<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 3, 1999
REGISTRATION NO. 333-72883
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
MEDIA METRIX, INC.
(Exact name of registrant as specified in its charter)
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<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:
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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>
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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, 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,
check the following box. / /
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.
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<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 -- MAY 3, 1999
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PROSPECTUS
MAY , 1999
[LOGO]
3,000,000 SHARES OF COMMON STOCK
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THE COMPANY: THE OFFERING:
- - We provide Internet audience - We are offering 3,000,000 shares
measurement products and of our common stock.
services. - The underwriters have an option
- - Media Metrix, Inc. to purchase an additional 250,000
35 East 21(st) Street shares from Media Metrix and
New York, New York 10010 200,000 shares from existing
(212) 460-7980 stockholders to cover over-
PROPOSED SYMBOL & MARKET: allotments.
- - MMXI/Nasdaq National Market - We currently estimate that the
price of the shares will be
between $12 and $14.
- This is our initial public
offering, and no public market
currently exists for our shares.
- We plan to use the proceeds from
this offering for international
expansion, new product
development, to redeem all
outstanding shares of redeemable
preferred stock and for general
corporate purposes, including
working capital.
- Closing: May , 1999
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<CAPTION>
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Per Share Total
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<S> <C> <C>
Public offering price: $ $
Underwriting fees:
Proceeds to Media Metrix:
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THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 7.
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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
THOMAS WEISEL PARTNERS LLC
THE UNDERSIGNED ARE FACILITATING INTERNET DISTRIBUTION.
DLJDIRECT INC. E*TRADE SECURITIES
<PAGE>
Media Metrix: The Power of Relevant Knowledge The Source for Internet Audience
Measurement Data Enabling the Continued Growth and Development of the Internet
[Graphic Showing click-by-click details from two panelists' data logs.]
Quote from The New York Times
[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: Audience Measurement. Media Metrix measures the
entire Internet, including the Web and proprietary online services like America
Online.
Text to right of second screen: E-Commerce. E-Commerce growth, like that of
Internet advertising, will depend largely on the availability of reliable,
comprehensive quantitative and qualitative data.
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
measurement data are used as a basis for buying and selling Internet
advertising.
Text middle left of page: Setting the Standard. Media Metrix provides Internet
audience measurement products and services to leading Internet advertisers and
advertising agencies, Internet properties, technology companies and financial
institutions.
[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 measurement, e-commerce data, 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.
<PAGE>
TABLE OF CONTENTS
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PAGE
<S> <C>
Prospectus Summary............................ 4
Risk Factors.................................. 7
Use of Proceeds............................... 20
Dividend Policy............................... 20
Capitalization................................ 21
Dilution...................................... 22
Selected Financial Data....................... 23
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................. 24
Business...................................... 33
Management.................................... 45
<CAPTION>
PAGE
<S> <C>
Certain Relationships and Related
Transactions................................ 51
Principal and Selling Stockholders............ 54
Description of Capital Stock.................. 57
Shares Eligible for Future Sale............... 61
Underwriting.................................. 63
Legal Matters................................. 65
Experts....................................... 65
Where You Can Find Additional Information..... 66
Index to Financial Statements................. F-1
</TABLE>
3
<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 provide Internet audience measurement products and services to leading
Internet advertisers and advertising agencies, Internet properties, technology
companies and financial institutions. We measure usage of the entire Internet,
including its largest segments, the World Wide Web and proprietary on-line
services like America Online. Our products and services enable the continued
growth and development of the Internet by providing third-party audience
measurement data that our customers rely on to make critical business decisions.
We collect data by measuring Internet usage from a representative sample, or
panel, of personal computer users with our proprietary tracking technology. We
maintain a large panel of Internet users reporting Internet usage at work and at
home, as well as the usage of proprietary on-line services. Our audience
measurement methodology has been developed from our background in marketing and
media research, particularly our experience with recruiting and operating
panels. Each panelist is required to fill out a detailed questionnaire to
provide background demographic information. Our proprietary tracking technology
collects data from the panelist's personal computer and transmits these data to
our office for processing. The data are then used to construct several
databases, which we use to provide our products and services.
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
Amazon.com, America Online, Beyond.com, Buena Vista/Disney, eBay, Everen
Securities, Fidelity, IBM, Infoseek, Interpublic Group, Microsoft, Omnicom, Time
Warner, Xoom.com and Yahoo! The quality and depth of our customer base and our
customer renewal rate of over 95% reflect our position as a widely accepted
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.
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<PAGE>
OUR STRATEGY
Our goal is 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. In March 1997, we
reorganized into a Delaware corporation and began using the trade name Media
Metrix in our business. In November 1998, we merged with RelevantKnowledge,
Inc., our leading competitor. NPD, our largest stockholder and parent, will own
approximately 26.2% of our common stock following this offering.
Although our revenues have continued to grow, we have a history of operating
losses and negative cash flow. In addition, the market for Internet audience
measurement services is new and rapidly evolving, and we expect competition in
this market to intensify in the future.
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
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<S> <C>
Common stock offered by Media Metrix......... 3,000,000 shares
Common stock to be outstanding after the
offering................................... 16,727,877 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 March
31, 1999. This information excludes:
- 462,907 shares of common stock subject to options granted under our 1998
Equity Incentive Plan and outstanding as of March 31, 1999 at a weighted
average exercise price of $7.47 per share;
- 496,283 shares of common stock subject to options granted under our
earlier Stock Option Plan and outstanding as of March 31, 1999 at a
weighted average exercise price of $0.84 per share;
- 854,648 additional shares of common stock reserved for issuance under our
1998 Equity Incentive Plan; and
- 469,436 shares of common stock reserved for outstanding warrants at a
weighted average exercise price of $1.87 per share.
5
<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.
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<CAPTION>
PERIOD FROM THREE MONTHS ENDED
INCEPTION YEAR ENDED PRO FORMA
THROUGH DECEMBER 31, YEAR ENDED MARCH 31,
DECEMBER 31, ------------------------------- DECEMBER 31, --------------------
1995 1996 1997 1998 1998 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues....................... $ -- $ 1,033 $ 3,188 $ 6,331 $ 8,145 $ 1,160 $ 3,178
Gross profit (loss)............ (140) (711) (275) 2,210 1,145 360 1,458
Loss from operations........... (372) (3,376) (4,679) (7,223) (16,058) (897) (2,463)
Net loss applicable to common
stockholders................. (372) (3,376) (4,874) (7,472) (16,211) (929) (2,466)
Basic and diluted net loss per
common share applicable to
common stockholders.......... $ (0.06) $ (0.52) $ (0.75) $ (0.98) $ (1.49) $ (0.14) $ (0.19)
Shares used in calculating
basic and diluted net loss
per common share applicable
to common stockholders....... 6,523 6,523 6,523 7,619 10,861 6,523 13,296
</TABLE>
The following balance sheet data give effect to our sale of 3,000,000 shares
of common stock in this offering at an assumed initial public offering price of
$13.00 per share, after deducting the underwriting discount and estimated
offering expenses, and the application of net proceeds from this offering. The
assumed initial public offering price is the midpoint of the range of the
initial public offering price.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
-------------------------
ACTUAL AS ADJUSTED
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............................................................. $ 2,385 $ 32,972
Working capital........................................................................ 312 31,029
Total assets........................................................................... 11,240 41,618
Redeemable preferred stock............................................................. 4,762 --
Total stockholders' equity............................................................. 1,474 36,744
</TABLE>
6
<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, $7.2 million in
1998 and $2.5 million in the three months ended March 31, 1999. 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 $16.1 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;
7
<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
8
<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;
- the amount and timing of costs relating to changes in the size or
composition of our panel; 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. We cannot assure you that our
revenues will increase in proportion to the increase in advertising on the
Internet, or at all. 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. If our revenues fall short of
expectations, we may not be able to adjust our fixed expenses to compensate for
this shortfall on a timely basis.
9
<PAGE>
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. One
of our competitors, NetRatings, Inc., announced a strategic relationship with
Nielsen Media Research, Inc. in October 1998. In March 1999, NetRatings and
Nielsen Media Research introduced a new Web site ratings service that competes
directly with many aspects of our services. 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 these
events, it is likely that the Nielsen/NetRatings venture will 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.
Some 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;
10
<PAGE>
- adopt more aggressive pricing policies; and
- 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.
11
<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.
OUR COSTS MAY INCREASE IF THE SIZE OR COMPOSITION OF OUR PANEL CHANGES.
A significant portion of our costs consists of the expense of recruiting and
maintaining our panel and collecting and processing data generated by the panel.
We may, in the future, need to change the size or composition of our panel. As a
result, our expenses for recruiting and maintaining our panel may increase. This
could have a material adverse effect on our business, results of operations and
financial condition.
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, high renewal
rates have formed a foundation for our revenue growth. 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.
12
<PAGE>
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.
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. 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.
13
<PAGE>
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.
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 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."
14
<PAGE>
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 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.
Third parties may claim that our technologies infringe upon 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 RELY ON TECHNOLOGY LICENSED FROM NPD AND OTHERS.
We 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.
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. 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
materially adversely affect our business, results of operations and financial
condition.
15
<PAGE>
OUR PROPRIETARY RIGHTS MAY BE ADVERSELY AFFECTED BY OUR STRATEGIC PARTNERS.
We expect to license some 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 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. 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.
Several 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. Our products and services may ultimately not comply with
recommended industry guidelines if we determine that compliance would not be
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 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.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Year 2000 Compliance."
16
<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.
THERE MAY BE LIMITS IMPOSED ON USES OF PERSONAL INFORMATION GATHERED USING THE
INTERNET.
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 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.
17
<PAGE>
WE FACE UNCERTAINTY ABOUT ADDITIONAL FINANCING FOR OUR FUTURE CAPITAL NEEDS.
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
additional financing 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 additional funds 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 additional funds 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.
WE MAY SUFFER AN INTERRUPTION IN OUR BUSINESS.
Our business interruption insurance may not be adequate to compensate us
fully for losses that may occur as a result of an interruption in our business.
Our business, results of operations and financial condition could be materially
and adversely affected if we are unable to conduct our business for an extended
period of time for any reason.
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 42.3% 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 26.2% 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.
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 our common stock prevailing from time to time. This could also impair our
ability to raise additional capital through the sale of our equity securities.
After this offering, we will have 16,727,877 shares of common stock outstanding,
or 16,977,877 shares if the underwriters over-allotment option is exercised in
full. Of these shares, the shares sold in this offering will be freely
tradeable, 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
13,727,877 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.
18
<PAGE>
In addition, after this offering, the holders of 13,466,288 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. See "Shares
Eligible for Future Sale."
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 $11.11 per share. As a result,
if we were to distribute our tangible assets to our stockholders immediately
following this offering, purchasers of shares of common stock in this offering
would receive less than the amount paid for such shares. See "Dilution."
EFFECTS OF ANTI-TAKEOVER PROVISIONS COULD INHIBIT THE ACQUISITION OF MEDIA
METRIX.
Some of the provisions of our certificate of incorporation, bylaws and
Delaware law could, together or separately:
- discourage potential acquisitions proposals;
- delay or prevent a change in control; and
- 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 Law 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.
19
<PAGE>
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the 3,000,000 shares of
common stock offered by us will be approximately $35.3 million, assuming an
initial public offering price of $13.00 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 $38.3 million.
We will use at least $5.5 million of the net proceeds from this offering to
fund investments in our planned European joint venture, Media Metrix Europe. We
plan on making additional investments in our international expansion efforts. We
have no present plans or commitments with respect to any such investments.
We will also use approximately $4.8 million of the net proceeds from this
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 March 31, 1999, principal and accrued dividends equaled $4.8
million.
The remaining amounts will be used to develop new products 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.
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<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of March 31, 1999 and
as adjusted to reflect our sale of the shares of common stock in this offering
at an assumed initial public offering price of $13.00 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 MARCH 31, 1999
--------------------------
<S> <C> <C>
ACTUAL AS ADJUSTED
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
Long-term debt, including current portion......................... $ 323 $ 323
Redeemable preferred stock, $.01 par value; 41,446 shares
authorized, issued and outstanding, actual; no shares
authorized, issued and outstanding, as adjusted................. 4,762 --
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, 60,000,000 shares authorized and
13,727,877 shares issued and outstanding, actual; 16,727,877
shares issued and outstanding, as adjusted.................... 137 167
Additional paid-in capital...................................... 21,353 56,593
Accumulated deficit............................................. (18,560) (18,560)
Deferred compensation........................................... (1,456) (1,456)
---------- --------------
Total stockholders' equity........................................ 1,474 36,744
---------- --------------
Total capitalization.......................................... $ 6,559 $ 37,067
---------- --------------
---------- --------------
</TABLE>
The outstanding share information is based on our shares outstanding as of
March 31, 1999. This information excludes:
- 462,907 shares of common stock subject to options granted under our 1998
Equity Incentive Plan and outstanding as of March 31, 1999 at a weighted
average exercise price of $7.47 per share;
- 496,283 shares of common stock subject to options granted under our
earlier Stock Option Plan and outstanding as of March 31, 1999 at a
weighted average exercise price of $0.84 per share;
- 854,648 additional shares of common stock reserved for issuance under our
1998 Equity Incentive Plan; and
- 469,436 shares of common stock reserved for outstanding warrants at a
weighted average exercise price of $1.87 per share.
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<PAGE>
DILUTION
Our net tangible book value as of March 31, 1999, was approximately $(3.9)
million, or $(0.29) per share of common stock. Net tangible book value per share
is equal to our tangible net assets, less total liabilities, divided by the
number of shares of common stock outstanding as of March 31, 1999. Net tangible
book value dilution per share to new investors represents the difference between
the amount per share paid by purchasers of shares of common stock in this
offering and the net tangible book value per share of common stock immediately
after completion of this offering. After giving effect to the sale of 3,000,000
shares at an assumed initial offering price of $13.00 per share and the
application of the net proceeds from this offering, our net tangible adjusted
book value at March 31, 1999 would have been approximately $31.6 million, or
$1.89 per share of common stock. This amount represents an immediate increase in
net tangible book value of $2.18 per share to existing stockholders and an
immediate dilution in net tangible book value of $11.11 per share to new
investors. The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share........................ $ 13.00
Net tangible book value per share at March 31, 1999.................. $ (0.29)
Increase per share attributable to new investors..................... 2.18
---------
Net tangible book value per share after the offering................... 1.89
---------
Dilution per share to new investors.................................... $ 11.11
---------
---------
</TABLE>
The following table summarizes, as of March 31, 1999, 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 $13.00 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)............................... 13,727,877 82.1% $ 19,915,994 33.8% $ 1.45
New investors.......................................... 3,000,000 17.9 39,000,000 66.2 13.00
------------ ----- ------------- -----
Total.............................................. 16,727,877 100.0% $ 58,915,994 100.0%
------------ ----- ------------- -----
------------ ----- ------------- -----
</TABLE>
- -----------------------
(1) Includes $10,500,000, representing the value of the 3,890,874 shares of
common stock issued in connection with our merger with RelevantKnowledge.
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
13,527,877 or 79.7% 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 3,450,000, or 20.3% 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
March 31, 1999. This information excludes:
- 462,907 shares of common stock subject to options granted under our 1998
Equity Incentive Plan and outstanding as of March 31, 1999 at a weighted
average exercise price of $7.47 per share;
- 496,283 shares of common stock subject to options granted under our
earlier Stock Option Plan and outstanding as of March 31, 1999 at a
weighted average exercise price of $0.84 per share;
- 854,648 additional shares of common stock reserved for issuance under our
1998 Equity Incentive Plan; and
- 469,436 shares of common stock reserved for outstanding warrants at a
weighted average exercise price of $1.87 per share.
