTORS"
N/A
Witness by: /s/ Richard B. Bell
(Rev. 04/25/97)
Page 10 of 10 Pages
<PAGE>
EXHIBIT A
Tract Legal Description
All that tract or parcel of land lying and being in Land Lot 81 of the 14th
District of Fulton County, Georgia, and also the City of Atlanta, Georgia, being
more particularly described as follows:
Beginning at the point of intersection of the southerly right-of-way line of
Bankhead Avenue (46' R/W) with the southwesterly right-of-way line of Means
Street (30' R/W), said point also being the TRUE POINT OF BEGINNING; thence,
continuing along said right-of-way of Means Street, S. 630(degrees) 15' 41" E. a
distance of 66.59 feet to a point;
thence, S. 63(degrees) 54' 56" E. a. distance of 141.18 feet to a point;
thence, S. 62(degrees) 54' 00" E. a distance of 45.57 feet to a point;
thence, S. 60(degrees) 35' 46" E. a distance of 167.51 feet to a point;
thence, S. 60(degrees) 43' 54" E. a distance of 79.60 feet to a point;
thence, S. 68(degrees) 27' 04" E. a distance of 57.74 feet to a point;
thence, S. 69(degrees) 34' 35" E. a distance of 23.35 feet to a point;
thence, S. 69(degrees) 34' 35" E. a distance of 79.41 feet to a point;
thence, S. 27(degrees) 25' 27" W. a distance of 190.82 feet to a point on the
northeasterly right-of-way of Southern Railroad; thence continuing along said
right-of-way of Southern Railroad, northwesterly an arc distance of 78.84 feet
to a point, said arc being subtended by a chord of N. 74(degrees) 32' 28" W. a
chord distance of 78.83 feet; thence an arc distance of 80.99 feet to a point,
said arc being subtended by a chord of N. 71(degrees) 17' 19" W. a chord
distance of 80.97 feet; thence, northwesterly an arc distance of 348.89 feet to
a point, said arc being subtended by a chord of N. 61(degrees) 29' 35" W. a
chord distance of 348.00 feet; thence, northwesterly an arc distance of
<PAGE>
100.40 feet to a point, said arc being subtended by a chord of N. 51(degrees)
32' 19" W. a chord distance of 100.37 feet; thence, northwesterly an arc
distance of 238.21 feet to a point, said arc being subtended by a chord of N.
43(degrees) 38' 06" W. a chord distance of 237.82 feet; thence, N. 79(degrees)
48' 53" E. a distance of 5.00 feet to a point; thence, N. 38(degrees) 18' 46" W.
a distance of 40.00 feet to a point on the southerly right-of-way line of
Bankhead Avenue (46' R/W); thence, continuing along said right-of-way, S.
84(degrees) 51' 44" E. a distance of 217,60 feet to a point, said point also
being the TRUE POINT OF BEGINNING.
Said tract or parcel of land is known as 512 and 530 Means Street as shown on an
As-Built Survey, prepared by DLM Civil Engineering and Land Surveying, Inc.,
dated October 15, 1993, as revised April 23, 1996 (Project No. 93-083).
<PAGE>
EXHIBIT "B"
RULES AND REGULATIONS
1. No advertisement, or other notice, shall be inscribed, painted or
affixed on any part of the outside or inside of the Demised Premises or
Building, except for such order, size and style, and at such places as shall be
designed by Lessor.
2. The sidewalks and entry passages shall not be obstructed by Lessee, or
used by it for any purpose other than for ingress and egress. The floors, and
skylights and windows that reflect or admit light into any place in said Demised
Premised or Building. shall not be covered or obstructed by Lessee. The water
closets and other water apparatus, shall not be used for any other purpose than
for those which they were constructed and no sweepings, rubbish, or other
obstructing substances shall be thrown therein. Any damage resulting to them, or
to associated systems, from misuse, shall be repaired by any Lessee who, or
whose employees, agents, invitees, contractors or servants shall cause it.
3. Lessee shall not act in any way or permit any acts to be made in said
Demised Premises, or bring or keep anything therein, which shall in anyway
obstruct or interfere with the rights of other tenants or in any way injure
them. Lessee, its employees, agents, invitees, contractors and servants, shall
maintain order in the Demised Premises and the Building and shall not make or
permit any improper noise in the Demised Premises or the Building or interfere
in any way with other tenants or those having business with them. Improper noise
is defined as noise which interferes with the other tenants in the building.
Nothing shall be thrown by Lessee, its employees, agents, invitees, contractors
or servants, out of the windows, doors or skylights of the Demised Premises or
the Building. No rooms shall be occupied or used as sleeping or lodging
apartments at any time. No part of the Demised Premised or the Building shall be
used in any way appropriated for gambling, immoral or other unlawful practices.
4. It is understood and agreed that the Lessor shall not be responsible to
any Lessee for any loss of property from the Demised Premises, however
occurring, unless caused by the willful misconduct or gross negligence of
Lessor.
5. No animals shall be allowed in the office, halls, corridors, or
elsewhere in the Demised Premises or Building.
6. Lessee, its employees, agents, invitees, contractors or servants shall
observe strict care not to leave doors open when it rains or snows, and for any
fault or carelessness in this respect shall make good any injury sustained by
other lessees, and to Lessor for damage to paint, plastering or other parts of
the Demised Premises or the Building resulting from such default or
carelessness. No alterations shall be made to any part of the Demised Premises
or the Building by putting up or changing partitions, doors or windows, nor
shall there be any connection made to the electrical wires or electrical
fixtures, or plumbing lines, nor shall there be any penetrations through the
walls, floor or roof without the consent in writing on each occasion of Lessor
or its Agent. All glass, locks and trimming in or upon the doors and windows of
the Demised Premises or the Building shall be kept whole and, when any part
thereof shall be broken, the same shall be immediately replaced or repaired and
put in order under the direction and to the satisfaction of Lessor, or its
Agent, and shall be kept left whole and in good repair. Lessee shall not injure,
overload or deface the Demised Premises or the Building, the woodwork or the
walls of the Demised Premises, nor carry on upon the Demised Premises or the
Building any noisome (noisome is defined as noise which interferes with the
other tenants in the building), noxious or offensive business.
<PAGE>
7. No more than two keys for each office will be furnished without charge;
the charge for additional keys shall be Five Dollars ($5.00) each. No additional
locks or latches shall be put upon any door without written consent of Lessor.
Lessee, at termination of its Lease of the Demised Premises shall return all
keys to doors in Demised Premises and the Building to Lessor. Lessee shall have
the right to key interior doors or install its own security system at its own
expense.
8. Lessor in all cases retains the power to prescribe the weight and
position of iron safes or other heavy articles as reasonable and necessary.
9. Lessee shall not without Lessor's prior written consent install or
operate any steam engine, broiler, machinery within the Demised Premises, or
carry on any mechanical business therein, or use or allow to be used within the
Demised Premises oil, burning fluids, camphene, gasoline or kerosene for
heating, warning or lighting. No article deemed extra hazardous on account of
fire and no explosives shall be brought into said Demised Premises. No
offensives gases or liquids are permitted.
10. If Lessee desires blinds or window covering, they must be of such
shape, color and material as may be prescribed by Lessor, and shall be erected
with the Lessor's prior consent and at the expense of Lessee. No awnings shall
be placed on Demised Premises or Building.
11. Except for the storage of trash or rubbish in dumpsters provided by
Lessor, Lessee shall not permit storage of any kind outside of the Demised
Premises and shall keep the Demised Premises clean.
12. Lessee, its employees, agents, invitees and contractors shall observe
and obey all parking and traffic regulations as imposed by Lessor on the
Property. Lessor, in all cases, retains the power to designate "No Parking"
zones, traffic rights of way and general parking procedures.
13. Lessee shall instruct all delivery companies that any vehicles making
deliveries to the Demised Premises shall use the truck access roads provided for
such use and park only in designated loading areas.