22
<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
statement of operations for the period ended December 31, 1995 and for the three
months ended March 31, 1998 and 1999 and the balance sheet as of March 31, 1999
are unaudited and, in our opinion, 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. The
results of operations for the three months ended March 31, 1999 are not
necessarily indicative of results to be expected for any future period. 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 THREE MONTHS ENDED
INCEPTION YEAR ENDED PRO FORMA
THROUGH DECEMBER 31, YEAR ENDED MARCH 31,
DECEMBER 31, ------------------------------------- DECEMBER 31, --------------------
1995 1996 1997 1998 1998 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues......................... $ -- $ 1,033 $ 3,188 $ 6,331 $ 8,145 $ 1,160 $ 3,178
Costs of revenues................ 140 1,744 3,463 4,121 7,000 800 1,720
------ ----------- ----------- ----------- ------------- --------- ---------
Gross profit (loss).............. (140) (711) (275) 2,210 1,145 360 1,458
Operating expenses:
Research and development....... 86 588 866 1,382 2,162 248 681
Sales and marketing............ 45 929 2,022 2,888 4,512 575 1,334
General and administrative..... 101 1,148 1,516 3,084 6,057 434 1,157
Amortization of intangibles.... -- -- -- 479 2,872 -- 749
Acquired in-process research
and development.............. -- -- -- 1,600 1,600 -- --
------ ----------- ----------- ----------- ------------- --------- ---------
Total operating expenses..... 232 2,665 4,404 9,433 17,203 1,257 3,921
------ ----------- ----------- ----------- ------------- --------- ---------
Loss from operations............. (372) (3,376) (4,679) (7,223) (16,058) (897) (2,463)
Interest income, net of interest
expense........................ -- -- 95 65 161 45 79
------ ----------- ----------- ----------- ------------- --------- ---------
Net loss......................... (372) (3,376) (4,584) (7,158) (15,897) (852) (2,384)
Preferred stock dividends........ -- -- (290) (314) (314) (77) (82)
------ ----------- ----------- ----------- ------------- --------- ---------
Net loss available to common
stockholders................... $ (372) $ (3,376) $ (4,874) $ (7,472) $ (16,211) $ (929) $ (2,466)
------ ----------- ----------- ----------- ------------- --------- ---------
------ ----------- ----------- ----------- ------------- --------- ---------
Basic and diluted net loss per
common share applicable to
common stockholders............ $ (0.06) $ (0.52) $ (0.75) $ (0.98) $ (1.49) $ (0.14) $ (0.19)
------ ----------- ----------- ----------- ------------- --------- ---------
------ ----------- ----------- ----------- ------------- --------- ---------
Shares used in calculating basic
and diluted net loss per common
share applicable to common
stockholders................... 6,523 6,523 6,523 7,619 10,861 6,523 13,296
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------------- AS OF MARCH 31,
1996 1997 1998 1999
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.......................................... $ 583 $ 1,869 $ 8,012 $ 2,385
Working capital (deficit).......................................... (2,478) (47) 1,057 312
Total assets....................................................... 1,213 2,787 16,060 11,240
Due to NPD......................................................... 2,782 1,284 4,706 1,339
Preferred stocks................................................... -- 8,366 4,680 4,762
Total stockholders' equity (deficit)............................... (2,478) (8,274) 2,622 1,474
</TABLE>
23
<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 provide Internet audience measurement products and services to leading
Internet advertisers and advertising agencies, Internet properties, technology
companies and financial institutions. 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.
The quality and depth of our customer base and our customer renewal rate of over
95% reflect our position as a widely accepted Internet audience measurement
service.
Our business was originally conducted as a division within NPD, a leading
marketing research firm. Prior to March 1996, we were engaged primarily in
product research and development. In March 1996, PC Meter, L.P., was formed to
further commercialize our Internet audience measurement business in an entity
separate from NPD, although NPD continued to provide PC Meter with
administrative and support services and technology licenses. By July 1996, we
increased the size of our panel to over 10,000 individuals and significantly
increased our product offerings. In April 1997, PC Meter was merged into Media
Metrix and we raised approximately $4.0 million in a private placement to fund
the expansion of our business. 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 3,890,874 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 $6.4
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 350 as of March 31, 1999. 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.
24
<PAGE>
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.
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 continuous 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,
$7.2 million in 1998 and $2.5 million in the three months ended March 31, 1999.
If the merger with RelevantKnowledge had taken place on January 1, 1998, our pro
forma loss from operations for 1998 would have been $16.1 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 March 31, 1999, we had an accumulated deficit of $18.6 million.
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. As of March 31, 1999, we had an outstanding payable to NPD for
$1.3 million. 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>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
<S> <C> <C> <C> <C> <C>
1996 1997 1998 1998 1999
Revenues..................................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Costs of revenues............................................ 168.9 108.6 65.1 69.0 54.1
--------- --------- --------- --------- ---------
Gross profit (loss).......................................... (68.9) (8.6) 34.9 31.0 45.9
Operating expenses:
Research and development................................... 56.9 27.2 21.8 21.4 21.4
Sales and marketing........................................ 90.0 63.4 45.6 49.6 42.0
General and administrative................................. 111.1 47.6 48.7 37.4 36.4
Amortization of intangibles................................ -- -- 7.6 -- 23.6
Acquired in-process research and development............... -- -- 25.3 -- --
--------- --------- --------- --------- ---------
Total operating expenses..................................... 258.0 138.2 149.0 108.4 123.4
--------- --------- --------- --------- ---------
Loss from operations......................................... (326.9) (146.8) (114.1) (77.4) (77.5)
Interest income, net......................................... -- 3.0 1.0 3.9 2.5
--------- --------- --------- --------- ---------
Net loss..................................................... (326.9)% (143.8)% (113.1)% (73.5)% (75.0)%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
25
<PAGE>
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
REVENUES. Revenues increased 174.0% from $1.2 million for the three months
ended March 31, 1998 to $3.2 million for the three months ended March 31, 1999.
Sales of syndicated audience measurement products and services accounted for
approximately 90% of revenues for each of the three months ended March 31, 1998
and 1999. 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, including customers acquired in connection with
the RelevantKnowledge merger, and an increase in the amount of products and
services sold to our customers. No single customer accounted for more than 10%
of revenues during either of the three months ended March 31, 1998 and 1999.
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 profit was $360,000 for the three months ended March 31,
1998, or 31.0% of revenues. Gross profit was $1.5 million for the three months
ended March 31, 1999, or 45.9% of revenues. The increase in gross profit as a
percentage of revenues for the three months ended March 31, 1999 over the prior
period was due to an increase in revenues, without a commensurate increase in
costs. The increase in gross profit was partially offset by the costs associated
with operating a substantially larger panel following the RelevantKnowedge
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 $248,000 for the three months
ended March 31, 1998, or 21.4% of revenues. Research and development costs were
$681,000 for the three months ended March 31, 1999, or 21.4% 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 RelevantKnowedge merger.
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
$575,000 for the three months ended March 31, 1998, or 49.6% of revenues. Sales
and marketing costs were $1.3 million for the three months ended March 31, 1999,
or 42.0% of revenues. The increase in absolute dollars was due primarily to the
increase in sales and marketing personnel, including the addition of personnel
in connection with the RelevantKnowedge merger, and additional marketing costs.
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
$434,000 for the three months ended March 31, 1998, or 37.4% of revenues.
General and administrative costs were $1.2 million for the three months ended
March 31, 1999, or 36.4% of revenues. The increase in absolute dollars was due
to the expenses associated with increased personnel and expansion of our office
facilities, including the addition of personnel and office facilities in
connection with the RelevantKnowedge merger, 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. We anticipate that our general and administrative
costs will increase as a result of expenses associated with becoming a public
company.
AMORTIZATION OF INTANGIBLES. Amortization charges of $749,000 for the three
months ended March 31, 1999 represent the amortization of RelevantKnowledge's
panel, which is being amortized
26
<PAGE>
over 12 months, and amortization of other intangibles acquired in our merger
with RelevantKnowedge, which are being amortized over three years.
LOSS FROM OPERATIONS. Our loss from operations was $897,000 for the three
months ended March 31, 1998, or (77.4)% of revenues. Loss from operations was
$2.5 million for the three months ended March 31, 1999, or (77.5)% of revenues.
Loss from operations was higher in the three months ended March 31, 1999 due to
the continued expansion of our business, the merger with RelevantKnowedge and
amortization of intangibles. The decrease in loss from operations as a
percentage of revenues was due to an increase in revenues relative to the
increases in costs of revenues and operating costs.
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, 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. 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 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 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 the addition of personnel 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 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
48.7% 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.
27
<PAGE>
AMORTIZATION OF INTANGIBLES. Amortization charges of $479,000 represent 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 (114.1)% 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. One customer accounted for approximately 19% of revenues for the
year ended December 31, 1997. No single customer accounted for more than 10% of
revenues during the year ended December 31, 1996.
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.
28
<PAGE>
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, 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 periods indicated. 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 period as an indication of the results of operations for any future period.
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1998 1998 1998 1998 1999
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues................................................ $ 1,160 $ 1,345 $ 1,493 $ 2,333 $ 3,178
Costs of revenues....................................... 800 801 885 1,635 1,720
----------- ----------- ----------- --------- ---------
Gross profit............................................ 360 544 608 698 1,458
Operating expenses:
Research and development.............................. 248 260 274 600 681
Sales and marketing................................... 575 711 664 938 1,334
General and administrative............................ 434 412 633 1,605 1,157
Amortization of intangibles........................... -- -- -- 479 749
Acquired in-process research and development.......... -- -- -- 1,600 --
----------- ----------- ----------- --------- ---------
Total operating expenses................................ 1,257 1,383 1,571 5,222 3,921
----------- ----------- ----------- --------- ---------
Loss from operations.................................... (897) (839) (963) (4,524) (2,463)
Interest income, net of interest expense................ 45 4 7 9 79
----------- ----------- ----------- --------- ---------
Net loss................................................ $ (852) $ (835) $ (956) $ (4,515) $ (2,384)
----------- ----------- ----------- --------- ---------
----------- ----------- ----------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1998 1998 1998 1998 1999
Revenues................................................ 100.0% 100.0% 100.0% 100.0% 100.0%
Costs of revenues....................................... 69.0 59.6 59.3 70.1 54.1
----------- ----------- ----------- --------- ---------
Gross profit............................................ 31.0 40.4 40.7 29.9 45.9
Operating expenses:
Research and development.............................. 21.4 19.3 18.3 25.7 21.4
Sales and marketing................................... 49.6 52.9 44.5 40.2 42.0
General and administrative............................ 37.4 30.6 42.4 68.8 36.4
Amortization of intangibles........................... -- -- -- 20.5 23.6
Acquired in-process research and development.......... -- -- -- 68.6 --
----------- ----------- ----------- --------- ---------
Total operating expenses................................ 108.4 102.8 105.2 223.8 123.4
----------- ----------- ----------- --------- ---------
Loss from operations.................................... (77.4) (62.4) (64.5) (193.9) (77.5)
Interest income, net of interest expense................ 3.9 0.3 0.5 0.4 2.5
----------- ----------- ----------- --------- ---------
Net loss................................................ (73.5)% (62.1)% (64.0)% (193.5)% (75.0)%
----------- ----------- ----------- --------- ---------
----------- ----------- ----------- --------- ---------
</TABLE>
29
<PAGE>
Our revenues have increased in all periods 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 three months ended December 31, 1998 and March 31, 1999 reflect
the merger with RelevantKnowledge and, therefore, are not comparable to prior
periods. The results for those two periods include amortization of intangibles
and the write-off of acquired in-process research and development in association
with the merger, a non-cash compensation expense recorded in connection with
stock options and 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, $411,000
for the year ended December 31, 1998 and $6.7 million for the three months ended
March 31, 1999. For each of these periods, 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.
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, $3.1
million for the year ended December 31, 1998 and $(52,000) for the three months
ended March 31, 1999. 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, $3.5
million for the year ended December 31, 1998 and $1.1 million for the three
months ended March 31, 1999. 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. Cash provided by financing
activities for the three months ended March 31, 1999 was primarily due to the
proceeds received from the exercise of warrants and stock options.
As of March 31, 1999, we had $2.4 million of cash and cash equivalents. As
of March 31, 1999, our principal commitments consisted of accrued obligations
under our agreements with NPD in the amount of $1.3 million. In addition, as of
March 31, 1999, our redeemable preferred stock had an aggregate liquidation
value of $4.8 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. In addition, we expect to invest at
least $5.5 million over the next several years in our European joint venture,
Media Metrix Europe.
Although we have no material commitments for capital expenditures,
management anticipates that we will experience an increase in our capital
expenditures and lease commitments consistent with our
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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 expenses will be a
material use of our cash resources. Although we expect to use net cash in our
business for the forseeable future, 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.
We reviewed our meter, as well as our internal programs, and preliminarily
determined that there are no significant year 2000 issues within our meter or
our systems or services. We corrected deficiencies which were identified in the
course of our preliminary review of our systems and are currently conducting a
test of the updated software, including software in which deficiencies had been
detected and corrected. We expect that this test will be completed by the end of
April 1999. The results of tests conducted to date show no significant year 2000
issues. 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
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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.
WORST CASE SCENARIO
We believe that our worst case scenario would be a complete failure of the
metering software installed on our panelists' computers due to year 2000
complications. This would lead to a loss of data for the time period during
which the failure is not remedied. Lack of data could prevent us from issuing
our reports for the period during which the failure is not remedied. We will
continue to monitor this and any other potential problem areas.
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, which is expected to be completed by the end of April 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.
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BUSINESS
INTRODUCTION
We provide Internet audience measurement products and services to leading
Internet advertisers and advertising agencies, Internet properties, technology
companies and financial institutions. We measure usage of the entire Internet,
including its largest segments, the World Wide Web and proprietary on-line
services like America Online. Our products and services enable the continued
growth and development of the Internet by providing third-party audience
measurement data that our customers rely on to make 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 a large panel of Internet users reporting Internet usage both at
work and at home, as well as the usage of proprietary on-line services.
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. The quality and depth of our
customer base and our customer renewal rate of over 95% reflect our position as
a widely accepted 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 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.
The Internet also gives marketers the potential to:
- establish dialogues and individual relationships with customers;
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- 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.
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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 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 provide products and services that are critical to the continued growth
and development of the Internet. We provide a third-party audience measurement
standard that our customers use as a basis for making effective 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
leading Internet advertisers and advertising agencies, Internet properties,
leading technology companies and financial institutions.
We have become a widely accepted Internet audience measurement service
because of the following:
WE PROVIDE COMPREHENSIVE AUDIENCE MEASUREMENT. We are uniquely able to
measure the entire Internet audience, including people who use the Web and
proprietary on-line services. We maintain a large panel of Internet users
reporting Internet usage at work and at home. 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
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development and management of representative consumer and business panels to
collect data. This is a 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, their views influence the developing standards 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 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 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 behavioral and demographic data on
people who purchase products, actively shop, or merely click on to a particular
e-commerce site.
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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 have historically retained substantially
all of our 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. In April 1999, we entered into an agreement in
principle with two leading European media research and marketing information
firms to create Media Metrix Europe. Audience data collection is expected to
begin in the third quarter of 1999 in Germany, the United Kingdom and France.
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 March 31, 1999, we employed 19 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.
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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 that delivers pre-defined
content to users, 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.
WEEKLY FLASH........................ Tracks web site performance on a weekly basis.
</TABLE>
Currently, we also capture some information about ad banners and use it as
input to our Ad Network Report and to our customized services, reports and
analyses. Ad banners are the primary
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format for delivering advertisements over the Internet. In the future, we may
provide a report on ad banner usage.
In addition, we intend to introduce an e-commerce product line in the second
quarter of 1999. The first report that we expect to offer is the Online Shopping
Report, which will detail shopping behavior on Internet sites for selected
shopping categories.
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........................... Report in-depth information on Web site performance within a specific
industry sector or vertical market.
RETENTION ANALYSES.................. Report the percentage of audience that visits a Web site during a
particular month and returns during following months.
USAGE REPORTS....................... Segment Web and Web site traffic into heavy, medium and light usage groups
and compares behavior, usage pattern and demographics.
SITE CONTENT REPORTS................ Analyze specific user-defined content areas, or channels, within a Web site
and reports on all items in the Key Measures Report.
PERSONAL CLICKSTREAM REPORTS........ Report 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............ Report 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............ Quantify 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>
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CUSTOMERS
We have over 350 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. 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 March 31, 1999. 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.
INTERNATIONAL OPERATIONS
We believe that the ability to offer Internet audience measurement data for
non-U.S. markets will be a critical element in the Internet audience measurement
market. Having established our business model in the United States, we have
begun our international expansion efforts. In April 1999, we entered into an
agreement in principle to launch Media Metrix Europe in partnership with
European media research companies GfK AG of Germany and IPSOS S.A. of France.
Media Metrix Europe will be a majority-owned subsidiary of Media Metrix. We
expect to begin audience data collection in Germany, France and the United
Kingdom in the third quarter of 1999. Our partners in Media Metrix Europe intend
to expand our services to other major European markets as demand warrants. We
are already measuring Internet audiences in Sweden through the SIFO Group, under
a license entered into in 1998 covering Sweden, Norway and Finland. In addition,
a Kanji version of our meter is being beta tested in Japan by a major audience
measurement company.
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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 continuous 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.