14. The toilet rooms, urinals and wash bowls shall not be used for any
purpose other than that for which they were constructed and no foreign
substances of any kind whatsoever shall be thrown therein and the expense of any
breakage, stoppage or damage resulting from the violation of this rule shall be
borne by the Lessee who, or whose employees or invitees shall have caused it.
15. Lessee shall not do or permit to be done in or about the Demised
Premises or the Building anything which shall obstruct or interfere with the
rights of any lessee of Lessor or annoy them in any way including, but not
limited to loud or unseeming noises from musical instruments.
16. Lessor reserves the right to make other such reasonable and necessary
rules and regulations as in its judgment may from time to time be needed for the
safety, care and cleanliness of the Demised Premises and the Building, and for
the preservation of good order therein and these rules and regulations shall not
unduly restrict Lessee's operation.
17. Any material violation of any material rules, or any amendments
thereof or additions thereto, shall be sufficient cause for termination of this
Lease at the option of Lessor.
<PAGE>
EXHIBIT C
LEASE COMMENCEMENT DATE AGREEMENT
THIS IS LEASE COMMENCEMENT DATE AGREEMENT ("Agreement") is made as of this
19th day of May, 1997 between Carriage House Associates Limited Partnership
(hereinafter referred to as "Lessor"), and Relevant Knowledge (hereinafter
referred to as "Lessee").
WHEREAS, Lessor and Lessee entered into a certain lease agreement dated
May 16, 1997, (hereinafter referred to as the "Lease"), for space therein more
particularly described as Suite 107, 530 Means Street, NW, Atlanta, Georgia in
Fulton, Georgia (hereinafter referred to as the "Premises").
NOW, THEREFORE, Lessor and Lessee mutually acknowledge and agree as
follows:
1. Initially capitalized terms herein shall have the same meaning
ascribed thereto in the Lease.
2. The Premises contain 2889 rentable square feet.
3. The Commencement Date of the Lease Term for Suite 107 pursuant to
the above referenced Lease is June 18, 1997, and the Termination
Date of the Lease Term is June 30, 2000.
4. Lessee is in full possession of, and has accepted, the Premises
known as Suite 107 and the Lease is in full force and effect with
regard to Suite 107. Lessee agrees and acknowledges to Lessor that
as of the date hereof Lessor has fulfilled the terms and conditions
of the Lease with regard to Suite 107.
5. Base Rent is due pursuant to the Lease beginning June 18, 1997 with
respect to Suite 107.
IN WITNESS WHEREOF, the parties hereto have signed and sealed this
Agreement.
CARRIAGE HOUSE ASSOCIATES RELEVANT KNOWLEDGE
LIMITED PARTNERSHIP
BY: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
---------------------- -------------------
TITLE: Manager TITLE: CEO
------------------- ----------------
<PAGE>
EXHIBIT C-1
LEASE COMMENCEMENT DATE AGREEMENT
THIS IS LEASE COMMENCEMENT DATE AGREEMENT ("Agreement") is made as of this
29th day of May, 1997 between Carriage House Associates Limited Partnership
(hereinafter referred to as "Lessor"), and Relevant Knowledge (hereinafter
referred to as "Lessee").
WHEREAS, Lessor and Lessee entered into a certain lease agreement dated
16th May, 1997, (hereinafter referred to as the "Lease"), for space therein more
particularly described as Suite G-1, 530 Means Street, NW, Atlanta, Georgia in
Fulton, Georgia (hereinafter referred to as the "Premises").
NOW, THEREFORE, Lessor and Lessee mutually acknowledge and agree as
follows:
1. Initially capitalized terms herein shall have the same meaning
ascribed thereto in the Lease.
2. The Premises contain 7586 rentable square feet.
3. The Commencement Date of the Lease Term for Suite G-1 pursuant to
the above referenced Lease is 6/29, 1997, and the Termination Date
of the Lease Term is 6/30, 2000.
4. Lessee is in full possession of, and has accepted, the Premises
known as Suite G-1 and the Lease is in full force and effect with
regard to Suite G-1. Lessee agrees and acknowledges to Lessor that
as of the date hereof Lessor has fulfilled the terms and conditions
of the Lease with regard to Suite G-1.
5. Base Rent is due pursuant to the Lease beginning 6/29, 1997 with
respect to Suite G-1.
IN WITNESS WHEREOF, the parties hereto have signed and sealed this
Agreement.
CARRIAGE HOUSE ASSOCIATES RELEVANT KNOWLEDGE
LIMITED PARTNERSHIP
BY: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
---------------------- -------------------
TITLE: Manager TITLE: CEO
------------------- ----------------
<PAGE>
EXHIBIT D
INSURANCE
(a) Insurance by Lessor. Lessor shall at all times during the Lease Term carry,
at its own expense, a policy of insurance which insures the Building, including
the Premises, against loss or damage by fire or other casualty (namely, the
perils against which insurance is afforded by a standard fire insurance policy
and extended coverage; provided, however, that Lessor shall not be responsible
for, and shall not be obligated to insure against, any loss of or damage to any
personal property of Lessee, or which Lessee may have in the Building or the
Premises or any trade fixtures installed by or paid for by Lessee on the
Promises or any additional improvements which Lessee may construct on the
Premises, and Lessor shall not be liable for any loss or damage to such
property, unless caused by the gross negligence or malicious intent of Lessor
and its employees or agents. If improvements made by Lessee result in an
increase of the premiums charged during the Lease Term on the casualty insurance
carried by Lessor on the Building, then the cost of such increase in insurance
premiums shall be borne by Lessee, who shall reimburse Lessor for the same as
additional rent after being separately billed therefore.
(b) Insurance by Lessee. Lessee shall, at all times during the Lease Term, at
Lessee's cost, obtain and keep in effect the following insurance insuring
Lessee, Lessor and all mortgagees and any other person or entity designated by
Lessor as having an interest in the Property (as their interests may appear):
(i) Insurance upon all property situated in the Premises owned by Lessee
or for which Lessee is legally liable and on fixtures and improvements
installed in the Premises by or on behalf of Lessee. Such policies shall
be for an amount of not less than 100% of the full replacement cost with
coverage against at least fire with standard extended coverage, vandalism,
malicious mischief, sprinkler leakage, and water damage. If there is a
dispute as to the replacement cost amount, the decision of Lessor shall be
conclusive;
(ii) Business interruption insurance is an amount sufficient to reimburse
Lessee for direct or indirect loss of earnings attributable to prevention
of access of the Building or Premises as a result of such perils;
(iii) Commercial General Liability insurance including fire, legal,
liability, and contractual liability insurance coverage with respect to
the Building and the Premises. The coverage is to include activities and
operations conducted by Lessee and any other person in the Premises and
other person performing work on behalf of Lessee and those for whom Lessee
is by law responsible in any other part of the Building. Such insurance
shall be written on a comprehensive basis with inclusive limits of not
less than $2,000,000 for each occurrence for bodily injury and property
damage or such higher limits as Lessor acting reasonably, may require from
time to time. The limit of said insurance shall not, however, limit the
liability of Lessee hereunder. Lessor shall be named on all liability
policies maintained by Lessee;
(iv) Worker's Compensation insurance for all Lessee's employees working in
the Premises in an amount sufficient to comply with applicable laws or
regulations;
(v) Any other form of insurance as Lessee, Lessor or its mortgagees may
reasonably require from time to time. Such insurance shall be in form,
amounts and for the risks which a prudent Lessee would insure;
All policies of insurance maintained by Lessee shall be in a form acceptable to
Lessor; issued by an insurer acceptable to Lessor and licensed to do business in
the state in which the Building is located; and require at least thirty (30)
days written notice to Lessor of termination or material alteration and waive,
any right of subrogation against Lessor. All policies shall provide that the
interests of Lessor, its mortgagee, or those named insureds designated by Lessor
shall not be invalidated because of any breach or violation of any warranties,
representations, declarations or conditions contained in the policies. All
policies must contain a severability of interest clause, a cross-liability
clause and shall be primary and shall not provide for contribution of any other
insurance available to Lessor, its mortgagees, or those named insured designated
by Lessor. If requested by Lessor, Lessee shall, upon the Commencement Date and
thereafter within fifteen (15) days prior to the expiration date of each such
policy, promptly deliver to Lessor certified copies or other written evidence of
such policies and written evidence satisfactory to Lessor that all premiums have
been paid and all policies are in effect. If any coverage required by Lessor
lapses, is canceled, or is not obtained in accordance with this agreement, or
should insurance secured not be approved by Lessor, and such failure or approval
not be corrected within 48 hours after written notice from Lessor, Lessor, may,
without obligation, purchase such required insurance coverage at Lessee's
expense. Lessee shall promptly reimburse Lessor for any monies so expended as
additional rent.
<PAGE>
(c) Lessee's Contractor's Insurance. Lessee shall require any contractor of
Lessee permitted to perform work in, on or about the Premises to obtain and
maintain the following insurance coverage at no expense to Lessor.
(i) Commercial General Liability Insurance, including a Broad Form General
Liability Endorsement in the amount of $1,000,000, naming Lessor and
Lessee as insureds.
(ii) Worker's Compensation Insurance for all contractor's employees
working in the Premises in an amount sufficient to comply with applicable
laws or regulations.
(iii) Employee's Liability Insurance in an amount not less than $100,000.
(iv) Any other insurance as Lessee, Lessor or its mortgagees may require
from time to time.
(d) Waiver of Subrogation. Lessor and Lessee each agree that neither Lessor nor
Lessee (and their successors and assignees) will have any claim against the
other for any loss, damage, or injury which is covered by insurance carried by
either party and for which recovery from such insurer is made, notwithstanding
the negligence of either party in causing the loss.
(e) Increase in Premiums. Lessee will not do anything or fail to do anything
which will cause the cost of Lessor's insurance to increase or which will
prevent Lessor from procuring policies (including, but not limited to, public
liability) from companies and in a form satisfactory to Lessor. If any breach of
this Paragraph (e) any Lessee shall cause the rate of fire or other insurance to
be increased. Lessee shall pay the amount of such increase as additional rent
promptly upon being billed therefor.
(f) Lessee's Additional Insurance. Lessor makes no representation that the
limits of liability specified to be carried by Lessee under the terms of this
Lease are adequate to protect Lessee against Lessee's undertaking under this
Exhibit D, and in the event Lessee believes that any such insurance coverage
called for under this Lease is insufficient, Lessee shall provide, at its own
expense, such additional insurance as Lessee deems adequate.
<PAGE>
Exhibit 10.7(1)
RelevantKnowledge. Inc.
CONFIDENTIAL INFORMATION AND
INVENTION ASSIGNMENT AGREEMENT
As a condition of my employment with RelevantKnowledge, Inc., its
subsidiaries, affiliates, successors or assigns (together the "Company"), and in
consideration of my employment with the Company and my receipt of the
compensation now and hereafter paid to me by Company, I agree to the following:
(1) At-Will Employment. I UNDERSTAND AND ACKNOWLEDGE THAT MY EMPLOYMENT
WITH THE COMPANY IS FOR AN UNSPECIFIED DURATION AND CONSTITUTES "AT-WILL"
EMPLOYMENT. I ACKNOWLEDGE THAT THIS EMPLOYMENT RELATIONSHIP MAY BE TERMINATED AT
ANY TIME, WITH OR WITHOUT GOOD CAUSE OR FOR ANY OR NO CAUSE, AT THE OPTION
EITHER OF THE COMPANY OR MYSELF, WITH OR WITHOUT NOTICE.
(2) Confidential Information.
(a) Company Information. I agree at all times during the term of my
employment and thereafter, to hold in strictest confidence, and not to use,
except for the benefit of the Company, or to disclose to any person, firm or
corporation without written authorization of the Board of Directors of the
Company, except as required by law, any Confidential Information of the Company.
I understand that "Confidential Information" means any Company proprietary
information, technical data, trade secrets or know-how, including, but not
limited to, research, product plans, products, services, customer lists and
customers (including, but not limited to, customers of the Company on whom I
called or with whom I became acquainted during the term of my employment),
markets, software, developments, inventions, processes, formulas, technology,
designs, drawings, engineering, hardware configuration information, marketing,
finances or other business information disclosed to me by the Company either
directly or indirectly in writing, orally or by drawings or observation of parts
or equipment. I further understand that Confidential Information does not
include any of the foregoing items which has become publicly known and made
generally available through no wrongful act of mine or of others who were under
confidentiality obligations as to the item or items involved.
(b) Former Employer Information. I agree that I will not, during my
employment with the Company, improperly use or disclose any proprietary
information or trade secrets of any former or concurrent employer or other
person or entity and that I will not bring onto the premises of the Company any
unpublished document or proprietary information belonging to any such employer,
person or entity unless consented to in writing by such employer, person or
entity.
<PAGE>
(c) Third Party Information. I recognize that the Company has
received and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. I agree to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or
corporation or to use it except as necessary in carrying out my work for the
Company consistent with the Company's agreement with such third party.
(3) Inventions.
(a) Inventions Retained and Licensed. I have attached hereto, as
Exhibit A, a list describing all inventions, original works of authorship,
developments, improvements, and trade secrets which were made by me prior to my
employment with the Company (collectively referred to as "Prior Inventions"),
which belong to me, which relate to the Company's proposed business, products or
research and development, and which are not assigned to the Company hereunder;
or, if no such list is attached, I represent that there are no such Prior
Inventions. If in the course of my employment with the Company, I incorporate
into a Company product, process or machine a Prior Invention owned by me or in
which I have an interest, the Company is hereby granted and shall have a
nonexclusive, royalty-free, irrevocable, perpetual, worldwide license to make,
have made, modify, use and sell such Prior Invention as part of or in connection
with such product, process or machine.
(b) Assignment of Inventions. I agree that I will promptly make full
written disclosure to the Company, will hold in trust for the sole right and
benefit of the Company, and hereby assign to the Company, or its designee, all
my right, title, and interest in and to any and all inventions, original works
of authorship, developments, concepts, improvements or trade secrets, whether or
not patentable or registrable under copyright or similar laws, which I may
solely or jointly conceive or develop or reduce to practice, or cause to be
conceived or developed or reduced to practice, during the period of time I am in
the employ of the Company (collectively referred to as "Inventions"). I further
acknowledge that all original works of authorship which are made by me (solely
or jointly with others) within the scope of and during the period of my
employment with the Company and which are protectable by copyright are "works
made for hire," as that term is defined in the United States Copyright Act.
(c) Inventions Assigned to the United States. I agree to assign to
the United States government all my right, title, and interest in and to any and
all Inventions whenever such full title is required to be in the United States
by a contract between the Company and the United States or any of its agencies.
(d) Maintenance of Records. I agree to keep and maintain adequate
and current written records of all Inventions made by me (solely or jointly with
others) during the term of my employment with the Company. The records will be
in the form of notes, sketches, drawings, and any other format that may be
specified by the Company. The records will be available to and remain the sole
property of the Company at all times.
<PAGE>
(e) Patent and Copyright Registrations. I agree to assist the
Company, or its designee, at the Company's expense, in every proper way to
secure the Company's rights in the Inventions and any copyrights, patents, mask
work rights or other intellectual property rights relating thereto in any and
all countries, including the disclosure to the Company of all pertinent
information and data with respect thereto, the execution of all applications,
specifications, oaths, assignments and all other instruments which the Company
shall deem necessary in order to apply for and obtain such rights and in order
to assign and convey to the Company, its successors, assigns, and nominees the
sole and exclusive rights, title and interest in and to such Inventions, and any
copyrights, patents, mask work rights or other intellectual property rights
relating thereto. I further agree that my obligation to execute or cause to be
executed, when it is in my power to do so, any such instrument or papers shall
continue after the termination of this Agreement. If the Company is unable
because of my mental or physical incapacity or for any other reason to secure my
signature to apply for or to pursue any application for any United States or
foreign patents or copyright registrations covering Inventions or original works
of authorship assigned to the Company as above, then I hereby irrevocably
designate and appoint the Company and its duly authorized officers and agents as
my agent and attorney in fact, to act for and in my behalf and stead to execute
and file any such applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters patent or copyright
registrations thereon with the same legal force and effect as if executed by me.