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
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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 March 31, 1999, we had 19 employees dedicated to research and
development. We incurred research and development expenses of $588,000 in 1996,
$865,000 in 1997, $1.4 million in 1998 and $681,000 in the three months ended
March 31, 1999. 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. 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 and the registration of our
trademarks and service marks in the United States and in 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 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
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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.
Currently, we compete directly with NetRatings. NetRatings announced a
strategic relationship with Nielsen Media Research in October 1998. In March
1999, NetRatings and Nielsen Media Research introduced a new Web site ratings
service that competes directly with many aspects of our services. Nielsen Media
Research is the leading provider of television audience measurement services and
has significantly more financial and other resources than we do. In light of
these events, the Nielsen/NetRatings venture will likely become a significant
competitor. 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
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existing technologies may also increase the competitive pressures on us by
enabling our competitors to offer a lower-cost service.
EMPLOYEES
As of March 31, 1999, we had 95 full-time employees, with:
- 19 in research and development;
- 27 in operations;
- 37 in sales, marketing and client service; and
- 12 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.
PROPERTIES
Currently, our operations and research and development facility is located
in Uniondale, New York, which is 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 negotiations
with a third party to lease additional space in New York, New York.
LEGAL PROCEEDINGS
We are not a party to any material legal proceedings.
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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 is the principal
shareholder of NPD and 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, from 1992 to
May 1995. Mr. Lynch earned a Bachelors of Commerce degree from University
College Dublin, Ireland and an M.B.A. from the London Business School, England.
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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.
From July 1992 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 is
a member of NPD's Board of Advisors. Mr. Kry holds a degree in textile
engineering from NKI, Skolan, Stockholm, Sweden.
JAMES MORTENSEN has been a director since March 1997. Mr. Mortensen has been
a private consultant since 1982. 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 is a member of
NPD's Board of Advisors. 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. from March 1994, 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
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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 -- 26,092 --
Operating Officer 1996(2) 62,500 51,000 -- 66,534 --
Steve Coffey................................... 1998 145,000 54,500 -- 43,715 --
Executive Vice President 1997 130,000 35,000 -- 26,092 --
1996 120,000 47,000 -- 66,534 --
Thomas A. Lynch................................ 1998 -- -- -- 39,366 --
Chief Financial Officer(1) 1997 -- -- -- 2,174 --
1996 -- -- -- -- --
Doug McFarland................................. 1998 154,500 42,000 -- 30,555 --
Senior Vice President, Sales 1997 150,000 30,000 -- 36,963 --
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. NPD was reimbursed $62,000 for Mr.
Johnson's services in each of the years 1997 and 1998. NPD was reimbursed
$36,000 for Mr. Lynch's services in each of the years 1997 and 1998. We will
continue to pay for Mr. Johnson's services pursuant to an amended and
restated management services 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 December
1998. For 1999, Mr. Lynch is being paid at the rate of $165,000 per annum.
(2) Ms. Packo joined us in July 1996.
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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>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SHARES OPTIONS EXERCISE DEEMED VALUE PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE PER SHARE ON FOR OPTION TERM (3)
OPTIONS EMPLOYEES IN PRICE PER DATE ----------------------
GRANTED 1998 SHARE (1) OF GRANT (2) EXPIRATION DATE 0% 5%
<S> <C> <C> <C> <C> <C> <C> <C>
Tod Johnson................. -- -- -- -- -- -- --
Mary Ann Packo.............. 21,743 11.7% $ 2.30 $ 2.30 July 22, 2008 -- $ 31,450
21,972 2.39 10.29 December 3, 2008 $ 173,579 315,767
Steve Coffey................ 21,743 11.7 2.30 2.30 July 22, 2008 -- 31,450
21,972 2.39 10.29 December 3, 2008 173,579 315,767
Thomas A. Lynch............. 17,394 10.5 2.30 2.30 July 22, 2008 -- 25,160
21,972 2.39 10.29 December 3, 2008 173,579 315,767
Doug McFarland.............. 19,569 8.2 2.30 2.30 July 22, 2008 -- 28,306
10,986 2.39 10.29 December 3, 2008 86,789 157,883
<CAPTION>
10%
<S> <C>
Tod Johnson................. --
Mary Ann Packo.............. $ 79,701
533,911
Steve Coffey................ 79,701
533,911
Thomas A. Lynch............. 63,760
533,911
Doug McFarland.............. 71,732
266,956
</TABLE>
- -----------------------
(1) The exercise prices represent our board's estimate of the fair market value
of the common stock on the grant date. The board considered many factors in
establishing such prices, including our financial condition and operating
results, an independent valuation and the market for Internet-related
stocks.
(2) The deemed value on the date of grant of the options granted on December 3,
1998 was determined after the date of grant solely for financial accounting
purposes.
(3) 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. The 0%, 5% and 10%
assumed annual rates of compounded stock price appreciation do not represent
our estimate or projection of our future common stock prices. Each option
listed in the table has a 10-year term. 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.
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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............................................ 49,574 86,767 $ 633,060 $ 1,015,547
Steve Coffey.............................................. 49,574 86,767 633,060 1,015,547
Thomas A. Lynch (2)....................................... 435 88,235 5,555 1,043,296
Doug McFarland............................................ 7,393 60,125 94,409 703,558
</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 $13.00 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.
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 March 31, 1999, options to purchase an aggregate of 959,190 shares of
common stock were outstanding under the equity plans, and an aggregate of
877,587 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
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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.
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CERTAIN RELATIONSHIPS AND RELATED 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. All
of these warrants were exercised on March 31, 1999.
On November 5, 1998, RelevantKnowledge merged into Media Metrix. We issued
an aggregate of 3,890,874 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 that agreement when we merged with
PC Meter. The agreement was amended and restated on
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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 data and
documentation which we generate during the performance of the services relating
to our business.
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.
NPD was reimbursed $62,000 for Mr. Johnson's services in 1997 and 1998. NPD
was reimbursed $36,000 for Mr. Lynch's services in 1997 and 1998. These amounts
represent all compensation to NPD for the services provided to us by Mr. Johnson
and Mr. Lynch in 1997 and 1998. Messrs. Johnson and Lynch provided services to
NPD in addition to those related to Media Metrix and were compensated for those
services. Compensation paid by NPD to Messrs. Johnson and Lynch exceeded the
amounts paid by the Company to NPD. The amounts charged by NPD for Mr. Johnson
and Mr. Lynch's services to Media Metrix were below the amounts provided for
under the management services agreement.
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NPD has waived any additional amounts to which it is entitled under the
agreement. See "Management--Executive Compensation."
Upon the closing of this offering, we will amend and restate the management
services agreement to provide that NPD will be reimbursed $15,000 per month, or
$180,000 per year, for Mr. Johnson's services. As of January 1, 1999, Mr. Lynch
became one of our employees and we have agreed to pay him an initial yearly base
salary of $165,000.
SERVICES AGREEMENT
We entered into a new services agreement with NPD as of September 30, 1998
which replaced a prior services agreement having substantially similar terms. 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. In 1998,
we received an aggregate of $30,000 in fees and no reimbursed 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 entered into a new license agreement dated as of November 5, 1998 with
NPD which replaced a prior license agreement having substantially similar terms.
NPD has granted to us an exclusive, non-transferable, perpetual, worldwide
license to use some of its computer software 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, or $132,000 per year. In 1998, we paid
NPD an aggregate of $132,000 in licensing fees. 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.
LOANS TO STOCKHOLDERS
In connection with the merger with RelevantKnowledge, NPD loaned $100,000 to
Jeffrey C. Levy and $100,000 to Timothy F. S. Cobb pursuant to secured
promissory notes. The notes are due and payable when Messrs. Levy or Cobb sell
shares of our common stock and receive gross proceeds of at least $500,000. The
notes bear interest at the applicable Federal rate. We anticipate that Messrs.
Levy and Cobb will repay the notes following the closing of this offering.
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PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of our common stock as of March 31, 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. Jeffrey C. Levy and Timothy F. S. Cobb each will sell up to 100,000
shares of common stock in the event the underwriters' over-allotment option is
exercised. 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 March 31, 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 13,727,877 shares of common stock
outstanding as of March 31, 1999 and 16,727,877 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 31.9% 26.2%
Greylock IX Limited Partnership (2).............................................. 1,193,510 8.7 7.1
The 1995 Scott Johnson Trust (3)................................................. 1,071,385 7.8 6.4
The 1995 Stacey Johnson Trust (4)................................................ 1,071,385 7.8 6.4
Whitney Equity Partners, L.P. (5)................................................ 937,402 6.8 5.6
Oak Investment Partners VI, Limited Partnership (6).............................. 926,959 6.8 5.5
Oak VI Affiliates Fund, Limited Partnership (6).................................. 926,959 6.8 5.5
Venrock Associates II, L.P. (7).................................................. 915,826 6.7 5.5
Venrock Associates (7)........................................................... 915,826 6.7 5.5
Tod Johnson (8).................................................................. 4,380,559 31.9 26.2
Mary Ann Packo (9)............................................................... 49,574 * *
Steve Coffey (10)................................................................ 49,574 * *
Thomas A. Lynch (11)............................................................. 47,565 * *
Doug McFarland (12).............................................................. 7,393 * *
Jeffrey C. Levy (13)............................................................. 503,204 3.7 3.0
Michael Brooks (14).............................................................. 937,402 6.8 5.6
Stig Kry (15).................................................................... 10,138 * *
William W. Helman (16)........................................................... 1,193,510 8.7 7.1
James Mortensen (17)............................................................. 10,138 * *
Timothy F. S. Cobb (18).......................................................... 503,065 3.7 3.0
All directors and executive officers as a group (10 persons) (19)................ 7,189,057 51.4% 42.3%
</TABLE>
- -----------------------
* Less than 1.0%
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(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) 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 133,417
shares of common stock held by Whitney Equity Partners, L.P. and warrants to
purchase 7,777 shares of common stock held by J. H. Whitney & Co. 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 c/o J. H. Whitney & Co., 177 Broad Street, Stamford,
Connecticut 06901.
(6) Consists of 905,824 shares of common stock owned by Oak Investment Partners
VI, Limited Partnership and 21,135 shares of common stock owned by Oak VI
Affiliates Fund, Limited Partnership. 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 523,195 shares of common stock owned by Venrock Associates II,
L.P. and 392,631 shares of common stock owned by Venrock Associates. 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 49,574 shares of common stock issuable upon the exercise of
options. Does not include 108,739 shares of common stock issuable upon the
exercise of options not currently exercisable within 60 days of March 31,
1999. See "Management--Stock Options."
(10) Consists of 49,574 shares of common stock issuable upon the exercise of
options. Does not include 108,739 shares of common stock issuable upon the
exercise of options not currently exercisable within 60 days of March 31,
1999. See "Management--Stock Options."
(11) Consists of 47,565 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 77,725 shares of common stock issuable upon the
exercise of options not currently exercisable within 60 days of March 31,
1999. See "Management--Stock Options."
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(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 March 31,
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 granted the underwriters an option to purchase up
to 100,000 shares to cover over-allotments. The purchase price for the
shares will equal the initial public price of this offering minus the
underwriting discounts. If this option is exercised in full, Mr. Levy will
beneficially own 403,204 shares, or 2.4% of our common stock after this
offering.
(14) Consists of 796,208 shares of common stock and warrants to purchase 133,417
shares of common stock issuable upon the exercise of a warrant owned by
Whitney Equity Partners, L.P. and warrants to purchase 7,777 shares of
common stock owned by J.H. Whitney & Co. Mr. Brooks is a managing member of
J. H. Whitney Equity Partners, L.L.C., the general partner of Whitney Equity
Partners, L.P. which possesses investment and voting power with respect to
all shares owned by Whitney Equity Partners, L.P. Mr. Brooks disclaims
beneficial ownership of the shares of common stock owned by Whitney Equity
Partners, L.P. other than the shares attributable to his proportionate
interest. Mr. Brooks is also a general partner of J. H. Whitney & Co. and a
managing member of Whitney General Partner, L.L.C., which is also a general
partner of J. H. Whitney & Co. which possess investment and voting power
with respect to all shares owned by J. H. Whitney & Co. Mr. Brooks disclaims
beneficial ownership of the shares of common stock owned by J. H. Whitney &
Co. other than the shares attributable to his proportionate interest. See
footnote (5) 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 benefit 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 March 31, 1999.
(16) Consists of 1,193,510 shares of common stock owned by Greylock IX Limited
Partnership. 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. 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 March 31, 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
100,000 shares to cover over-allotments. The purchase price for the shares
will equal the initial public price of this offering minus the underwriting
discounts. If this option is exercised in full, Mr. Cobb will beneficially
own 403,065 shares, or 2.4% of our common stock after this offering.
(19) Consists of 315,576 shares issuable upon the exercise of options and
warrants to purchase common stock of which 66,536 options were granted
pursuant to an NPD benefit plan which gives the holders of such options the
right to purchase shares of our common stock held by NPD. Does not include
408,561 shares of common stock issuable upon the exercise of options not
currently exercisable within 60 days of March 31, 1999.
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DESCRIPTION OF CAPITAL STOCK
Upon the closing of this offering, and the filing of our restated
certificate of incorporation, our authorized capital stock will consist of
60,000,000 shares of common stock, $.01 par value, and 5,000,000 shares of
preferred stock, $.01 par value.
As of March 31, 1999, we had 13,727,877 shares of common stock outstanding
held by approximately 128 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
3,000,000 shares of common stock in this offering, there will be 16,727,877
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 has been 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.
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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 generating proceeds of at least $15
million.
WARRANTS
As of March 31, 1999, we had outstanding warrants to purchase an aggregate
of 469,436 shares of common stock at a weighted average exercise price of $1.87.
Of these, warrants to purchase 337,295 shares of our common stock will expire
upon this offering, unless exercised earlier. In addition, warrants to purchase
132,141 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,
13,466,288 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
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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.
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CLASSIFIED BOARD OF DIRECTORS
Our board will be 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 certificate of incorporation will provide that our stockholders may not
take action by written consent, but only at an annual or special meeting of
stockholders. Our bylaws will 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 will provide 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 Continental Stock
Transfer and Trust Company.
60
<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
16,727,877 shares of our common stock, assuming no exercise of the underwriters'
over-allotment option and no exercise of outstanding options or warrants. As of
March 31, 1999, we had approximately 128 holders of our common stock. 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 13,727,877 shares eligible for sale in the public
market as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES DATE
- ----------------------------------- ------------------------------------------------
<C> <S>
-- After the date of this prospectus.
8,852,130 After 180 days from the date of this prospectus
(subject, in some cases, to volume limitations).
4,875,747 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 167,279 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.
61
<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 13,466,288 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 March 31, 1999, options to purchase 959,190 shares of common
stock were issued and outstanding. Upon the expiration of the lock-up agreements
describe above, at least 847,902 shares of common stock will be subject to
vested options, based on the number of options outstanding as of March 31, 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.
62
<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, BancBoston Robertson
Stephens Inc. and Thomas Weisel Partners LLC 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................................
Thomas Weisel Partners LLC.......................................
---------
Total........................................................ 3,000,000
---------
---------
</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, including the absence of any material adverse
change in our business and receipt of acceptable certificates, opinions and
letters from us, our counsel and the independent auditors. 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 of the shares to the public, the representatives may change the public
offering price and such 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 MEDIA METRIX STOCKHOLDERS
------------------------ ------------------------
FULL FULL
NO EXERCISE EXERCISE NO EXERCISE EXERCISE
<S> <C> <C> <C> <C>
Per share......................................
Total..........................................
</TABLE>
We will pay the offering expenses, estimated to be $1.0 million.
63
<PAGE>
Thomas Weisel Partners LLC, one of the representatives of the underwriters,
was organized and registered as a broker-dealer in December 1998. Since December
1998, Thomas Weisel Partners has been named as a lead or co-manager on 20 filed
public offerings of equity securities, of which six have been completed, and has
acted as a syndicate member in an additional eight public offerings of equity
securities. Thomas Weisel Partners does not have any material relationship with
us or any of our officers, directors or other controlling persons, except with
respect to its contractual relationship with us pursuant to the underwriting
agreement entered into in connection with this offering.
DLJDIRECT Inc., an affiliate of Donaldson, Lufkin & Jenrette Securities
Corporation and a member of the selling group, and E*TRADE Securities, Inc., a
selected dealer, are facilitating the distribution of the shares sold in the
offering over the Internet. The underwriters have agreed to allocate a limited
number of shares to DLJDIRECT Inc. and E*TRADE Securities, Inc. for sale to
their brokerage account holders.
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
450,000 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.
We, our executive officers and directors, and substantially all of our
stockholders have agreed, for a period of 180 days from the date of this
prospectus, not to, 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. 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
(other than a registration statement registering options or shares granted under
a stock option plan) without the prior written consent of Donaldson, Lufkin &
Jenrette.