(4) Conflicting Employment. I agree that, during the term of my employment
with the Company, I will not engage in any other employment, occupation,
consulting or other business activity directly related to the business in which
the Company is now involved or becomes involved during the term of my
employment, nor will I engage in any other activities that conflict with my
obligations to the Company.
(5) Returning Company Documents. I agree that, at the time of leaving the
employ of the Company, I will deliver to the Company (and will not keep in my
possession, recreate or deliver to anyone else) any and all devices, records,
data, notes, reports, proposals, lists, correspondence, specifications, drawings
blueprints, sketches, materials, equipment, other documents or property, or
reproductions of any aforementioned items developed by me pursuant to my
employment with the Company or otherwise belonging to the Company, its
successors or assigns. In the event of the termination of my employment, I agree
to sign and deliver the "Termination Certification" attached hereto as Exhibit
B.
(6) Notification of New Employer. In the event that I leave the employ of
the Company, I hereby grant consent to notification by the Company to my new
employer about my rights and obligations under this Agreement.
(7) Solicitation of Employees. I agree that for a period of twelve (12)
months immediately following the termination of my relationship with the Company
for any reason, whether with or without cause, I shall not either directly or
indirectly solicit, induce, recruit or encourage any of the Company's employees
to leave their employment, or take away such employees, or attempt to
<PAGE>
solicit, induce, recruit, encourage or take away employees of the Company,
either for myself or for any other person or entity.
(8) Conflict of Interest Guidelines. I agree to diligently adhere to the
Conflict of Interest Guidelines attached as Exhibit C hereto.
(9) Representations. I agree to execute any proper oath or verify any
proper document required to carry out the terms of this Agreement. I represent
that my performance of all the terms of this Agreement will not breach any
agreement to keep in confidence proprietary information acquired by me in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I agree I will not enter into, any oral or written agreement in
conflict herewith.
(10) Arbitration and Equitable Relief.
(a) Arbitration. EXCEPT AS PROVIDED IN SECTION 10(b) BELOW, I AGREE
THAT ANY DISPUTE OR CONTROVERSY ARISING OUT OF, RELATING TO, OR CONCERNING ANY
INTERPRETATION, CONSTRUCTION, PERFORMANCE OR BREACH OF THIS AGREEMENT, SHALL BE
SETTLED BY ARBITRATION TO BE HELD IN ATLANTA, GEORGIA. THE COMPANY AND I AGREE
THAT THE AGGRIEVED PARTY MUST GIVE WRITTEN NOTICE OF ANY CLAIM TO THE OTHER
PARTY NO LATER THAN ONE YEAR AFTER THE EVENT GIVING RISE TO THE CLAIM, OR SUCH
SHORTER PERIOD AS MAY BE PRESCRIBED BY LAW. OTHERWISE THE CLAIM SHALL BE VOID
AND DEEMED WAIVED EVEN IF THERE IS A FEDERAL OR STATE STATUTE OF LIMITATIONS
WHICH WOULD HAVE GWEN MORE TIME TO PURSUE THE CLAIM.
EXCEPT AS PROVIDED IN THIS AGREEMENT, THE ARBITRATION SHALL BE IN
ACCORDANCE WITH THE RULES THEN IN EFFECT OF THE AMERICAN ARBITRATION
ASSOCIATION. THE ARBITRATOR SHALL HAVE THE JURISDICTION TO HEAR AND RULE ON
PRE-HEARING DISPUTES AND IS AUTHORIZED TO HOLD PRE-HEARING CONFERENCES BY
TELEPHONE OR IN PERSON, AS THE ARBITRATOR DEEMS NECESSARY. THE ARBITRATOR SHALL
HAVE THE AUTHORITY TO ENTERTAIN A MOTION TO DISMISS AND/OR A MOTION FOR SUMMARY
JUDGEMENT BY ANY PARTY AND SHALL APPLY THE STANDARDS GOVERNING SUCH MOTIONS
UNDER THE FEDERAL RULES OF CIVIL PROCEDURE. THE ARBITRATOR MAY GRANT INJUNCTIONS
OR OTHER RELIEF IN SUCH DISPUTE OR CONTROVERSY. THE DECISION OF THE ARBITRATOR
SHALL BE FINAL, CONCLUSIVE AND BINDING ON THE PARTIES TO THE ARBITRATION.
JUDGMENT MAY BE ENTERED ON THE ARBITRATOR'S DECISION IN ANY COURT HAVING
JURISDICTION. THE COMPANY AND I SHALL EACH PAY ONE-HALF OF THE COSTS AND
EXPENSES OF SUCH ARBITRATION, AND EACH OF US SHALL SEPARATELY PAY OUR COUNSEL
FEES AND EXPENSES.
THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EMPLOYEE'S RIGHT TO A JURY
TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF
THE EMPLOYER/EMPLOYEE RELATIONSHIP (EXCEPT AS PROVIDED IN SECTION 10(b) BELOW),
INCLUDING, BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:
<PAGE>
i. ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT;
BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD
FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL
INFLICTION OF EMOTIONAL DISTRESS: NEGLIGENT OR INTENTIONAL MISREPRESENTATION;
NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECT WE ECONOMIC
ADVANTAGE; AND DEFAMATION;
ii. ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL, STATE OR
MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS
ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT
ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR LABOR
STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE
SECTION 201, et seq.;
iii. ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND
REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.
(b) Equitable Remedies. I AGREE THAT IT WOULD BE IMPOSSIBLE OR
INADEQUATE TO MEASURE AND CALCULATE THE COMPANY'S DAMAGES FROM ANY BREACH OF THE
COVENANTS SET FORTH IN SECTIONS 2, 3, AND 5 HEREIN. ACCORDINGLY, I AGREE THAT IF
I BREACH ANY OF SUCH SECTIONS, THE COMPANY WILL HAVE AVAILABLE, IN ADDITION TO
ANY OTHER RIGHT OR REMEDY AVAILABLE, THE RIGHT TO OBTAIN AN INJUNCTION FROM A
COURT OF COMPETENT JURISDICTION RESTRAINING SUCH BREACH OR THREATENED BREACH AND
TO SPECIFIC PERFORMANCE OF ANY SUCH PROVISION OF THIS AGREEMENT. I FURTHER AGREE
THAT NO BOND OR OTHER SECURITY SHALL BE REQUIRED IN OBTAINING SUCH EQUITABLE
RELIEF AND I HEREBY CONSENT TO THE ISSUANCE OF SUCH INJUNCTION AND TO THE
ORDERING OF SPECIFIC PERFORMANCE.
(c) Consideration. I UNDERSTAND THAT EACH PARTY'S PROMISE TO RESOLVE
CLAIMS BY ARBITRATION IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT,
RATHER THAN THROUGH THE COURTS, IS CONSIDERATION FOR OTHER PARTY'S LIKE PROMISE.
I FURTHER UNDERSTAND THAT I AM OFFERED EMPLOYMENT IN CONSIDERATION OF MY PROMISE
TO ARBITRATE CLAIMS.
(11) General Provisions.
(a) Governing Law; Consent to Personal Jurisdiction. This Agreement
will be governed by the laws of the State of Georgia. I hereby expressly consent
to the personal jurisdiction of the state and federal courts located in Georgia
for any lawsuit filed there against me by the Company arising from or relating
to this Agreement.
(b) Entire Agreement. This Agreement sets forth the entire agreement
and understanding between the Company and me relating to the subject matter
herein and merges all prior discussions between us. No modification of or
amendment to this Agreement, nor any waiver of any
<PAGE>
rights under this agreement, will be effective unless in writing signed by the
party to be charged. Any subsequent change or changes in my duties, salary or
compensation will not affect the validity or scope of this Agreement.
(c) Severability. If one or more of the provisions in this Agreement
are deemed void by law, then the remaining provisions will continue in hill
force and effect.
(d) Successors and Assigns. This Agreement will be binding upon my
heirs, executors, administrators and other legal representatives and will be for
the benefit of the Company, its successors, and its assigns.
Date:
----------------------
-----------------------------------
Signature
-----------------------------------
Name of Employee (typed or printed)
- ----------------------------
Witness
<PAGE>
EXHIBIT A
LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP
Identifying Number
Title Date or Brief Description
- ----------------- -------------------------- --------------------
|_| No inventions or improvements
|_| Additional Sheets Attached
Signature of Employee:
-----------------------
Print Name of Employee:
-----------------------
Date:
------------
<PAGE>
EXHIBIT B
RELEVANTKNOWLEDGE, INC.
TERMINATION CERTIFICATION
This is to certify that I do not have in my possession, nor have I failed
to return, any devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, other documents or property, or reproductions of any aforementioned
items belonging to RelevantKnowledge, Inc., its subsidiaries, affiliates,
successors or assigns (together, the "Company").
I further certify that I have complied with all the terms of the Company's
Employment Confidential Information and Invention Assignment Agreement signed by
me, including the reporting of any inventions and original works of authorship
(as defined therein), conceived or made by me (solely or jointly with others)
covered by that agreement.
I further agree that, in compliance with the Employment, Confidential
Information and Invention Assignment Agreement, I will preserve as confidential
all trade secrets, confidential knowledge, data or other proprietary information
relating to products, processes, know-how, designs, formulas, developmental or
experimental work, computer programs, data bases, other original works of
authorship, customer lists, business plans, financial information or other
subject matter pertaining to any business of the Company or any of its
employees, clients, consultants or licensees.
I further agree that for twelve (12) months from this date, I will not
hire any employees of the Company and I will not solicit, induce, recruit or
encourage any of the Company's employees to leave their employment.
Date:
----------
-----------------------------------
(Employee's Signature)
-----------------------------------
(Type/Print Employee's Name)
<PAGE>
EXHIBIT C
RELEVANTKNOWLEDGE. INC.
CONFLICT OF INTEREST GUIDELINES
It is the policy of RelevantKnowledge, Inc. to conduct its affairs in
strict compliance with the letter and spirit of the law and to adhere to the
highest principles of business ethics. Accordingly, all officers, employees and
independent contractors must avoid activities which are in conflict, or give the
appearance of being in conflict, with these principles and with the interests of
the Company. The following are potentially compromising situations which must be
avoided. Any exceptions must be reported to the President and written approval
for continuation must be obtained.
1. Revealing confidential information to outsiders or misusing
confidential information. Unauthorized divulging of information is a violation
of this policy whether or not for personal gain and whether or not harm to the
Company is intended. (The Confidential Information and Invention Assignment
Agreement elaborates on this principle and is a binding agreement.)
2. Accepting or offering substantial gifts, excessive entertainment,
favors or payments which may be deemed to constitute undue influence or
otherwise be improper or embarrassing to the Company.
3. Participating in civic or professional organizations that might involve
divulging confidential information of the Company.
4. Initiating or approving personnel actions affecting reward or
punishment of employees or applicants where there is a family relationship or is
or appears to be a personal or social involvement.
5. Initiating or approving any form of personal or social harassment of
employees.
6. Investing or holding outside directorship in suppliers, customers, or
competing companies, including financial speculations, where such investment or
directorship might influence in any manner a decision or course of action of the
Company.
7. Borrowing from or lending to employees, customers or suppliers.
8. Acquiring real estate of interest to the Company.
9. Improperly using or disclosing to the Company any proprietary
information or trade secrets of any former or concurrent employer or other
person or entity with whom obligations of confidentiality exist.
<PAGE>
10. Unlawfully discussing prices, costs, customers, sales or markets with
competing companies or their employees.
11. Making any unlawful agreement with distributors with respect to
prices.
12. Improperly using or authorizing the use of any inventions which are
the subject of patent claims of any other person or entity.
13. Engaging in any conduct which is not in the best interest of the
Company.
Each officer, employee and independent contractor must take every
necessary action to ensure compliance with these guidelines and to bring problem
areas to the attention of higher management for review. Violations of this
conflict of interest policy may result in discharge without warning.
-2-
<PAGE>
MEDIA METRIX, INC.
CONFIDENTIALITY AND NONCOMPETITION
AGREEMENT
I understand that in connection with my employment by Media Metrix,
Inc., a Delaware corporation ("Media Metrix"), I will have access to various
proprietary or confidential information, not generally known to others,
including, but not limited to, its computer software designs, computer
passwords, computer object codes, sampling/projection/adjustment methodologies,
panel balancing schema, sample selection programs, modeling codes/formulae,
client revenue/project information, proprietary data obtained from or about
clients, research and development plans, customer lists, financial and pricing
information, trade secrets and general business and operating plans. I recognize
that the growth and stability of Media Metrix depends on its possession of such
proprietary or confidential information and its ability to rely on its employees
not to accidentally or intentionally appropriate and distribute such information
to competitors or other outside personnel, or use such information for their own
personal benefit or to the disadvantage of Media Metrix.
Therefore, in consideration of my employment or continued employment
by Media Metrix, I agree as follows:
1. Unfair Competition. I acknowledge and agree that the sale or
unauthorized use or disclosure of any of Media Metrix's trade secrets I obtain
during my employment with Media Metrix constitutes unfair competition. I promise
and agree not to engage in any unfair competition with Media Metrix either
during the term of my employment or at any time thereafter. Media Metrix's trade
secrets are defined as all information, including the information specified in
the first paragraph of this Agreement, pertaining to Media Metrix's books,
records, accounts, customer trade lists, rates and all information generally
pertaining to operations, which is not generally known to others, and which
gives Media Metrix an advantage over competitors who do not know of or use the
trade secret.
2. Noncompetition During Term of Employment. During the term of my
employment, I shall not, directly or indirectly, either as an employee,
employer, consultant, agent, principal, partner, stockholder, corporate officer,
director or in any other individual or representative capacity, engage or
participate in any business that competes in any manner whatsoever with the
business of Media Metrix, is a supplier to Media Metrix or is seeking to do
business with Media Metrix, nor shall I otherwise in any way use any of Media
Metrix's proprietary or confidential information for personal benefit or to the
disadvantage of Media Metrix; provided, however, that the provisions of this
paragraph shall not apply to investments in publicly traded shares of stock
which constitute less than one percent of the outstanding shares of such stock.
-1-
<PAGE>
3. Solicitation of Customers After Termination of Employment. I
specifically acknowledge and agree that the names and addresses of Media
Metrix's customers constitute trade secrets of Media Metrix. For a period of one
(1) year immediately following any voluntary termination of my employment with
Media Metrix or termination of such employment by Media Metrix for cause, I
shall not directly or indirectly make known to any person, firm or corporation
the names or addresses of any of Media Metrix's customers or any other
information pertaining to them, or call on, solicit, take away or attempt to
call on, solicit or take away from Media Metrix, by offering similar or
competitive products or services, any customers or any business of any of the
customers of Media Metrix on whom I called or with whom I become acquainted
during my employment with Media Metrix, either for myself or for any other
person, firm or corporation.
4. Solicitation of Employees of Media Metrix. During the term of my
employment, other than in the performance of my duties to Media Metrix, I shall
not directly or indirectly solicit or encourage to leave the employment of Media
Metrix or any of its affiliates any employee of Media Metrix or its affiliates.