The underwriters, at our request, have reserved for sale at the initial
public offering price up to ten percent (10%) of the shares of common stock to
be sold in this offering for sale to our employees and other persons designated
by us. The number of shares available for sale to the general public will be
reduced to the extent that any reserved shares are purchased. Any reserved
shares not so purchased will be offered by the underwriters on the same basis as
the other shares offered hereby.
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
64
<PAGE>
general condition of the securities markets at the time of this offering and the
recent market prices of securities of generally comparable companies.
We have applied for quotation of our common stock on the Nasdaq National
Market under the symbol "MMXI."
Bayview Investors, Ltd., an entity affiliated with BancBoston Robertson
Stephens Inc., holds 63,039 shares of our common stock. In addition, Bayview
holds warrants to purchase 6,665 shares of our common stock at an exercise price
of $.03 per share.
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
not 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 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, for the year ended December 31, 1997 and for the six
week period ended December 31, 1996, 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.
65
<PAGE>
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. You may obtain information on the
operation of the Public Reference Room by calling the commission at
1-800-SEC-0330. 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.
66
<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 and March 31, 1999 (unaudited)................................ F-3
Statements of Operations for the years ended December 31, 1996, 1997 and 1998 and the three months ended
March 31, 1998 and 1999 (unaudited)...................................................................... F-4
Statements of Stockholders' (Deficit) Equity for the years ended December 31, 1996, 1997 and 1998 and the
three months ended March 31, 1999 (unaudited)............................................................ F-5
Statements of Cash Flows for the years ended December 31, 1996, 1997 and 1998 and the three months ended
March 31, 1998 and 1999 (unaudited)...................................................................... F-6
Notes to Financial Statements.............................................................................. F-7
RELEVANTKNOWLEDGE, INC.
Report of Independent Accountants.......................................................................... F-19
Balance Sheets at December 31, 1997 and October 31, 1998................................................... F-20
Statements of Operations for the six weeks ended December 31, 1996, the year ended December 31, 1997 and
the ten months ended October 31, 1998.................................................................... F-21
Statements of Changes in Shareholders' Equity for the six weeks ended December 31, 1996, the year ended
December 31, 1997 and the ten months ended October 31, 1998.............................................. F-22
Statements of Cash Flows for the six weeks ended December 31, 1996, the year ended December 31, 1997 and
the ten months ended October 31, 1998.................................................................... F-23
Notes to Financial Statements.............................................................................. F-24
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
Statement of Operations for the year ended December 31, 1998............................................... F-31
Notes to Unaudited Pro Forma Statement of Operations....................................................... F-32
</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
April 30, 1999
F-2
<PAGE>
MEDIA METRIX, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1997 1998 MARCH 31,
1999
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................... $1,869,013 $ 8,012,020 $ 2,385,260
Receivables:
Trade, less allowance for doubtful accounts of $100,000 in 1997,
$220,000 in 1998 and $280,000 in 1999............................... 520,886 1,119,905 2,073,176
Expenditures billable to clients...................................... 219,877 250,432 287,017
---------- ----------- -----------
Total receivables....................................................... 740,763 1,370,337 2,360,193
Prepaid expenses and other current assets............................... 38,063 207,333 380,988
---------- ----------- -----------
Total current assets...................................................... 2,647,839 9,589,690 5,126,441
Property and equipment, at cost, net of accumulated depreciation and
amortization of $17,991 in 1997, $75,930 in 1998 and $140,931 in 1999... 116,834 649,790 636,823
Intangibles acquired, net of accumulated amortization of $479,000 in 1998
and $1,227,600 in 1999.................................................. -- 5,736,766 5,188,166
Other assets.............................................................. 22,280 83,774 288,642
---------- ----------- -----------
Total assets.............................................................. $2,786,953 $16,060,020 $11,240,072
---------- ----------- -----------
---------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable and accrued liabilities................................ $ 881,322 $ 2,308,323 $ 1,599,286
Due to The NPD Group, Inc............................................... 1,284,315 4,705,825 1,338,955
Advance billings to clients............................................. 529,220 1,391,275 1,743,097
Current portion of long-term debt....................................... -- 127,179 133,184
---------- ----------- -----------
Total current liabilities................................................. 2,694,857 8,532,602 4,814,522
Long-term debt............................................................ -- 225,353 190,173
Redeemable Preferred Stock--$1 par value; 41,446 shares authorized, issued
and outstanding; liquidation and redemption value--$4,679,760 in 1998
and $4,761,656 in 1999.................................................. 4,366,022 4,679,760 4,761,656
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 and 1999, none issued and outstanding........... -- -- --
Common stock, $.01 par value--60,000,000 shares authorized; shares
issued and outstanding--6,523,330 in 1997, 13,098,857 in 1998 and
13,727,877 in 1999.................................................... 65,233 130,989 137,279
Additional paid-in capital.............................................. 281,656 18,149,202 21,352,552
Common stock issuable................................................... -- 1,999,831 --
Accumulated deficit..................................................... (8,620,806) (16,093,242) (18,559,552)
Deferred compensation................................................... -- (1,564,475) (1,456,558)
---------- ----------- -----------
Total stockholders' (deficit) equity...................................... (8,273,917) 2,622,305 1,473,721
---------- ----------- -----------
Total liabilities and stockholders' (deficit) equity...................... $2,786,953 $16,060,020 $11,240,072
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
See accompanying notes.
F-3
<PAGE>
MEDIA METRIX, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------- ---------------------
<S> <C> <C> <C> <C> <C>
1996 1997 1998 1998 1999
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues........................................... $1,032,629 $3,187,653 $6,330,485 $1,159,718 $3,177,539
Costs of revenues.................................. 1,743,831 3,463,058 4,120,569 799,672 1,719,990
---------- ---------- ---------- --------- ----------
Gross profit (loss)................................ (711,202) (275,405) 2,209,916 360,046 1,457,549
Operating expenses:
Research and development......................... 587,731 865,498 1,382,375 248,167 680,891
Sales and marketing.............................. 928,993 2,021,409 2,888,195 575,118 1,334,546
General and administrative....................... 1,147,768 1,516,396 3,084,255 434,195 1,157,227
Amortization of intangibles...................... -- -- 479,000 -- 748,600
Acquired in-process research and development..... -- -- 1,600,000 -- --
---------- ---------- ---------- --------- ----------
Total operating expenses........................... 2,664,492 4,403,303 9,433,825 1,257,480 3,921,264
---------- ---------- ---------- --------- ----------
Loss from operations............................... (3,375,694) (4,678,708) (7,223,909) (897,434) (2,463,715)
Interest income, net of interest expense of $11,374
in 1998 and $16,692 in 1999...................... -- 94,760 65,211 45,306 79,301
---------- ---------- ---------- --------- ----------
Net loss........................................... (3,375,694) (4,583,948) (7,158,698) (852,128) (2,384,414)
Preferred stock dividends.......................... -- (289,564) (313,738) (76,405) (81,896)
---------- ---------- ---------- --------- ----------
Net loss applicable to common stockholders......... $(3,375,694) $(4,873,512) $(7,472,436) $(928,533) $(2,466,310)
---------- ---------- ---------- --------- ----------
---------- ---------- ---------- --------- ----------
Basic and diluted net loss per share applicable to
common stockholders.............................. $ (.52) $ (.75) $ (.98) $ (.14) $ (.19)
---------- ---------- ---------- --------- ----------
---------- ---------- ---------- --------- ----------
Shares used in the calculation of basic and diluted
net loss per share applicable to common
stockholders..................................... 6,523,330 6,523,330 7,618,511 6,523,330 13,296,447
---------- ---------- ---------- --------- ----------
---------- ---------- ---------- --------- ----------
</TABLE>
See accompanying notes.
F-4
<PAGE>
MEDIA METRIX, INC.
STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
AND THREE MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
OWNER'S/ COMMON STOCK ADDITIONAL COMMON TOTAL
PARTNERS' -------------------- PAID-IN STOCK ACCUMULATED DEFERRED STOCKHOLDERS'
CAPITAL SHARES AMOUNT CAPITAL ISSUABLE DEFICIT COMPENSATION (DEFICIT) EQUITY
<S> <C> <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 -- -- -- -- -- -- 898,000
Net loss............ -- -- -- -- -- (3,375,694) -- (3,375,694)
----------- ---------- -------- ----------- ---------- ------------ ------------ ----------------
Balance at December
31, 1996.......... 1,269,600 -- -- -- -- (3,747,294) -- (2,477,694)
Purchase of
partnership
interest.......... 3,200,000 -- -- -- -- -- -- 3,200,000
Exchange of
partners' interest
for 6,522,893
shares of common
stock and 41,446
shares of
Redeemable
Preferred Stock... (4,469,600) 6,522,893 65,229 259,771 -- -- -- (4,144,600)
Contribution of
amounts owed to
The NPD Group,
Inc............... -- -- -- 380,977 -- -- -- 380,977
Sale of common
stock............. -- 437 4 96 -- -- -- 100
Costs incurred in
connection with
issuance of Series
A Convertible
Preferred Stock... -- -- -- (359,188) -- -- -- (359,188)
Payment of
Redeemable
Preferred Stock
dividends......... -- -- -- -- -- (68,142) -- (68,142)
Accrual of
Redeemable
Preferred Stock
dividends......... -- -- -- -- -- (221,422) -- (221,422)
Net loss............ -- -- -- -- -- (4,583,948) -- (4,583,948)
----------- ---------- -------- ----------- ---------- ------------ ------------ ----------------
Balance at December
31, 1997.......... 6,523,330 65,233 281,656 -- (8,620,806) -- (8,273,917)
Conversion of Series
A Convertible
Preferred Stock... -- 2,155,176 21,552 3,978,439 -- -- -- 3,999,991
Conversion of Series
B Convertible
Preferred Stock... -- 520,590 5,206 1,494,794 -- -- -- 1,500,000
Issuance of common
stock in
connection with
acquisition....... -- 3,890,874 38,909 10,461,091 -- -- -- 10,500,000
Exercise of
warrants.......... -- 8,887 89 197 -- -- -- 286
Sale of common
stock--194,380
shares issuable... -- -- -- -- 1,999,831 -- -- 1,999,831
Employee stock
options........... -- -- -- 1,933,025 -- -- (1,933,025) --
Amortization of
deferred
compensation...... -- -- -- -- -- -- 368,550 368,550
Accrual of
Redeemable
Preferred Stock
dividends......... -- -- -- -- -- (313,738) -- (313,738)
Net loss............ -- -- -- -- -- (7,158,698) -- (7,158,698)
----------- ---------- -------- ----------- ---------- ------------ ------------ ----------------
Balance at December
31, 1998.......... -- 13,098,857 130,989 18,149,202 1,999,831 (16,093,242) (1,564,475) 2,622,305
Issuance of common
stock issuable
(unaudited)....... -- 194,380 1,944 1,997,887 (1,999,831) -- -- --
Exercise of warrants
and stock options
(unaudited)....... -- 434,640 4,346 1,205,463 -- -- -- 1,209,809
Amortization of
deferred
compensation
(unaudited)....... -- -- -- -- -- -- 107,917 107,917
Accrual of
Redeemable
Preferred Stock
dividends
(unaudited)....... -- -- -- -- -- (81,896) -- (81,896)
Net loss
(unaudited)....... -- -- -- -- -- (2,384,414) -- (2,384,414)
----------- ---------- -------- ----------- ---------- ------------ ------------ ----------------
Balance at March 31,
1999
(unaudited)....... $ -- 13,727,877 $137,279 $21,352,552 $ -- $(18,559,552) ($1,456,558) $ 1,473,721
----------- ---------- -------- ----------- ---------- ------------ ------------ ----------------
----------- ---------- -------- ----------- ---------- ------------ ------------ ----------------
</TABLE>
See accompanying notes.
F-5
<PAGE>
MEDIA METRIX, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------- ----------------------
<S> <C> <C> <C> <C> <C>
1996 1997 1998 1998 1999
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss........................................... $(3,375,694) $(4,583,948) $(7,158,698) $ (852,128) $(2,384,414)
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 -- 60,000
Depreciation and amortization of property and
equipment...................................... -- 17,991 65,969 7,119 65,001
Amortization of intangibles...................... -- -- 479,000 -- 748,600
Amortization of deferred compensation............ -- -- 368,550 -- 107,917
Changes in operating assets and liabilities:
Receivables.................................... (629,704) (211,059) (427,652) (230,616) (1,049,856)
Prepaid expenses and other current assets...... -- (38,063) (13,625) (22,962) (173,655)
Other assets................................... -- (22,280) 28,976 -- 3,480
Accounts payable and accrued liabilities....... 88,182 793,140 657,737 (388,019) (1,039,045)
Advance billings to clients.................... 220,020 309,200 393,581 63,745 351,822
Due to The NPD Group, Inc...................... 2,782,351 (1,117,059) 3,421,510 683,036 (3,366,870)
---------- ---------- ---------- ---------- ----------
Net cash used in operating activities.............. (341,845) (4,752,078) (410,878) (739,825) (6,677,020)
INVESTING ACTIVITIES
Cash acquired...................................... -- -- 3,185,112 -- --
Additions to property and equipment................ -- (134,825) (117,489) (6,418) (52,034)
Proceeds from the sale of fixed assets............. -- -- 5,300 -- --
---------- ---------- ---------- ---------- ----------
Net cash (used in) provided by investing
activities....................................... -- (134,825) 3,072,923 (6,418) (52,034)
---------- ---------- ---------- ---------- ----------
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) -- (29,175)
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 and stock
options.......................................... -- -- 286 -- 1,209,809
Payment of offering costs.......................... -- -- -- -- (78,340)
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 -- 1,102,294
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in cash and cash
equivalents...................................... 583,155 1,285,858 6,143,007 (746,243) (5,626,760)
Cash and cash equivalents at beginning of period... -- 583,155 1,869,013 1,869,013 8,012,020
---------- ---------- ---------- ---------- ----------
Cash and cash equivalents at end of period......... $ 583,155 $1,869,013 $8,012,020 $1,122,770 $2,385,260
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
SUPPLEMENTAL INFORMATION
Interest paid...................................... $ -- $ -- $ 11,374 $ -- $ 16,692
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
See accompanying notes.
F-6
<PAGE>
Media Metrix, Inc.
Notes to Financial Statements
December 31, 1998
(Information as of March 31, 1999 and for
the three months ended March 31, 1998 and 1999 is unaudited)
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 and increased the number of authorized shares of common stock to
60,000,000. 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
INTERIM FINANCIAL STATEMENTS
The financial statements as of March 31, 1999 and for the three months ended
March 31, 1998 and 1999 have been prepared by Media Metrix without audit. In the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position as of March 31,
1999 and the results of operations and cash flows for the three months ended
March 31, 1998 and 1999 have been made. Certain information and footnote
disclosures normally
F-7
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or eliminated.
The results of operations for the three months ended March 31, 1999 are not
necessarily indicative of the results to be expected for any future interim
period or for the year ending December 31, 1999.
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.
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
Syndicated (recurring) products and services are sold on a subscription
basis. Revenues for such products and services are recognized over the term of
the related contract as products or services are provided. Buyers of syndicated
products and services typically are billed in advance for the next three months.
Billings rendered in advance of products or services being provided are recorded
as "Advance billings to clients" in the accompanying balance sheet.
Revenues for customized (nonrecurring) products and services are recognized
in the period in which the products or services are provided.
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").
F-8
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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).
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.
F-9
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
3. BASIC AND DILUTED NET LOSS PER SHARE (CONTINUED)
The following sets forth the computation of basic and diluted net loss per
share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
YEAR ENDED DECEMBER 31,
------------------------------------------- ----------------------------
<S> <C> <C> <C> <C> <C>
1996 1997 1998 1998 1999
Numerator:
Net loss............................ $ (3,375,694) $ (4,583,948) $ (7,158,698) $ (852,128) $ (2,384,414)
Preferred stock dividends........... -- (289,564) (313,738) (76,405) (81,896)
------------- ------------- ------------- ------------- -------------
Net loss applicable to common
stockholders...................... $ (3,375,694) $ (4,873,512) $ (7,472,436) $ (928,533) $ (2,466,310)
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
Denominator for basic and diluted loss
per share--weighted average
shares.............................. 6,523,330 6,523,330 7,618,511 6,523,330 13,296,447
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
Basic and diluted loss per share
applicable to common stockholders... $ (.52) $ (.75) $ (.98) $ (.14) $ (.19)
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
</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 3,890,874 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--$3,182,000, including cash of
$3,185,000, (ii) acquired in-process research and development--$1,600,000, (iii)
debt--$372,000, and (iv) intangibles--$6,416,000, 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 follows: 266,658
at $0.03 per share (8,887 of which were exercised in 1998 and 14,748 in 1999),
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
F-10
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
4. ACQUISITION (CONTINUED)
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) $ (15,898,000)
-------------- --------------
-------------- --------------
Net loss applicable to common stockholders.................... $ (14,686,000) $ (16,211,000)
-------------- --------------
-------------- --------------
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................. 10,414,204 10,860,906
-------------- --------------
-------------- --------------
</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.