For the period of one (1) year following the termination of my employment with
Media Metrix, I shall not directly or indirectly solicit or encourage to leave
the employment of Media Metrix or any of its affiliates, any employee of Media
Metrix or its affiliates.
5. Ownership and Return of Media Metrix's Property. All records of
the accounts of customers, and any records and books relating in any manner
whatsoever to the customers of Media Metrix, whether prepared by me or otherwise
coming into my possession, shall be the exclusive property of Media Metrix
regardless of who actually purchased, prepared, obtained or created the original
book or record. I shall immediately, upon any termination of my employment,
return to Media Metrix all such books and records and all other property in my
possession or under my control belonging to Media Metrix, and shall return all
such property in good condition, ordinary wear and tear and damage by any cause
beyond my reasonable control excepted. Any ideas, suggestions, presentations,
research, discoveries, designs, processes or creations and the like, and any
copyrights, patents or other intellectual property rights arising therefrom,
conceived or made by me, individually or with others, having relation to, or
within the performance of, my services to Media Metrix, shall be the sole and
exclusive property of Media Metrix. I covenant and agree, upon Media Metrix's
request and for no additional compensation, either during or after the term of
my employment with Media Metrix, to execute and deliver to Media Metrix any
instruments of assignment or conveyance with regard to the rights described in
the immediately preceding sentence which may be so requested.
Because of the unique nature of Media Metrix's secrets and other
proprietary or confidential information, and because of the inadequacy of
monetary awards for breaches of my agreements and obligations set forth in this
Agreement, I further agree that if I fail to comply with any such agreement or
obligation, or in the event of a breach or threatened breach of any agreement or
obligation herein, in
-2-
<PAGE>
addition to any other remedies available to Media Metrix at law or in equity,
Media Metrix will be entitled to injunctive relief, without the posting of any
bond or other security, to enforce the provisions of this Agreement and will be
entitled to recover its reasonable attorneys' fees and expenses incurred in
conjunction with such proceedings.
I also specifically recognize and agree that this Agreement shall
not be construed as creating or evidencing any separate or independent
obligation of Media Metrix to hire or to retain me as its employee for any
specified period of time or to assign to me any particular duties or
responsibilities.
This Agreement contains the full and complete understanding of the
parties with respect to the subject matter hereof and supersedes all prior
agreements, representations and understandings whether oral or written.
I have read and agree to the terms
of this Agreement.
----------------------------------
Date:
-----------------
Witness:
---------------
-3-
<PAGE>
Exhibit 10.8
EMPLOYMENT AGREEMENT
AGREEMENT made as of November 5, 1998, between MEDIA METRIX, INC., a
Delaware corporation with an office at 900 West Shore Road, Port Washington, NY
11050 (the "Company"), and Jeffrey C. Levy residing at 120 The Prado, Atlanta,
GA 30309 ("Executive").
W I T N E S S E T H:
WHEREAS, pursuant to an Agreement and Plan of Reorganization, dated
as of September 30, 1998 (the "Merger Agreement"), by and between the Company
and RelevantKnowledge, Inc. ("RelevantKnowledge"), RelevantKnowledge will be
merged with and into the Company;
WHEREAS, the Executive is a senior executive officer and principal
stockholder of RelevantKnowledge and has unique and specific skills which are
material to the Company's willingness to enter into and consummate the Merger
Agreement; and
WHEREAS, the execution and delivery of this Agreement is a condition
to the closing of the transactions contemplated by the Merger Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
promises, representations and covenants herein contained, the parties hereto
agree as follows, with all capitalized terms used herein and not otherwise
defined herein having the respective meanings ascribed thereto in the Merger
Agreement:
1. EMPLOYMENT.
Subject to the consummation of the transactions contemplated under
the Merger Agreement, the Company hereby employs Executive as Vice Chairman of
the Company. Executive hereby accepts employment as Vice Chairman, subject to
the terms and conditions herein set forth.
2. DUTIES.
During the period from the Employment Date (as defined in Section 3
below) until the earlier of (i) the date nine months from the Employment Date
and (ii) the consummation of the initial public offering of the Company's
securities, Executive shall devote his entire business time, attention and
energies (allowable vacation time and reasonable absences for sickness excepted)
to the business of the Company. For the remainder of the Term (as defined in
Section 3 below), Executive shall devote such time, attention and energy to the
business of the Company as shall be mutually agreed upon by the Chief Executive
Officer and Executive. Executive's duties and responsibilities are set forth on
Exhibit A attached hereto. Executive shall report directly to the Chief
Executive Officer or the Board of Directors of the Company. Executive shall
discharge his duties in a competent and
<PAGE>
faithful manner, consistent with sound business practices. Notwithstanding
anything herein to the contrary, during the period from the Employment Date (as
defined in Section 3 below) until the earlier of (i) the date nine months from
the Employment Date and (ii) the consummation of the initial public offering of
the Company's securities, Executive shall not, directly or indirectly, alone or
as a member of any partnership or other organization, or as an officer, director
or employee of any other corporation, partnership or other organization, be
actively engaged in any duties or pursuits which materially interfere with the
performance of his duties hereunder without the prior authorization of the Board
of Directors of the Company.
3. TERM.
The initial term of employment under this Agreement shall begin as
of the date hereof (the "Employment Date") and shall continue until the earlier
of (i) fifteen months from the Employment Date or (ii) six months following the
consummation of the initial public offering of the Company's securities subject
to earlier termination in accordance with the terms hereof. Thereafter, this
Agreement shall be renewable upon mutual agreement of the parties hereto. The
initial term and, if the period of employment is so renewed such additional
period(s) of employment, are collectively referred to herein as the "Term."
4. COMPENSATION.
(a) As compensation for the services to be rendered by Executive
hereunder, the Company agrees to pay, or cause to be paid, to Executive, and
Executive agrees to accept, in accordance with the Company's payroll practice,
an initial annual base salary of $165,000, subject to such payroll deductions as
are required by law. This annual base salary may be increased, but not
decreased, at the discretion of the Board of Directors.
(b) The Executive shall be entitled to a bonus for fiscal 1998 in
addition to the Executive's annual base salary, to be determined by the Chief
Executive Officer in consultation with the Non-Executive RK Director (as defined
below), based on the bonus structure generally available to the Company's senior
executives. In addition, Executive shall be entitled to a bonus for fiscal 1999
in addition to the Executive's annual base salary, to be determined based on
criteria to be agreed upon by the Chief Executive Officer and Executive. For
purposes of this Agreement, the "Non-Executive RK Director" shall by the
director of the Company nominated by the former stockholders of
RelevantKnowledge who is not employed by the Company.
5. BENEFITS.
Executive shall be entitled to such vacations and to participate in
and receive any other benefits customarily provided by the Company to
Executive's peers in accordance with Company policies, all as determined from
time to time by the Board of Directors of the Company. In addition, Executive
shall receive an automobile allowance of $500 per month.
-2-
<PAGE>
6. TERMINATION OF EMPLOYMENT; EFFECT OF TERMINATION.
(a) Executive's employment hereunder may be terminated upon 15 days'
prior written notice from the Company to Executive:
(i) without cause, at any time prior to the expiration of the
period from the Employment Date until the earlier of (x) the date nine
months from the Employment Date and (y) the consummation of the initial
public offering of the Company's securities; or
(ii) at any time during the Term upon the determination by the
Board of Directors that there is justifiable cause (as hereinafter
defined) for such termination.
(b) Executive's employment shall terminate upon:
(i) the death of Executive;
(ii) the "disability" of Executive (as hereinafter defined
pursuant to subsection (c) below); or
(iii) the "constructive termination" of Executive (as
hereinafter defined).
(c) For the purposes of this Agreement, the term "disability" shall
mean the in ability of Executive, due to illness, accident or any other physical
or mental incapacity, to perform his duties with or without reasonable
accommodation for a period of two (2) consecutive months or for a total of four
(4) months (whether or not consecutive) in any twelve (12) month period during
the Term, as reasonably determined by the Board of Directors of the Company,
including the approval of the Non-Executive RK Director.
(d) For the purposes hereof, the term "justifiable cause" shall mean
and be limited to: any repeated unauthorized failure or refusal by Executive to
perform any of his duties pursuant to this Agreement after written notice to
Executive of such failure and, if curable, failure to cure within 30 days from
the date such notice is received; material breach of any duties owed to the
Company as a matter of law after written notice to Executive of such breach, and
if curable, failure to cure within 30 days from the date such notice is
received; Executive's conviction (which, through lapse of time or otherwise, is
not subject to appeal) of any crime or offense which constitutes a felony in the
jurisdiction involved; Executive's performance of any act or his failure to act,
for which if Executive were prosecuted and convicted, a crime or offense
involving money or property of the Company or its subsidiaries, or which would
constitute a felony in the jurisdiction involved, would have occurred; an act of
fraud or embezzlement by Executive in connection with the business of the
Company or any of its subsidiaries, chronic alcohol or drug abuse which
materially affects Executive's performance of his duties hereunder; or any acts
of moral turpitude as would prevent the effective performance of his duties;
provided, however, that after the period from the Employment Date until
-3-
<PAGE>
the earlier of (i) the date nine months from the Employment Date or (ii) the
date of the consummation of the initial public offering of the Company's
securities, the term "justifiable cause" shall mean and be limited to
Executive's conviction (which, through lapse of time or otherwise, is not
subject to appeal) of any crime or offense which constitutes a felony in the
jurisdiction involved. Upon termination of Executive's employment for
justifiable cause, this Agreement shall terminate immediately and Executive
shall not be entitled to any amounts or benefits hereunder other than such
portion of Executive's annual salary as has been accrued through the date of his
termination of employment and any benefits or payments to which he is entitled
under the Company's plans or policies. Notwithstanding anything in this
Agreement to the contrary, the Company shall not have justifiable cause to
terminate the Executive due to any action or inaction by the Company which may
result in the constructive termination of the Executive.
(e) For the purposes of this Agreement, the term "constructive
termination" shall mean and be limited to (i) Executive's loss of title without
Executive's consent, (ii) an assignment of duties or responsibilities to
Executive by the Company which are inconsistent with the duties set forth on
Exhibit A, upon written notice to the Company of any such acts and, if curable,
failure to cure within 30 days from the date such notice is received, (iii) a
reduction in Executive's compensation, or (iv) a modification, amendment or
termination of any benefits received by Executive, except for Company-wide
reductions.
(f) If Executive shall die during the Term, this Agreement shall
terminate immediately. In such event, the estate of Executive shall thereupon be
entitled to receive such portion of Executive's annual salary as has been
accrued through the date of his death and any benefits or payments to which
Executive is entitled under the Company's plans or policies.
(g) Upon Executive's "disability" (as defined herein), this
Agreement shall terminate immediately. In such event, the Executive shall
thereupon be entitled to receive such portion of Executive's annual salary as
has been accrued through the date of his disability and any benefits or payments
to which he is entitled under the Company's plans or policies. Notwithstanding
anything to the contrary contained herein, during any period that Executive
fails to perform his duties hereunder as a result of his disability (but prior
to the conclusion of the two or four month period specified in Section 6(c)
hereof), (i) Executive shall continue to receive his full salary at the rate
then in effect and all benefits provided in Section 6 hereof, provided that
payments made to Executive pursuant to this Section 6(g) shall be reduced by the
sum of the amounts, if any, payable to Executive at or prior to the time of any
such payment under any disability benefit plan or program of, or provided by,
the Company, and (ii) the Company shall have the right to hire any other
individual or individuals to temporarily perform, during the pendency of a
disability, such duties and functions as the Company shall desire, including
those duties heretofore performed by Executive.
(h) Notwithstanding any provision to the contrary contained herein,
in the event that Executive's employment is terminated by the Company at any
time for any reason other than justifiable cause, disability or death, the
Company shall pay Executive or Executive's estate, in
-4-
<PAGE>
accordance with the prevailing salary payment schedule, a one-time payment equal
to two years of such Executive's base salary.
7. NON-COMPETITION.
(a) Executive agrees that during his employment by the Company and
for a period of eighteen months following the expiration or termination of
Executive's employment hereunder (the "Non-Competitive Period"), Executive shall
not, anywhere in the world that the Company does business, directly or
indirectly, as owner, partner, joint venturer, stockholder (other than a holder
of less than 2% of a class of securities of a publicly traded company),
employee, principal, director, licensor or in any capacity whatsoever engage in,
become financially interested in, be employed by, render any consultation or
business advice with respect to, or have any connection with, any business which
competes with the Business (as hereinafter defined) of the Company or any of its
subsidiaries. For purposes of this Agreement, the term "Business" shall mean new
media market measurement services. In addition, Executive shall not, directly or
indirectly, during the Non-Competitive Period, request or cause any suppliers or
customers with whom the Company or any of its subsidiaries has a business
relationship to cancel or terminate any such business relationship with the
Company or any of its subsidiaries.
(b) Executive shall not, during the Term of this Agreement or for a
period of eighteen months following the termination of this Agreement, directly
or indirectly, solicit, encourage or induce in any manner, any current employee
of the Company or any of its subsidiaries to terminate, for any reason, his or
her employment with the Company or any of its subsidiaries; provided, however,
that the foregoing will not apply to actions taken by Executive which are
required by, or are within the scope of, his employment with the Company. In
addition, for a period of eighteen months following the termination of this
Agreement, Executive shall not, directly or indirectly, hire or offer to hire
any former employees of the Company or its subsidiaries unless any such former
employee (i) approaches Executive without encouragement by Executive and (ii)
such former employee has not been employed by the Company for at least six
months at the time such former employee approaches Executive.
(c) If any portion of the restrictions set forth in this Section 7
should, for any reason whatsoever, be declared invalid by a court of competent
jurisdiction, the validity or enforceability of the remainder of such
restrictions shall not thereby be adversely affected.
(d) Executive acknowledges and agrees that the territorial and time
limitations set forth in this Section 7 are reasonable and properly required for
the adequate protection of the Business. In the event any such territorial or
time limitation is deemed to be unreasonable by a court of competent
jurisdiction, Executive agrees to the reduction of the territorial or time
limitation to the area or period which such court shall deem reasonable.
-5-
<PAGE>
(e) The existence of any claim or cause of action by Executive
against the Company or any subsidiary shall not constitute a defense to the
enforcement by the Company or any subsidiary of the foregoing restrictive
covenants, but such claim or cause of action shall be litigated separately.
(f) Executive acknowledges and agrees that the execution of this
Agreement, and specifically Executive's agreement to the provisions contained in
this Section 7, were conditions to the consummation by the Company of the
transactions contemplated by the Merger Agreement.
8. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) The Executive acknowledges that, with respect to
RelevantKnowledge, he has learned and developed and had access to, and with
respect to the Company during the Term, he will learn, develop and have access
to, various proprietary or confidential information, not generally known to
others, relating to the business and affairs of the Company and
RelevantKnowledge. The Company and RelevantKnowledge are engaged in a highly
competitive business; their competitive position depends in great measure upon
the ability to develop or acquire and maintain the confidentiality of
confidential information; and they have expended and are likely to continue to
expend considerable efforts and resources in the development or acquisition of
confidential information. Based upon the foregoing, the Executive recognizes
that the unauthorized disclosure of confidential information in violation of the
terms hereof is likely to result in serious and irrevocable harm to the Company
and Relevant Knowledge.