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 and the three months ended March 31, 1998 and
1999, amounted to approximately $3,568,000, $5,831,000, $6,023,000, $1,848,000
F-11
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
5. RELATED PARTY TRANSACTIONS (CONTINUED)
and $711,000, respectively. At December 31, 1997 and 1998 and March 31, 1999,
Media Metrix owed approximately $1,284,000, $4,706,000 and $1,339,000,
respectively, to NPD for such services. During the years ended December 31,
1996, 1997 and 1998 and the three months ended March 31, 1998 and 1999, weighted
average amounts owed by Media Metrix to NPD were approximately $1,546,000,
$1,492,000, $2,565,000, $1,654,000 and $2,003,000, 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-12
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
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 and
March 31, 1999 consist of:
<TABLE>
<CAPTION>
1997 1998 1999
<S> <C> <C> <C>
Trade accounts payable................................ $ 359,000 $ 1,079,000 $ 467,000
Commissions and bonuses............................... 113,000 660,000 442,000
Panel costs........................................... 128,000 57,000 30,000
Other................................................. 281,000 512,000 660,000
---------- ------------ ------------
$ 881,000 $ 2,308,000 $ 1,599,000
---------- ------------ ------------
---------- ------------ ------------
</TABLE>
F-13
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
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. The investment advisor exercised warrants to
purchase 245,501 shares of common stock on March 31, 1999.
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. Such warrants were exercised on March 31, 1999. 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.
F-14
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
8. PREFERRED STOCKS (CONTINUED)
- 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.
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 2018.
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
F-15
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
9. INCOME TAXES (CONTINUED)
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 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 all its outstanding
stock options granted prior to such time by removing the requirement of the
occurrence of an initial public offering before such options became exercisable.
This change resulted in a new measurement date. Accordingly, Media Metrix
established, as a separate component of stockholders' equity, deferred
compensation (approximately $724,000) equal to the number of options granted
times the difference in their exercise price and $2.30, the estimated fair value
of the common stock at the time of the new measurement date, and recorded
compensation expense in 1998 of approximately $348,000 representing the portion
of the deferred compensation which vested through December 31, 1998.
On December 3, 1998, Media Metrix issued stock options to employees to
purchase 153,072 shares of common stock at $2.39 per share, which was considered
to be the fair value of the common stock at that time. Soon thereafter, Media
Metrix issued shares at $10.29 per share (see Note 12); accordingly, for
accounting purposes, Media Metrix used such per share value to record an
additional deferred compensation charge of $1,209,000 of which $20,150 was
amortized in December 1998.
F-16
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
10. STOCK OPTIONS (CONTINUED)
The following table summarizes activity in stock options:
<TABLE>
<CAPTION>
THREE
MONTHS
YEAR ENDED DECEMBER 31, ENDED
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MARCH 31,
1996 1997 1998 1999
-------------------------- -------------------------- -------------------------- ----------
<CAPTION>
SHARES WEIGHTED- SHARES WEIGHTED- SHARES WEIGHTED- SHARES
UNDER AVERAGE UNDER AVERAGE UNDER AVERAGE UNDER
OPTION EXERCISE PRICE OPTION EXERCISE PRICE OPTION EXERCISE PRICE OPTION
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, beginning of
year................. -- $ -- 133,067 $ 0.23 283,093 $ 0.23 696,130
Grants................. 133,067 0.23 150,026 0.23 373,219 1.97 265,275
Exercises.............. -- -- -- -- -- -- (765)
Forfeitures............ -- -- -- -- (6,957) 2.30 (1,450)
Options issued in
connection with
acquisition.......... -- -- -- -- 46,775 2.39 --
--------- --------- --------- ----------
Balance, end of year... 133,067 0.23 283,093 0.23 696,130 1.29 959,190
--------- --------- --------- ----------
--------- --------- --------- ----------
Weighted-average fair
value of options
issued during the
period............... $ 0.07 $ 0.06 $ 3.42
<CAPTION>
<S> <C>
WEIGHTED-
AVERAGE
EXERCISE
PRICE
<S> <C>
Balance, beginning of
year................. $ 1.29
Grants................. 11.26
Exercises.............. 2.39
Forfeitures............ 2.39
Options issued in
connection with
acquisition.......... --
Balance, end of year... 4.04
Weighted-average fair
value of options
issued during the
period............... $ 2.79
</TABLE>
The following tables summarize information about stock options outstanding
at December 31, 1998 and March 31, 1999:
<TABLE>
<CAPTION>
DECEMBER 31, 1998 MARCH 31, 1999
------------------------------------------ ------------------------------------------
WEIGHTED-AVERAGE WEIGHTED-AVERAGE
EXERCISE OPTIONS OPTIONS REMAINING OPTIONS OPTIONS REMAINING
PRICE OUTSTANDING EXERCISABLE CONTRACTUAL LIFE OUTSTANDING EXERCISABLE CONTRACTUAL LIFE
<S> <C> <C> <C> <C> <C> <C>
$ 0.23........ 283,093 83,231 2.6 years 283,093 83,231 2.4 years
0.35........ 70,665 -- 4.2 70,665 14,133 4.0
2.30........ 142,525 -- 4.5 142,525 -- 4.3
2.39........ 199,847 46,775 9.7 197,632 46,775 9.5
11.26........ -- -- -- 265,275 -- 9.8
----------- ----------- ----------- -----------
696,130 130,006 5.2 959,190 144,139 6.3
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
Media Metrix has reserved 3,639,448 and 2,306,213 shares of common stock for
issuance of all options and warrants at December 31, 1998 and March 31, 1999,
respectively.
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-17
<PAGE>
MEDIA METRIX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
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) $ (7,472,436)
------------- ------------- -------------
------------- ------------- -------------
Pro forma...................................... $ (3,376,754) $ (4,875,943) $ (7,487,969)
------------- ------------- -------------
------------- ------------- -------------
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-18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
RelevantKnowledge, Inc.
In our opinion, the accompanying balance sheets and the related statements
of operations, of changes in 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,
for the year ended December 31, 1997 and for the six week period ended December
31, 1996, 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
April 8, 1999
F-19
<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-20
<PAGE>
RELEVANTKNOWLEDGE, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX WEEKS TEN MONTHS
ENDED YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, OCTOBER 31,
1996 1997 1998
<S> <C> <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.................................................. 8,912 1,433,173 1,623,500
General and administrative........................................... 30,732 1,440,551 2,973,230
Research and development............................................. 103,925 651,421 780,277
------------ ------------- -------------
Total costs and expenses....................................... 143,569 6,035,766 8,256,044
------------ ------------- -------------
Net loss............................................................. $ (143,569) $ (5,340,855) $ (6,345,905)
------------ ------------- -------------
------------ ------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-21
<PAGE>
RELEVANTKNOWLEDGE, INC.
STATEMENTS OF CHANGES IN 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, November 20, 1996.......... -- -- -- -- -- --
Issuance of common stock.......... 3,500,000 $ 3,500 $ 3,500
Issuance of preferred stock....... 1,181,310 $ 750,000 750,000
Net loss.......................... $ (143,569) (143,569)
---------- ------------ ---------- ------------- -------------- -------------
Balance, December 31, 1996.......... 3,500,000 3,500 1,181,310 750,000 (143,569) 609,931
Issuance of preferred stock, net
of offering costs............... 3,888,646 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-22
<PAGE>
RELEVANTKNOWLEDGE, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX WEEKS TEN MONTHS
ENDED YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, OCTOBER 31,
1996 1997 1998
<S> <C> <C> <C>
Cash flows from operating activities
Net loss........................................................... $ (143,569) $ (5,340,855) $ (6,345,905)
Adjustments to reconcile net loss to cash used in operating
activities
Depreciation and amortization.................................. 368 103,173 143,589
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................................................. (11,768) -- (60,974)
Accounts payable and accrued expenses........................ 96,800 522,752 (216,602)
Commissions payable.......................................... -- -- 292,515
Deferred revenue............................................. -- 160,887 307,587
------------ ------------- -------------
Net cash used in operating activities...................... (58,169) (4,843,910) (4,985,181)
------------ ------------- -------------
Cash flows from investing activities
Proceeds from the sale of fixed assets........................... -- -- 6,500
Purchases of fixed assets........................................ (21,042) (826,507) (216,260)
------------ ------------- -------------
Net cash used in investing activities...................... (21,042) (826,507) (209,760)
------------ ------------- -------------
Cash flows from financing activities
Proceeds from issuance of common and preferred stock, net of
offering costs................................................. 753,500 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.................. 753,500 5,994,955 7,159,332
------------ ------------- -------------
Net increase in cash and cash equivalents.......................... 674,289 324,538 1,964,391
Cash and cash equivalents at beginning of period................... -- 674,289 998,827
------------ ------------- -------------
Cash and cash equivalents at end of period......................... $ 674,289 $ 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-23
<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 2018. 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-24
<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. No advertising expense was
recorded for the six weeks ended December 31, 1996.
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-25
<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, $136,000 and $800 for the ten
months ended October 31, 1998, the year ended December 31, 1997 and the six
weeks ended December 31, 1996, 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-26
<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-27
<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. No options were issued during the six weeks ended December 31, 1996. 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>
1997 1998
----------------------- -----------------------
WEIGHTED WEIGHTED
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-28
<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 six weeks ended December 31, 1996,
the year ended December 31, 1997, and ten months ended October 31, 1998, would
have been as follows:
<TABLE>
<CAPTION>
1996 1997 1998
<S> <C> <C> <C>
Net loss--as reported.............................. $ (143,569) $ (5,340,855) $ (6,345,905)
Net loss--proforma................................. $ (143,569) $ (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-29
<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-30
<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........................ 3,084,255 2,973,230 -- 6,057,485
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............................ 9,433,825 5,377,007 2,392,922 17,203,754
------------- ------------- ------------- --------------
Loss from operations................................ (7,223,909) (6,441,814) (2,392,922) (16,058,645)
Interest income, net of interest expense............ 65,211 95,909 -- 161,120
------------- ------------- ------------- --------------
Net loss............................................ (7,158,698) (6,345,905) (2,392,922) (15,897,525)
Preferred stock dividends........................... (313,738) -- -- (313,738)
------------- ------------- ------------- --------------
Net loss applicable to common stockholders.......... $ (7,472,436) $ (6,345,905) $ (2,392,922) $ (16,211,263)
------------- ------------- ------------- --------------
------------- ------------- ------------- --------------
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)............................. 7,618,511 10,860,906
------------- --------------
------------- --------------
</TABLE>
See accompanying notes to unaudited pro forma statement of operations.
F-31
<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-32
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MAY , 1999
[LOGO]
3,000,000 SHARES OF COMMON STOCK
-------------------
P R O S P E C T U S
-------------------
DONALDSON, LUFKIN & JENRETTE
BANCBOSTON ROBERTSON STEPHENS
THOMAS WEISEL PARTNERS LLC
--------------
DLJDIRECT INC.
E*TRADE SECURITIES
- ------------------------------------------------------------
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.................................... 95,000.00
Printing Expenses..................................................... 150,000
Legal Fees and Expenses............................................... 350,000
Accounting Fees and Expenses.......................................... 130,000
Blue Sky Expenses and Counsel Fees.................................... 10,000
Transfer Agent and Registrar Fees..................................... 5,000
Miscellaneous......................................................... 241,242.60
------------
Total................................................................. $ 1,000,000
------------
------------
</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 8 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 its incorporation in 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. We issued (i)
41,446 shares of Media Metrix redeemable preferred stock in exchange for
438,767.7324 Class A Limited Partnership Units of PC Meter; and (ii) 2,142,770
shares of Media Metrix common stock in exchange for 117,647 Class B Limited
Partnership Units of PC Meter. 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 19,323.5 Class B Limited
II-2
<PAGE>
Partnership Units. After the merger, NPD, The 1995 Scott Johnson Trust and The
1995 Stacey Johnson Trust held 4,380,559, 1,071,385 and 1,071,385 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 as compensation for
services rendered by Veronis Suhler & Associates to Media Metrix;
- 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 five 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.
Such warrants were exercised on March 31, 1999.
3. On November 5, 1998, RelevantKnowledge merged with Media Metrix. The
Registrant issued an aggregate of 3,890,874 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 share 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 968,362 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 March 31, 1999, the Registrant issued and sold
442,762 shares of its common stock to investors for aggregate consideration of
$1,208,268 pursuant to exercises of warrants to purchase common stock.
7. All share information set forth above reflects a 2.96873078 for one stock
split in November 1998 and the 1.4648 for one stock split anticipated to occur
prior to the closing of this offering.
No underwriters were engaged in connection with the foregoing sales of
securities. Such sales of common stock, Preferred Stock and warrants 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 Amended Certificate of Incorporation**
3.2 Form of Amended and Restated Certificate of Incorporation to be in effect upon the closing of this
offering
3.3 Form of Certificate of Amendment to Amended Certificate of Incorporation to be filed prior to the closing
of this offering.
3.4 Bylaws (previously filed as Exhibit 3.3)**
3.5 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 Form of Warrant issued to former RelevantKnowledge warrant holders (previously filed as Exhibit 4.6.1)**
4.5 Form of Warrant issued to former Media Metrix warrant holders (previously filed as Exhibit 4.6.2)**
4.6 Form of Warrant issued to former RelevantKnowledge warrant holders (previously filed as Exhibit 4.6.3)**
4.7 Specimen Stock Certificate**
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
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
NO. DESCRIPTION
<C> <S>
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**
10.9 Consulting Agreement by and between Media Metrix and Timothy F.S. Cobb, dated as of January 31, 1999.
10.10 Amended and Restated Management Services Agreement by and between Media Metrix, The NPD Group, Inc. and
Tod Johnson
10.11 Media Metrix Stock Option Plan (previously filed as Exhibit 4.4)**
10.12 1998 Equity Incentive Plan (previously filed as Exhibit 4.5)**
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 Amended Financial Data Schedule for the period ended December 31, 1998
27.2 Amended Financial Data Schedule for the period ended March 31, 1999
</TABLE>
** FILED PREVIOUSLY
(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
II-5
<PAGE>
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-6
<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 April 30, 1999.
<TABLE>
<S> <C> <C>
MEDIA METRIX, INC.
By: /s/ TOD JOHNSON
-----------------------------------------
Tod Johnson
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
</TABLE>
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 April 30, 1999
- ------------------------------ and
Tod Johnson Chairman of the Board
(Principal Executive
Officer)
/s/ THOMAS A. LYNCH Chief Financial Officer, April 30, 1999
- ------------------------------ Secretary and Treasurer
Thomas A. Lynch (Principal Financial and
Accounting Officer)
* Vice Chairman and Director April 30, 1999
- ------------------------------
Jeffrey C. Levy
* Director April 30, 1999
- ------------------------------
Michael Brooks
* Director April 30, 1999
- ------------------------------
William W. Helman
* Director April 30, 1999
- ------------------------------
Stig Kry
* Director April 30, 1999
- ------------------------------
James Mortensen
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ TOD JOHNSON
-------------------------
Tod Johnson
AS ATTORNEY-IN-FACT
</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 Amended Certificate of Incorporation**
3.2 Form of Amended and Restated Certificate of Incorporation to be in effect upon the closing of
this offering
3.3 Form of Certificate of Amendment to Amended Certificate of Incorporation to be filed prior to the
closing of this offering
3.4 Bylaws (previously filed as Exhibit 3.3)**
3.5 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 Form of Warrant issued to former Relevant Knowledge warrant holders (previously filed as Exhibit
4.6.1)**
4.5 Form of Warrant issued to original Media Metrix warrant holders (previously filed as Exhibit
4.6.2)**
4.6 Form of Warrant issued to former Relevant Knowledge warrant holders (previously filed as Exhibit
4.6.3)**
4.7 Specimen Stock Certificate**
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**
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NO. DESCRIPTION PAGE
<C> <S> <C>
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**
10.9 Consulting Agreement by and between Media Metrix and Timothy F.S. Cobb, dated as of January 31,
1999.