(b) Executive shall not, during the Term of this Agreement or at any
time following termination of this Agreement, directly or indirectly, disclose
or permit to be known (other than as is required in the regular course of his
duties or required by law (in which case Executive shall give the Company prior
written notice of such required disclosure) or with the prior unanimous written
consent of the Board of Directors of the Company), to any person, firm or
corporation, any confidential information acquired by him during the course of,
or as an incident to, his employment with RelevantKnowledge or hereunder,
relating to the Company or any of its subsidiaries, the directors of the Company
or its subsidiaries, any client of the Company or any of its subsidiaries, or
any corporation, partnership or other entity owned or controlled, directly or
indirectly, by any of the foregoing, or in which any of the foregoing has a
beneficial interest, including, but not limited to, the business affairs of each
of the foregoing. Such confidential information shall include, but shall not be
limited to, its computer software designs, computer passwords, computer object
codes, sampling/projection/adjustment methodologies, panel balancing schema,
sample selection programs, modeling codes/formulae, client revenue/project
information, proprietary data obtained from or about clients, research and
development plans, customer lists, financial and pricing information, trade
secrets and general business and operating plans, and any other documents
embodying such confidential information. This confidentiality obligation shall
not apply to any confidential information which (i) thereafter becomes publicly
available other than pursuant to a breach of this Section 8(a), directly or
indirectly, by Executive, (ii) was in the public domain prior to disclosure to
Executive, or (iii) is
-6-
<PAGE>
disclosed to Executive by a third party not in violation of any obligations of
confidentiality to the Company.
(c) All information and documents relating to the Company and its
affiliates as hereinabove described (or other business affairs) shall be the
exclusive property of the Company, and Executive shall use his best efforts to
prevent any publication or disclosure thereof. Upon termination of Executive's
employment with the Company, all documents, records, reports, writings and other
similar documents containing confidential information, including copies thereof,
then in Executive's possession or control shall be returned and left with the
Company.
9. INVENTIONS AND DISCOVERIES.
(a) During the period from the Employment Date (as defined in
Section 3 below) until the earlier of (i) the date nine months from the
Employment Date and (ii) the consummation of the initial public offering of the
Company's securities Executive shall promptly and fully disclose to the Company,
and with all necessary detail for a complete understanding of the same, all
developments, know-how, discoveries, inventions, improvements, concepts, ideas,
writings, formulae, processes and methods (whether copyrightable, patentable or
otherwise) made, received, conceived, acquired or written during working hours,
or otherwise, by Executive (whether or not at the request or upon the suggestion
of the Company) during such period, solely or jointly with others, in or
relating to any activities of the Company or its subsidiaries known to him as a
consequence of his employment hereunder (collectively the "Subject Matter").
(b) Executive hereby assigns and transfers, and agrees to assign and
transfer, to the Company, all his rights, title and interest in and to the
Subject Matter, and Executive further agrees to deliver to the Company any and
all drawings, notes, specifications and data relating to the Subject Matter, and
to execute, acknowledge and deliver all such further papers, including
applications for copyrights or patents, as may be necessary to obtain copyrights
and patents for any thereof in any and all countries and to vest title thereto
to the Company.
10. SPECIFIC PERFORMANCE
Executive agrees that if he breaches, or threatens to commit a
breach of, any of the provisions of Sections 7, 8 or 9 (the "Restrictive
Covenants"), the Company shall have, in addition to, and not in lieu of, any
other rights and remedies available to the Company under law and in equity, the
right to have the Restrictive Covenants specifically enforced by an court of
competent jurisdiction, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to the Company and that
money damages would not provide an adequate remedy to the Company.
11. AMENDMENT OR ALTERATION.
-7-
<PAGE>
No amendment or alteration of the terms of this Agreement shall be
valid unless made in writing and signed by both of the parties hereto.
12. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of New
York, without reference to or application of any conflicts laws or principles.
13. SEVERABILITY.
The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect.
14. NOTICES.
Any notices required or permitted to be given hereunder shall be
sufficient if in writing, and if delivered by hand or courier, or sent by
certified mail, return receipt requested, to the addresses set forth above or
such other address as either party may from time to time designate in writing to
the other, and shall be deemed given as of the date of the delivery or at the
expiration of seven days in the event of a mailing.
15. WAIVER OR BREACH.
It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.
16. ENTIRE AGREEMENT AND BINDING EFFECT.
This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof, supersedes all prior agreements, both
written and oral, between the parties with respect to the subject matter hereof,
and shall be binding upon and inure to the benefit of the parties hereto and
their respective legal representatives, heirs, distributors, successors and
assigns, provided that duties of Executive may not be delegated or assigned.
17. RETENTION OF EQUIPMENT.
Upon termination of this Agreement, Executive shall be entitled to
retain and remove from the Company's premises (i) his computer; provided, that
prior to the removal, Executive shall purge all data other than personal data
from the memory of such computer and (ii) his portable telephone.
-8-
<PAGE>
18. SURVIVAL.
Except as otherwise expressly provided herein, the termination of
Executive's employment hereunder or the expiration of this Agreement shall not
affect the enforceability of Sections 6, 7, 8, 9, 10, 11, 13 and 17 hereof.
19. LEGAL FEES.
The Company hereby agrees to pay all reasonable legal fees incurred
by Executive in connection with the negotiation and execution of this Agreement
up to an amount of $2,500.
20. FURTHER ASSURANCES.
The parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.
21. HEADINGS.
The Section headings appearing in this Agreement are for the
purposes of easy reference and shall not be considered a part of this Agreement
or in any way modify, demand or affect its provisions.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
MEDIA METRIX, INC.
By: /s/ [ILLEGIBLE]
-------------------------
Name:
Title:
EXECUTIVE
/s/ [ILLEGIBLE]
-----------------------------
-9-
<PAGE>
EXHIBIT A
Executive's duties and responsibilities hereunder from the Employment Date until
the earlier to occur of (i) nine months or (ii) the consummation of the initial
public offering of the Company's securities shall be as follows:
Member of the transition management committee, being chaired by Mary Ann Packo.
Public spokesperson, in conjunction with others.
Assist Chief Executive Officer in planning for possible initial public offering.
Other duties as mutually agreed upon by the Executive and the Chief Executive
Officer or the Board of Directors of the Company.
For the remainder of the Term, Executive's duties and responsibilities hereunder
shall be as mutually agreed upon by the Executive and the Chief Executive
Officer of the Company.
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected Financial
Data" and "Experts" and to the use of our report dated February 22, 1999, except
for the first paragraph of Note 1 - Organization as to which the date is ______,
1999, in the Registration Statement (Form S-1 No. 333-_____) and related
Prospectus of Media Metrix, Inc. dated February 24, 1999.
Ernst & Young LLP
New York, New York
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The foregoing consent is in the form that will be signed upon the completion of
the restatement of capital accounts described in the first paragraph of Note 1 -
Organization to the financial statements.
/s/ Ernst & Young LLP
New York, New York
February 24, 1999
<PAGE>
Exhibit 23.3
Consent of Independent Accountants
We consent to the inclusion in the Media Metrix, Inc. registration statement on
Form S-1 of our report dated January 11, 1999, on our audits of the financial
statements of RelevantKnowledge, Inc. We also consent to the reference to our
firm under the caption "Experts."
/s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP
Atlanta, Georgia
February 24, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 8,012,020
<SECURITIES> 0
<RECEIVABLES> 1,590,337
<ALLOWANCES> 220,000
<INVENTORY> 0
<CURRENT-ASSETS> 9,589,690
<PP&E> 725,720
<DEPRECIATION> 75,930
<TOTAL-ASSETS> 16,060,020
<CURRENT-LIABILITIES> 8,532,602
<BONDS> 0
4,679,760
0
<COMMON> 130,935
<OTHER-SE> 2,491,370
<TOTAL-LIABILITY-AND-EQUITY> 16,060,020
<SALES> 6,330,485
<TOTAL-REVENUES> 6,330,485
<CGS> 4,120,569
<TOTAL-COSTS> 4,120,569
<OTHER-EXPENSES> 9,253,075
<LOSS-PROVISION> 160,600
<INTEREST-EXPENSE> 65,211
<INCOME-PRETAX> (7,138,548)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,138,548)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,138,548)
<EPS-PRIMARY> (.98)
<EPS-DILUTED> (.98)
</TABLE>