10.10 Amended and Restated Management Services Agreement by and between Media Metrix, The NPD Group and
Tod Johnson
10.11 Media Metrix Stock Option Plan (previously filed as Exhibit 4.4)**
10.12 1998 Equity Incentive Plan (previously filed as Exhibit 4.5)**
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 Amended Financial Data Schedule for the period ended December 31, 1998
27.2 Amended Financial Data Schedule for the period ended March 31, 1999
</TABLE>
** FILED PREVIOUSLY
<PAGE>
Exhibit 1.1
3,000,000 Shares
MEDIA METRIX, INC.
Common Stock
UNDERWRITING AGREEMENT
May __, 1999
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
THOMAS WEISEL PARTNERS LLC
As representatives of the several Underwriters
named in Schedule I hereto
c/o Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
Media Metrix, Inc., a Delaware corporation (the "COMPANY"), proposes to
issue and sell 3,000,000 shares of its common stock, $.01 par value per share,
(the "FIRM SHARES"), to the several underwriters named in Schedule I hereto (the
"UNDERWRITERS"). The Company also proposes to issue and sell to the several
Underwriters and certain stockholders of the Company named in Schedule II hereto
(the "SELLING STOCKHOLDERS") severally propose to sell to the several
Underwriters, not more than an additional 450,000 shares of its common stock,
$.01 par value per share, (the "ADDITIONAL SHARES"), of which 250,000 shares are
to be issued and sold by the Company and 200,000 shares are to be sold by the
Selling Stockholders, each Selling Stockholder selling the amount set forth
opposite such Selling Stockholder's name in Schedule II hereto, if requested by
the Underwriters as provided in Section 2 hereof. The Firm Shares and the
Additional Shares are hereinafter referred to collectively as the "SHARES." The
shares of common stock of the Company to be outstanding after giving effect to
the sales contemplated hereby are hereinafter referred to as the "COMMON STOCK."
The Company and the Selling Stockholders are hereinafter sometimes referred to
collectively as the "SELLERS."
SECTION 1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has
prepared and filed with the Securities and Exchange Commission (the
"COMMISSION") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-1, including a
prospectus, relating to the Shares. The registration statement, as amended at
the time it became effective, including the information (if any) deemed to be
part of the registration statement at the time of effectiveness pursuant to Rule
430A under the Act, is hereinafter referred to as the
<PAGE>
"REGISTRATION STATEMENT;" and the prospectus in the form first used to confirm
sales of Shares is hereinafter referred to as the "PROSPECTUS." If the Company
has filed or is required pursuant to the terms hereof to file a registration
statement pursuant to Rule 462(b) under the Act registering additional shares of
Common Stock (a "RULE 462(B) REGISTRATION STATEMENT"), then, unless otherwise
specified, any reference herein to the term "Registration Statement" shall be
deemed to include such Rule 462(b) Registration Statement.
SECTION 2. AGREEMENTS TO SELL AND PURCHASE AND LOCK-UP AGREEMENTS. On
the basis of the representations and warranties contained in this Agreement, and
subject to its terms and conditions, the Company agrees to issue and sell and
each Underwriter agrees, severally and not jointly, to purchase from the Company
at a price per Share of $______ (the "PURCHASE PRICE") the number of Firm Shares
set forth opposite the name of such Underwriter in Schedule I hereto.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, (i) the Company agrees to
issue and sell 250,000 Additional Shares, (ii) each Selling Stockholder agrees,
severally and not jointly, to sell the number of Additional Shares set forth
opposite such Selling Stockholder's name in Schedule II hereto and (iii) the
Underwriters shall have the right to purchase, severally and not jointly, up to
an aggregate of 450,000 Additional Shares from the Company and the Selling
Stockholders at the Purchase Price. Additional Shares may be purchased solely
for the purpose of covering over-allotments made in connection with the offering
of the Firm Shares. In the event that any Selling Stockholder fails to sell the
Additional Shares to be sold by such Selling Stockholder hereunder, the Company
hereby agrees to sell such Additional Shares to the Underwriters in lieu
thereof. The Underwriters may exercise their right to purchase Additional Shares
in whole or in part from time to time by giving written notice thereof to the
Company within 30 days after the date of this Agreement. You shall give any such
notice on behalf of the Underwriters and such notice shall specify the aggregate
number of Additional Shares to be purchased pursuant to such exercise and the
date for payment and delivery thereof, which date shall be a business day (i) no
earlier than two business days after such notice has been given (and, in any
event, no earlier than the Closing Date (as hereinafter defined)) and (ii) no
later than ten business days after such notice has been given. If any Additional
Shares are to be purchased, each Underwriter, severally and not jointly, agrees
to purchase from the Company and the Selling Stockholders, respectively, the
number of Additional Shares (subject to such adjustments to eliminate fractional
shares as you may determine) which bears the same proportion to the total number
of Additional Shares to be purchased from the Company and the Selling
Stockholders as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I bears to the total number of Firm Shares.
Each Seller hereby agrees not to (i) 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 Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or
(ii) enter into any swap or other arrangement that transfers 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 (i) or (ii)
is to be settled by the delivery of Common Stock, or such other securities, in
cash or otherwise), except to the Underwriters pursuant to this
2
<PAGE>
Agreement, for a period of 180 days after the date of the Prospectus without the
prior written consent of Donaldson, Lufkin & Jenrette Securities Corporation.
Notwithstanding the foregoing, during such period (i) the Company may grant
stock options pursuant to the Company's existing stock option plan, (ii) the
Company may issue shares of Common Stock upon the exercise of an option or
warrant or the conversion of a security outstanding on the date hereof and (iii)
the Company may issue shares of Common Stock to securities holders of companies
acquired in exchange for securities of such companies, provided that such
securities holders agree to the foregoing restriction. The Company also agrees
not to file any registration statement with respect to any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock for a period of 180 days after the date of the Prospectus without
the prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation, other than S-8 registration statements. In addition, each Selling
Stockholder agrees that, for a period of 180 days after the date of the
Prospectus without the prior written consent of Donaldson, Lufkin & Jenrette
Securities Corporation, it will not 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. The
Company shall, prior to or concurrently with the execution of this Agreement,
deliver an agreement executed by (i) each Selling Stockholder, (ii) each of the
directors and officers of the Company who is not a Selling Stockholder and (iii)
each stockholder listed on Annex I hereto to the effect that such person will
not, during the period commencing on the date such person signs such agreement
and ending 180 days after the date of the Prospectus, without the prior written
consent of Donaldson, Lufkin & Jenrette Corporation, (A) engage in any of the
transactions described in the first sentence of this paragraph or (B) 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, otherwise than (i) as a bona fide gift or gifts,
provided the donee or donees thereof agree in writing to be bound by this
restriction or (ii) as a distribution or transfer to partners, stockholders of
such person or other third-parties to whom such person has granted certain
option rights prior to the date hereof, provided that the distributees or
transferees thereof agree in writing to be bound by the terms of this
restriction.
SECTION 3. TERMS OF PUBLIC OFFERING. The Sellers are advised by you
that the Underwriters propose (i) to make a public offering of their respective
portions of the Shares as soon after the execution and delivery of this
Agreement as in your judgment is advisable and (ii) initially to offer the
Shares upon the terms set forth in the Prospectus.
SECTION 4. DELIVERY AND PAYMENT. The Shares shall be represented by
definitive certificates and shall be issued in such authorized denominations and
registered in such names as Donaldson, Lufkin & Jenrette Securities Corporation
shall request no later than two business days prior to the Closing Date or the
applicable Option Closing Date (as defined below), as the case may be. The
Shares shall be delivered by or on behalf of the Sellers, with any transfer
taxes thereon duly paid by the respective Sellers, to Donaldson, Lufkin &
Jenrette Securities Corporation through the facilities of The Depository Trust
Company ("DTC"), for the respective accounts of the several Underwriters,
against payment to the Sellers of the Purchase Price therefor by wire transfer
of Federal or other funds immediately available in New York City. The
certificates representing the Shares shall be made available for inspection not
later than 9:30 A.M., New York City time, on the business day prior to the
Closing Date or the applicable
3
<PAGE>
Option Closing Date, as the case may be, at the office of DTC or its designated
custodian (the "DESIGNATED OFFICE"). The time and date of delivery and payment
for the Firm Shares shall be 9:00 A.M., New York City time, on May ___, 1999 or
such other time on the same or such other date as Donaldson, Lufkin & Jenrette
Securities Corporation and the Company shall agree in writing. The time and date
of delivery and payment for the Firm Shares are hereinafter referred to as the
"CLOSING DATE." The time and date of delivery and payment for any Additional
Shares to be purchased by the Underwriters shall be 9:00 A.M., New York City
time, on the date specified in the applicable exercise notice given by you
pursuant to Section 2 or such other time on the same or such other date as
Donaldson, Lufkin & Jenrette Securities Corporation and the Company shall agree
in writing. The time and date of delivery and payment for any Additional Shares
are hereinafter referred to as the "OPTION CLOSING DATE."
The documents to be delivered on the Closing Date or any Option Closing
Date on behalf of the parties hereto pursuant to Section 9 of this Agreement
shall be delivered at the offices of Brobeck, Phleger & Harrison LLP, 1633
Broadway, New York, New York 10019 and the Shares shall be delivered at the
Designated Office, all on the Closing Date or such Option Closing Date, as the
case may be.
SECTION 5. AGREEMENTS OF THE COMPANY. The Company agrees with you:
(a) To advise you promptly and, if requested by you, to confirm such
advice in writing, (i) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or for
additional information, (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the suspension
of qualification of the Shares for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purposes, (iii) when any amendment to the
Registration Statement becomes effective, (iv) if the Company is required to
file a Rule 462(b) Registration Statement after the effectiveness of this
Agreement, when the Rule 462(b) Registration Statement has become effective and
(v) of the happening of any event during the period referred to in Section 5(d)
below which makes any statement of a material fact made in the Registration
Statement or the Prospectus untrue or which requires any additions to or changes
in the Registration Statement or the Prospectus in order to make the statements
therein not misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the Company will use
its best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To furnish to you four (4) signed copies of the Registration
Statement as first filed with the Commission and of each amendment to it,
including all exhibits, and to furnish to you and each Underwriter designated by
you such number of conformed copies of the Registration Statement as so filed
and of each amendment to it, without exhibits, as you may reasonably request.
(c) To prepare the Prospectus, the form and substance of which shall be
satisfactory to you, and to file the Prospectus in such form with the Commission
within the applicable period specified in Rule 424(b) under the Act; during the
period specified in Section 5(d) below, not to file any further amendment to the
Registration Statement and not to make any amendment or
4
<PAGE>
supplement to the Prospectus of which you shall not previously have been advised
or to which you shall reasonably object after being so advised; and, during such
period, to prepare and file with the Commission, promptly upon your reasonable
request, any amendment to the Registration Statement or amendment or supplement
to the Prospectus which may be necessary or advisable in connection with the
distribution of the Shares by you, and to use its best efforts to cause any such
amendment to the Registration Statement to become promptly effective.
(d) Prior to 10:00 A.M., New York City time, on the first business day
after the date of this Agreement and from time to time thereafter for such
period as in the opinion of counsel for the Underwriters a prospectus is
required by law to be delivered in connection with sales by an Underwriter or a
dealer, to furnish in New York City to each Underwriter and any dealer as many
copies of the Prospectus (and of any amendment or supplement to the Prospectus)
as such Underwriter or dealer may reasonably request.
(e) If during the period specified in Section 5(d), any event shall
occur or condition shall exist as a result of which, in the reasonable opinion
of counsel for the Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if, in the reasonable opinion of counsel for the Underwriters, it is
necessary to amend or supplement the Prospectus to comply with applicable law,
forthwith to prepare and file with the Commission an appropriate amendment or
supplement to the Prospectus so that the statements in the Prospectus, as so
amended or supplemented, will not in the light of the circumstances when it is
so delivered, be misleading, or so that the Prospectus will comply with
applicable law, and to furnish to each Underwriter and to any dealer as many
copies thereof as such Underwriter or dealer may reasonably request.
(f) Prior to any public offering of the Shares, to cooperate with you
and counsel for the Underwriters in connection with the registration or
qualification of the Shares for offer and sale by the several Underwriters and
by dealers under the state securities or Blue Sky laws of such jurisdictions as
you may request, to continue such registration or qualification in effect so
long as required for distribution of the Shares and to file such consents to
service of process or other documents as may be necessary in order to effect
such registration or qualification; PROVIDED, HOWEVER, that the Company shall
not be required in connection therewith to qualify as a foreign corporation in
any jurisdiction in which it is not now so qualified or to take any action that
would subject it to general consent to service of process or taxation other than
as to matters and transactions relating to the Prospectus, the Registration
Statement, any preliminary prospectus or the offering or sale of the Shares, in
any jurisdiction in which it is not now so subject.
(g) To mail and make generally available to its stockholders as soon as
practicable an earnings statement covering the twelve-month period ending June
30, 2000 that shall satisfy the provisions of Section 11(a) of the Act, and to
advise you in writing when such statement has been so made available.
(h) During the period of three years after the date of this Agreement,
to furnish to you as soon as available copies of all reports or other
communications furnished to the record holders
5
<PAGE>
of Common Stock or furnished to or filed, on a publicly-available basis, with
the Commission or any national securities exchange on which any class of
securities of the Company is listed and such other publicly available
information concerning the Company and its subsidiaries as you may reasonably
request.
(i) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the Sellers' obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the Company's
counsel, the Company's accountants and any Selling Stockholder's counsel (in
addition to the Company's counsel) in connection with the registration and
delivery of the Shares under the Act and all other fees and expenses in
connection with the preparation, printing, filing and distribution of the
Registration Statement (including financial statements and exhibits), any
preliminary prospectus, the Prospectus and all amendments and supplements to any
of the foregoing, including the mailing and delivering of copies thereof to the
Underwriters and dealers in the quantities specified herein, (ii) all costs and
expenses related to the transfer and delivery of the Shares to the Underwriters,
including any transfer or other taxes payable thereon, (iii) all costs of
printing or producing this Agreement and any other agreements or documents in
connection with the offering, purchase, sale or delivery of the Shares, (iv) all
expenses in connection with the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws of the several states and
any foreign jurisdictions, and all costs of printing or producing any
Preliminary and Supplemental Blue Sky Memoranda in connection therewith
(including the filing fees and reasonable fees and disbursements of counsel for
the Underwriters in connection with such registration or qualification and
memoranda relating thereto), (v) the filing fees and disbursements of counsel
for the Underwriters in connection with the review and clearance of the offering
of the Shares by the National Association of Securities Dealers, Inc., (vi) all
fees and expenses in connection with the preparation and filing of the
registration statement on Form 8-A relating to the Common Stock and all costs
and expenses incident to the listing of the Shares on the Nasdaq National
Market, (vii) the cost of printing certificates representing the Shares, (viii)
the costs and charges of any transfer agent, registrar and/or depositary, and
(ix) all other costs and expenses incident to the performance of the obligations
of the Company and the Selling Stockholders hereunder (other than the Selling
Stockholders' indemnification and contribution obligations under Section 8
below) for which provision is not otherwise made in this Section. The provisions
of this Section shall not supersede or otherwise affect any agreement that the
Company and the Selling Stockholders may otherwise have for allocation of such
expenses among themselves.
(j) To use its best efforts to list for quotation the Shares on the
Nasdaq National Market and to maintain the listing of the Shares on the Nasdaq
National Market.
(k) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the Company prior to
the Closing Date or any Option Closing Date, as the case may be, and to satisfy
all conditions precedent to the delivery of the Shares.
(l) If the Registration Statement at the time of the effectiveness of
this Agreement does not cover all of the Shares, to file a Rule 462(b)
Registration Statement with the
6
<PAGE>
Commission registering the Shares not so covered in compliance with Rule 462(b)
by 10:00 P.M., New York City time, on the date of this Agreement and to pay to
the Commission the filing fee for such Rule 462(b) Registration Statement at the
time of the filing thereof or to give irrevocable instructions for the payment
of such fee pursuant to Rule 111(b) under the Act.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Underwriter that:
(a) The Registration Statement has become effective (other than any
Rule 462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement); any Rule 462(b) Registration Statement filed
after the effectiveness of this Agreement will become effective no later than
10:00 P.M., New York City time, on the date of this Agreement; and no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or threatened by the Commission.
(b) (i) The Registration Statement (other than any Rule 462(b)
Registration Statement to be filed by the Company after the effectiveness of
this Agreement), when it became effective, did not contain and, as amended, if
applicable, will not contain any 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, (ii) the Registration Statement (other than
any Rule 462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement) and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the Act,
(iii) if the Company is required to file a Rule 462(b) Registration Statement
after the effectiveness of this Agreement, such Rule 462(b) Registration
Statement and any amendments thereto, when they become effective (A) will not
contain any 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 and (B) will comply in all material respects with the Act and (iv)
the Prospectus does not contain and, as amended or supplemented, if applicable,
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph do not apply to
statements or omissions in the Registration Statement or the Prospectus based
upon information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein.
(c) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Act, complied when so filed in all material
respects with the Act, and did not contain 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, in the light of the circumstances under which
they were made, not misleading, except that the representations and warranties
set forth in this paragraph do not apply to statements or omissions in any
preliminary prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein.
7
<PAGE>
(d) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of its jurisdiction of incorporation
and has the corporate power and authority to carry on its business as described
in the Prospectus and to own, lease and operate its properties, and is duly
qualified and is in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on the
business, prospects, financial condition or results of operations of the Company
(a "Material Adverse Effect"). The Company has no subsidiaries. MMX Acquisition
Corp., a Delaware corporation formed by the Company, owns no assets, conducts no
operations and has issued none of its capital stock.
(e) There are no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or liens granted or issued by
the Company or any of its subsidiaries relating to or entitling any person to
purchase or otherwise to acquire any shares of the capital stock of the Company
or any of its subsidiaries, except as otherwise disclosed in the Registration
Statement.
(f) All the outstanding shares of capital stock of the Company
(including the Shares to be sold by the Selling Stockholders) have been duly
authorized and validly issued and are fully paid, non-assessable and not subject
to any preemptive or similar rights; and the Shares to be issued and sold by the
Company have been duly authorized and, when issued and delivered to the
Underwriters against payment therefor as provided by this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of such Shares
will not be subject to any preemptive or similar rights.
(g) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(h) The Company is not in violation of its charter or by-laws or in
default in the performance of any obligation, agreement, covenant or condition
contained in any indenture, loan agreement, mortgage, lease or other agreement
or instrument to which the Company is a party or by which the Company or its
property is bound, except for such violations or defaults that would not have a
Material Adverse Effect.
(i) The execution, delivery and performance of this Agreement by the
Company, the compliance by the Company with all the provisions hereof and the
consummation of the transactions contemplated hereby will not (i) require any
consent, approval, authorization or other order of, or qualification with, any
court or governmental body or agency (except such as may be required under the
securities or Blue Sky laws of the various states), (ii) conflict with or
constitute a breach of any of the terms or provisions of, or a default under,
the charter or by-laws of the Company or any indenture, loan agreement,
mortgage, lease or other agreement or instrument to which the Company is a party
or by which the Company or its property is bound, except for such conflicts or
defaults that would not have a Material Adverse Effect, (iii) violate or
conflict with any applicable law or any rule, regulation, judgment, order or
decree of any court or any governmental body or agency having jurisdiction over
the Company or its property, except for violations or conflicts that would not
have a Material Adverse Effect or (iv) result in
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the suspension, termination or revocation of any Authorization (as defined
below) of the Company or any other impairment of the rights of the holder of any
such Authorization, except for those that would not have a Material Adverse
Effect.
(j) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is or, to the
knowledge of the Company, could be a party or to which any of their respective
property is or could be subject that are required to be described in the
Registration Statement or the Prospectus and are not so described; nor are there
any statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not so described or filed as
required.
(k) Neither the Company nor any of its subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), any provisions of the
Employee Retirement Income Security Act of 1974, as amended, or any provisions
of the Foreign Corrupt Practices Act or the rules and regulations promulgated
thereunder, except for such violations which, singly or in the aggregate, would
not have a Material Adverse Effect.
(l) Each of the Company and its subsidiaries has such permits,
licenses, consents, exemptions, franchises, authorizations and other approvals
(each, an "AUTHORIZATION") of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and all
courts and other tribunals, including, without limitation, under any applicable
Environmental Laws, as are necessary to own, lease, license and operate its
respective properties and to conduct its business, except where the failure to
have any such Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a Material Adverse Effect. Each such
Authorization is valid and in full force and effect and each of the Company and
its subsidiaries is in compliance with all the terms and conditions thereof and
with the rules and regulations of the authorities and governing bodies having
jurisdiction with respect thereto; and no event has occurred (including, without
limitation, the receipt of any notice from any authority or governing body)
which allows or, after notice or lapse of time or both, would allow, revocation,
suspension or termination of any such Authorization or results or, after notice
or lapse of time or both, would result in any other impairment of the rights of
the holder of any such Authorization; except where such failure to be valid and
in full force and effect or to be in compliance, the occurrence of any such
event or the presence of any such restriction would not, singly or in the
aggregate, have a Material Adverse Effect.
(m) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with Environmental
Laws or any Authorization, any related constraints on operating activities and
any potential liabilities to third parties) which would, singly or in the
aggregate, have a Material Adverse Effect.
(n) This Agreement has been duly authorized, executed and delivered by
the Company.
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(o) Ernst & Young LLP are independent public accountants with respect
to the Company as required by the Act.
(p) The financial statements included in the Registration Statement and
the Prospectus (and any amendment or supplement thereto), together with related
schedules and notes, present fairly the financial position, results of
operations and changes in financial position of the Company and its subsidiaries
on the basis stated therein at the respective dates or for the respective
periods to which they apply; such statements and related schedules and notes
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; the supporting schedules, if any, included in the Registration
Statement present fairly in accordance with generally accepted accounting
principles the information required to be stated therein; and the other
financial information and data set forth in the Registration Statement and the
Prospectus (and any amendment or supplement thereto) are, in all material
respects, accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company.
(q) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described in
the Prospectus, will not be, an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended.
(r) Except as disclosed in the Registration Statement, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company or to
require the Company to include such securities with the Shares registered
pursuant to the Registration Statement.
(s) The Company has reviewed its operations and any third parties with
which the Company has a material relationship to evaluate the extent to which
the business or operations of the Company will be affected by the Year 2000
Problem. As a result of such review, the Company has no reason to believe, and
does not believe, that the Year 2000 Problem will have a Material Adverse Effect
on the Company. The "YEAR 2000 PROBLEM" as used herein means any significant
risk that computer hardware or software used in the receipt, transmission,
processing, manipulation, storage, retrieval, retransmission or other
utilization of data or in the operation of mechanical or electrical systems of
any kind will not be able to reliably distinguish dates beginning on January 1,
2000 from dates prior to January 1, 2000.
(t) The PRO FORMA financial statements of the Company and the related
notes thereto set forth in the Registration Statement and the Prospectus (and
any supplement or amendment thereto) have been prepared on a basis consistent
with the historical financial statements of the Company, give effect to the
assumptions used in the preparation thereof on a reasonable basis and in good
faith and present fairly the historical transactions contemplated by the
Registration Statement and the Prospectus. Such PRO FORMA financial statements
have been prepared in accordance with the applicable requirements of Rule 11-02
of Regulation S-X promulgated by the Commission. The other PRO FORMA financial
and statistical information and data set forth in
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the Registration Statement and the Prospectus (and any supplement or amendment
thereto) are, in all material respects, accurately presented and prepared on a
basis consistent with the PRO FORMA financial statements.
(u) The Company has not at any time during the last five (5) years (i)
made any unlawful contribution to any candidate for foreign office or failed to
disclose fully any contribution in violation of law, or (ii) made any payment to
any federal or state governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction thereof.
(v) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might reasonably be expected to cause
or result in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares.
(w) The Company has good and marketable title to all personal property
owned by it which is material to its business, in each case free and clear from
all liens, encumbrances and defects except such as are described in the
Prospectus or such that would not have a Material Adverse Effect.
(x) Except as otherwise set forth in the Registration Statement, the
real property and buildings held under lease by the Company are held by them
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries, taken as a whole, in
each case except as described in the Prospectus.
(y) The Company owns or possesses valid and enforceable licenses to all
patents, patent rights, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and trade names
("INTELLECTUAL PROPERTY") currently employed by the Company in connection with
the business now operated by it, except where the failure to own or possess such
Intellectual Property would not, singly or in the aggregate, have a Material
Adverse Effect. The Company has not received any notice, nor is it aware of
facts which would form a reasonable basis for any claim, that: (i) challenges
the Company's rights in or to any Intellectual Property; (ii) challenges the
validity or scope of any Intellectual Property; (iii) any third party has or
will be able to establish any rights in the Intellectual Property, except for
the ownership rights of the owners of the Intellectual Property which is
licensed to the Company or the rights of parties to whom the Company has granted
licenses of such Intellectual Property; (iv) the Intellectual Property infringes
or otherwise violates any patent, copyright, trade secret, trademark or other
proprietary right of any third party; or (v) there is infringement of the
Intellectual Property by any third party, which, in the case of any such claim
specified in clauses (i), (ii), (iii), (iv) or (v) above, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a Material Adverse Effect.
(z) The Company and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; and neither the Company nor any of its
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subsidiaries (i) has received notice from any insurer or agent of such insurer
that substantial capital improvements or other material expenditures will have
to be made in order to continue such insurance or (ii) has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers at a
cost that would not have a Material Adverse Effect.
(aa) No relationship, direct or indirect, exists between or among the
Company or any of its subsidiaries on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of its subsidiaries
on the other hand, which is required by the Act to be described in the
Registration Statement or the Prospectus which is not so described.
(bb) There is no (i) significant unfair labor practice complaint,
grievance or arbitration proceeding pending or, to the Company's best knowledge,
threatened against the Company or any of its subsidiaries before the National
Labor Relations Board or any state or local labor relations board, (ii) strike,
labor dispute, slowdown or stoppage pending or, to the Company's best knowledge,
threatened against the Company or any of its subsidiaries or (iii) union
representation question existing with respect to the employees of the Company
and its subsidiaries, except for such actions specified in clause (i), (ii) or
(iii) above, which, singly or in the aggregate, would not have a material
adverse effect on the business, prospects, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole. To the best of
the Company's knowledge, no collective bargaining organizing activities are
taking place with respect to the Company.
(cc) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(dd) All material tax returns required to be filed by the Company and
each of its subsidiaries in any jurisdiction have been filed, other than those
filings being contested in good faith, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other charges
due pursuant to such returns or pursuant to any assessment received by the
Company or any of its subsidiaries have been paid, other than those being
contested in good faith and for which adequate reserves have been provided.
(ee) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there has not occurred any material adverse change or any development involving
a prospective material adverse change in the condition, financial or otherwise,
or the earnings, business, management or operations of the Company and its
subsidiaries, taken as a whole, (ii) there has not been any material adverse
change or any development involving a prospective material adverse change in the
capital stock or in the long-
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term debt of the Company or any of its subsidiaries and (iii) neither the
Company nor any of its subsidiaries has incurred any material liability or
obligation, direct or contingent.
(ff) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters shall be deemed to
be a representation and warranty by the Company to the Underwriters as to the
matters covered thereby.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS.
Each Selling Stockholder represents and warrants to each Underwriter that:
(a) Such Selling Stockholder is the lawful owner of the Shares to be
sold by such Selling Stockholder pursuant to this Agreement and has, and on the
Option Closing Date will have, good and clear title to such Shares, free of all
restrictions on transfer, liens, encumbrances, security interests, equities and
claims whatsoever.
(b) The Shares to be sold by such Selling Stockholder have been duly
authorized and are validly issued, fully paid and non-assessable.
(c) Such Selling Stockholder has, and on the Option Closing Date will
have, full legal right, power and authority, and all authorization and approval
required by law, to enter into this Agreement, the Custody Agreement signed by
such Selling Stockholder and Continental Stock Transfer and Trust Company, as
Custodian, relating to the deposit of the Shares to be sold by such Selling
Stockholder (the "CUSTODY AGREEMENT") and the Power of Attorney of such Selling
Stockholder appointing certain individuals as such Selling Stockholder's
attorneys-in-fact (the "ATTORNEYS") to the extent set forth therein, relating to
the transactions contemplated hereby and by the Registration Statement and the
Custody Agreement (the "POWER OF ATTORNEY") and to sell, assign, transfer and
deliver the Shares to be sold by such Selling Stockholder in the manner provided
herein and therein.
(d) This Agreement has been duly executed and delivered by or on behalf
of such Selling Stockholder.
(e) The Custody Agreement of such Selling Stockholder has been duly
authorized, executed and delivered by such Selling Stockholder and is a valid
and binding agreement of such Selling Stockholder, enforceable in accordance
with its terms.
(f) The Power of Attorney of such Selling Stockholder has been duly
authorized, executed and delivered by such Selling Stockholder and is a valid
and binding instrument of such Selling Stockholder, enforceable in accordance
with its terms, and, pursuant to such Power of Attorney, such Selling
Stockholder has, among other things, authorized the Attorneys, or any one of
them, to execute and deliver on such Selling Stockholder's behalf this Agreement
and any other document that they, or any one of them, may deem necessary or
desirable in connection with the transactions contemplated hereby and thereby
and to deliver the Shares to be sold by such Selling Stockholder pursuant to
this Agreement.
(g) Upon delivery of and payment for the Shares to be sold by such
Selling Stockholder pursuant to this Agreement, good and clear title to such
Shares will pass to the
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Underwriters, free of all restrictions on transfer, liens, encumbrances,
security interests, equities and claims whatsoever.
(h) The execution, delivery and performance of this Agreement and the
Custody Agreement and Power of Attorney of such Selling Stockholder by or on
behalf of such Selling Stockholder, the compliance by such Selling Stockholder
with all the provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not (i) require any consent,
approval, authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states), (ii) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the
organizational documents of such Selling Stockholder, if such Selling
Stockholder is not an individual, or any indenture, loan agreement, mortgage,
lease or other agreement or instrument to which such Selling Stockholder is a
party or by which such Selling Stockholder or any property of such Selling
Stockholder is bound or (iii) violate or conflict with any applicable law or any
rule, regulation, judgment, order or decree of any court or any governmental
body or agency having jurisdiction over such Selling Stockholder or any property
of such Selling Stockholder.
(i) The information in the Registration Statement under the caption
"Principal Stockholders" which specifically relates to such Selling Stockholder
does not, and will not on the Closing Date, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. With respect to those Selling
Stockholders that are directors or officers of the Company, or are controlled by
directors or officers of the Company, each such Selling Stockholder represents
and warrants that such Selling Stockholder has no reason to believe that (i) the
Registration Statement (other than any Rule 462(b) Registration Statement to be
filed by the Company after the effectiveness of this Agreement), when it became
effective, contained and, as amended, if applicable, will contain any 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, (ii)
the Prospectus contains and, as amended or supplemented, if applicable, will
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading and (iii) each preliminary prospectus
filed as part of the registration statement as originally filed or as part of
any amendment thereto, or filed pursuant to Rule 424 under the Act, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph do not apply to
statements or omissions in the Registration Statement, the Prospectus or in any
preliminary prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein.
(j) At any time during the period described in Section 5(d), if there
is any change in the information referred to in Section 7(i), such Selling
Stockholder will immediately notify you of such change.
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(k) Each certificate signed by or on behalf of such Selling Stockholder
and delivered to the Underwriters or counsel for the Underwriters shall be
deemed to be a representation and warranty by such Selling Stockholder to the
Underwriters as to the matters covered thereby.
SECTION 8. INDEMNIFICATION. (a) The Sellers, jointly and severally,
agree to indemnify and hold harmless each Underwriter, its directors, its
officers and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), from and against any and all losses,
claims, damages, liabilities and judgments (including, without limitation, any
legal or other expenses incurred in connection with investigating or defending
any matter, including any action, that could give rise to any such losses,
claims, damages, liabilities or judgments) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), the Prospectus (or any amendment or
supplement thereto) or any preliminary prospectus, or caused by 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, except insofar as
such losses, claims, damages, liabilities or judgments are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished in writing to the Company by
such Underwriter through you expressly for use therein, provided, however, that
the foregoing indemnity agreement with respect to any preliminary prospectus
shall not inure to the benefit of any Underwriter who failed to deliver a
Prospectus, as then amended or supplemented, (so long as the Prospectus and any
amendment or supplement thereto was provided by the Company to the several
Underwriters in the requisite quantity and on a timely basis to permit proper
delivery on or prior to the Closing Date or the Option Closing Date, as the case
may be) to the person asserting any losses, claims, damages, liabilities or
judgments caused by any untrue statement or alleged untrue statement of a
material fact contained in such preliminary prospectus, or caused by 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, if
such material misstatement or omission or alleged material misstatement or
omission was cured in the Prospectus, as so amended or supplemented, and such
Prospectus was required by law to be delivered at or prior to the written
confirmation of sale to such person; provided, further, however, that each
Selling Stockholder shall only be liable to the extent, and only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement (or any amendment thereto), the
Prospectus (or any amendment or supplement thereto) or any preliminary
prospectus in reliance upon and in conformity with written information furnished
to the Company by such Selling Stockholder expressly for use therein.
Notwithstanding the foregoing, the aggregate liability of any Selling
Stockholder pursuant to this Section 8(a) shall be limited to an amount equal to
the total proceeds (before deducting underwriting discounts and commissions and
expenses) received by such Selling Stockholder from the Underwriters for the
sale of the Shares sold by such Selling Stockholder hereunder.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement, each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, each Selling
Stockholder and each person, if any, who controls such
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Selling Stockholder within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the Sellers
to such Underwriter but only with reference to information relating to such
Underwriter furnished in writing to the Company by such Underwriter through you
expressly for use in the Registration Statement (or any amendment thereto), the
Prospectus (or any amendment or supplement thereto) or any preliminary
prospectus.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), the Underwriter shall not be required to assume
the defense of such action pursuant to this Section 8(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
such Underwriter). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for (i) the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) for all Underwriters, their officers and
directors and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Act or Section 20 of the Exchange Act, (ii)
the fees and expenses of more than one separate firm of attorneys (in addition
to any local counsel) for the Company, its directors, its officers who sign the
Registration Statement and all persons, if any, who control the Company within
the meaning of either such Section and (iii) the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) for all
Selling Stockholders and all persons, if any, who control any Selling
Stockholder within the meaning of either such Section, and all such fees and
expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Underwriters, their officers and directors and such
control persons of any Underwriters, such firm shall be designated in writing by
Donaldson, Lufkin & Jenrette Securities Corporation. In the case of any such
separate firm for the Company and such directors, officers and control persons
of the Company, such firm shall be designated in writing by the Company. In the
case of any such separate firm for the Selling Stockholders and such control
persons of any Selling Stockholders, such firm shall be designated
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in writing by the Attorneys. The indemnifying party shall indemnify and hold
harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than thirty business days after the
indemnifying party shall have received a request from the indemnified party for
reimbursement for the reasonable fees and expenses of counsel (in any case where
such fees and expenses are at the expense of the indemnifying party) and, prior
to the date of such settlement, the indemnifying party shall have failed to
comply with such reimbursement request. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement or
compromise of, or consent to the entry of judgment with respect to, any pending
or threatened action in respect of which the indemnified party is or could have
been a party and indemnity or contribution may be or could have been sought
hereunder by the indemnified party, unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this Section 8 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments 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, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Sellers on the one hand and the Underwriters on the other hand from the offering
of the Shares or (ii) if the allocation provided by clause 8(d)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause 8(d)(i) above but also the
relative fault of the Sellers on the one hand and the Underwriters on the other
hand in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Sellers on the
one hand and the Underwriters on the other hand shall be deemed to be in the
same proportion as the total net proceeds from the offering (after deducting
underwriting discounts and commissions, but before deducting expenses) received
by the Sellers, and the total underwriting discounts and commissions received by
the Underwriters, bear to the total price to the public of the Shares, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault of the Sellers on the one hand and the Underwriters on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Selling Stockholders on the one hand or the Underwriters on the other hand and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
The Sellers and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the
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losses, claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any matter, including any action,
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 8, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective number
of Shares purchased by each of the Underwriters hereunder and not joint.
(e) The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
(f) Each Selling Stockholder hereby designates Media Metrix, Inc., 35
East 21st Street, New York, New York 10010, as its authorized agent, upon which
process may be served in any action which may be instituted in any state or
federal court in the State of New York by any Underwriter, any director or
officer of any Underwriter or any person controlling any Underwriter asserting a
claim for indemnification or contribution under or pursuant to this Section 8,
and each Selling Stockholder will accept the jurisdiction of such court in such
action, and waives, to the fullest extent permitted by applicable law, any
defense based upon lack of personal jurisdiction or venue. A copy of any such
process shall be sent or given to such Selling Stockholder, at the address for
notices specified in Section 12 hereof.
SECTION 9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase the Shares under this Agreement are
subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company contained in
this Agreement shall be true and correct on the Closing Date and Option Closing
Date, as applicable, with the same force and effect as if made on and as of the
Closing Date and Option Closing Date, as applicable.
(b) If the Company is required to file a Rule 462(b) Registration
Statement after the effectiveness of this Agreement, such Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., New York City
time, on the date of this Agreement; and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending
before or contemplated by the Commission.
(c) You shall have received on the Closing Date and Option Closing
Date, as applicable, a certificate dated the Closing Date, signed by Tod Johnson
and Thomas A. Lynch, in
18
<PAGE>
their capacities as the Chief Executive Officer and Chief Financial Officer of
the Company, confirming the matters set forth in Sections 6(ee), 9(a) and 9(b)
and that the Company has complied with all of the agreements and satisfied all
of the conditions herein contained and required to be complied with or satisfied
by the Company on or prior to the Closing Date or the Option Closing Date, as
applicable.
(d) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there shall not have occurred any change or any development involving a
prospective change in the condition, financial or otherwise, or the earnings,
business, management or operations of the Company and its subsidiaries, taken as
a whole, (ii) there shall not have been any change or any development involving
a prospective change in the capital stock or in the long-term debt of the
Company or any of its subsidiaries and (iii) neither the Company nor any of its
subsidiaries shall have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause 9(d)(i),
9(d)(ii) or 9(d)(iii), in your judgment, is material and adverse and, in your
judgment, makes it impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
(e) All the representations and warranties of each Selling Stockholder
contained in this Agreement shall be true and correct on the Option Closing Date
with the same force and effect as if made on and as of the Option Closing Date
and you shall have received on the Option Closing Date a certificate dated the
Option Closing Date from each Selling Stockholder to such effect and to the
effect that such Selling Stockholder has complied with all of the agreements and
satisfied all of the conditions herein contained and required to be complied
with or satisfied by such Selling Stockholder on or prior to the Option Closing
Date.
(f) You shall have received on the Closing Date and Option Closing
Date, as applicable, an opinion (satisfactory to you and counsel for the
Underwriters), dated the Closing Date and Option Closing Date, as applicable, of
Fulbright & Jaworski L.L.P., special counsel for the Company and the Selling
Stockholders, to the effect that:
(i) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority
to carry on its business and to own, lease and operate its properties
as described in the Prospectus;
(ii) the Company is duly qualified and is in good standing as
a foreign corporation authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be so
qualified would not have a Material Adverse Effect;
(iii) all the outstanding shares of capital stock of the
Company (including the Shares to be sold by the Selling Stockholders)
have been duly authorized and validly issued and are fully paid,
non-assessable and not subject to any preemptive or similar rights;
19
<PAGE>
(iv) the Shares to be issued and sold by the Company hereunder
have been duly authorized and, when issued and delivered to the
Underwriters against payment therefor as provided by this Agreement,
will be validly issued, fully paid and non-assessable, and to such
counsel's knowledge, the issuance of such Shares will not be subject to
any preemptive or similar rights;
(v) this Agreement has been duly authorized, executed and
delivered by the Company and by or on behalf of each Selling
Stockholder;
(vi) the authorized capital stock of the Company conforms as
to legal matters, in all material respects, to the description thereof
contained in the Prospectus;
(vii) the Registration Statement has become effective under
the Act, no stop order suspending its effectiveness has been issued and
no proceedings for that purpose are, to such counsel's knowledge after
due inquiry, pending before or contemplated by the Commission;
(viii) the statements under the captions "Risk Factors -
Effects of anti-takeover provisions could inhibit the acquisition of
Media Metrix", "Business - Intellectual Property", "Management - Equity
Incentive Plans", "Certain Transactions", "Description of Capital
Stock", "Shares Eligible for Future Sale" and "Underwriting" in the
Prospectus and Items 14 and 15 of Part II of the Registration
Statement, insofar as such statements constitute a summary of the legal
matters, documents or proceedings referred to therein, fairly present
the information called for with respect to such legal matters,
documents and proceedings;
(ix) the execution, delivery and performance of this Agreement
by the Company, the compliance by the Company with all the provisions
hereof and the consummation of the transactions contemplated hereby
will not (A) require any consent, approval, authorization or other
order of, or qualification with, any court or governmental body or
agency (except such as may be required under the securities or Blue Sky
laws of the various states), (B) conflict with or constitute a breach
of any of the terms or provisions of, or a default under, the charter
or by-laws of the Company or any indenture, loan agreement, mortgage,
lease or other agreement or instrument included as an exhibit to the
Registration Statement, to which the Company is a party or by which the
Company or its property is bound which would have a Material Adverse
Effect, or (C) to such counsel's knowledge, violate or conflict with
any applicable law or any rule, regulation, judgment, order or decree
of any court or any governmental body or agency having jurisdiction
over the Company and its property;
(x) such counsel does not know of any legal or governmental
proceedings pending or threatened against the Company that are required
to be described in the Registration Statement or the Prospectus and are
not so described;
(xi) the Company is not and, after giving effect to the
offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus, will not
20
<PAGE>
be, an "investment company" as such term is defined in the Investment
Company Act of 1940, as amended;
(xii) to such counsel's knowledge no holders of securities of
the Company have rights to the registration of shares of the Company's
Common Stock or other securities because of the filing of the
Registration Statement by the Company or the offering contemplated
hereby, except as disclosed in the Registration Statement;
(xiii) each Selling Stockholder is the lawful owner of the
Shares to be sold by such Selling Stockholder pursuant to this
Agreement and has good and clear title to such Shares, free of all
restrictions on transfer, liens, encumbrances, security interests,
equities and claims whatsoever;
(xiv) to such counsel's knowledge, each Selling Stockholder
has full legal right, power and authority, and all authorization and
approval required by law, to enter into this Agreement and the Custody
Agreement and the Power of Attorney of such Selling Stockholder and to
sell, assign, transfer and deliver the Shares to be sold by such
Selling Stockholder in the manner provided herein and therein;
(xv) the Custody Agreement of each Selling Stockholder has
been duly authorized, executed and delivered by such Selling
Stockholder and is a valid and binding agreement of such Selling
Stockholder, enforceable in accordance with its terms;
(xvi) the Power of Attorney of each Selling Stockholder has
been duly authorized, executed and delivered by such Selling
Stockholder and is a valid and binding instrument of such Selling
Stockholder, enforceable in accordance with its terms;
(xvii) upon delivery of and payment for the Shares to be sold
by each Selling Stockholder pursuant to this Agreement, and assuming
that the Underwriters purchased such Shares without notice of any
adverse claim within the meaning of the New York Uniform Commercial
Code, the Underwriters will acquire all of the Selling Stockholder's
interest in the Shares, free and clear of any adverse claims; and
(xviii) the execution, delivery and performance of this
Agreement and the Custody Agreement and Power of Attorney of each
Selling Stockholder by such Selling Stockholder, the compliance by such
Selling Stockholder with all the provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby will
not (A) require any consent, approval, authorization or other order of,
or qualification with, any court or governmental body or agency (except
such as may be required under the securities or Blue Sky laws of the
various states) or (B) to such counsel's knowledge, violate or conflict
with any applicable law or any rule or regulation of any court or any
governmental body or agency having jurisdiction over such Selling
Stockholder or any property of such Selling Stockholder.
In addition, such counsel shall state that the Registration Statement
and the Prospectus and any supplement or amendment thereto (except for the
financial statements and other
21
<PAGE>
financial data included therein as to which no opinion need be expressed) comply
as to form with the Act, (B) such counsel has no reason to believe that at the
time the Registration Statement became effective or on the date of this
Agreement, the Registration Statement and the prospectus included therein
(except for the financial statements and other financial data as to which such
counsel need not express any belief) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading and (C) such counsel
has no reason to believe that the Prospectus, as amended or supplemented, if
applicable (except for the financial statements and other financial data, as
aforesaid) contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
The opinion of Fulbright & Jaworski L.L.P. described in Section 9(f)
above shall be rendered to you at the request of the Company and the Selling
Stockholders and shall so state therein.
(g) You shall have received on the Closing Date and Option Closing
Date, as applicable, an opinion, dated the Closing Date and Option Closing Date,
as applicable, of Brobeck, Phleger & Harrison LLP, counsel for the Underwriters,
as to the matters referred to in Sections 9(f)(iv), 9(f)(v) (but only with
respect to the Company), 9(f)(viii) (but only with respect to the statements
under the caption "Description of Capital Stock" and "Underwriting") and the
paragraph immediately subsequent to Section 9(f)(xviii).
In giving such opinions with respect to the matters covered by Section
9(f)(xix), Fulbright & Jaworski L.L.P. and Brobeck, Phleger & Harrison LLP may
state that their opinion and belief are based upon their participation in the
preparation of the Registration Statement and Prospectus and any amendments or
supplements thereto and review and discussion of the contents thereof, but are
without independent check or verification except as specified.
(h) You shall have received, on each of the date hereof, the Closing
Date and the Option Closing Date, a letter dated the date hereof, the Closing
Date or the Option Closing Date, as applicable, as the case may be, in form and
substance satisfactory to you, from Ernst & Young LLP independent public
accountants, containing the information and statements of the type ordinarily
included in accountants' "comfort letters" to Underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus including but not limited to Statement
on Auditing Standards Nos. 71 and 86.
(i) The Company shall have delivered to you the agreements specified in
Section 2 hereof which agreements shall be in full force and effect on the
Closing Date and Option Closing Date, as applicable.
(j) The Shares shall have been duly listed for quotation on the Nasdaq
National Market.
(k) The Company and the Selling Stockholders shall not have failed on
or prior to the Closing Date or the Option Closing Date, as applicable, to
perform or comply with any of the
22
<PAGE>
agreements herein contained and required to be performed or complied with by the
Company or the Selling Stockholders, as the case may be, on or prior to the
Closing Date or the Option Closing Date, as applicable.
The several obligations of the Underwriters to purchase any Additional
Shares hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Company, the due authorization and issuance of such
Additional Shares and other matters related to the issuance of such Additional
Shares.
SECTION 10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement
shall become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the Closing
Date by you by written notice to the Sellers if any of the following has
occurred: (i) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions or in the
financial markets of the United States or elsewhere that, in your judgment, is
material and adverse and, in your judgment, makes it impracticable to market the
Shares on the terms and in the manner contemplated in the Prospectus, (ii) the
suspension or material limitation of trading in securities or other instruments
on the New York Stock Exchange, the American Stock Exchange, the Chicago Board
of Options Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade
or the Nasdaq National Market or limitation on prices for securities or other
instruments on any such exchange or the Nasdaq National Market, (iii) the
suspension of trading of any securities of the Company on any exchange or in the
over-the-counter market, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
court or other governmental authority which in your opinion materially and
adversely affects, or will materially and adversely affect, the business,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, (v) the declaration of a banking moratorium by
either federal or New York State authorities or (vi) the taking of any action by
any federal, state or local government or agency in respect of its monetary or
fiscal affairs which in your opinion has a material adverse effect on the
financial markets in the United States.
If on the Closing Date or on an Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase the Firm
Shares or Additional Shares, as the case may be, which it has or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not more
than one-tenth of the total number of Firm Shares or Additional Shares, as the
case may be, to be purchased on such date by all Underwriters, each
non-defaulting Underwriter shall be obligated severally, in the proportion which
the number of Firm Shares set forth opposite its name in Schedule I bears to the
total number of Firm Shares which all the non-defaulting Underwriters have
agreed to purchase, or in such other proportion as you may specify, to purchase
the Firm Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; provided that in no event shall the number of Firm Shares or Additional
Shares, as the case may be, which any
23
<PAGE>
Underwriter has agreed to purchase pursuant to Section 2 hereof be increased
pursuant to this Section 10 by an amount in excess of one-ninth of such number
of Firm Shares or Additional Shares, as the case may be, without the written
consent of such Underwriter. If on the Closing Date any Underwriter or
Underwriters shall fail or refuse to purchase Firm Shares and the aggregate
number of Firm Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Firm Shares to be purchased by all
Underwriters and arrangements satisfactory to you, the Company and the Selling
Stockholders for purchase of such Firm Shares are not made within 48 hours after
such default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter, the Company or the Selling Stockholders. In any such
case which does not result in termination of this Agreement, either you or the
Sellers shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other documents or arrangements
may be effected. If, on an Option Closing Date, any Underwriter or Underwriters
shall fail or refuse to purchase Additional Shares and the aggregate number of
Additional Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Additional Shares to be purchased on such
date, the non-defaulting Underwriters shall have the option to (i) terminate
their obligation hereunder to purchase such Additional Shares or (ii) purchase
not less than the number of Additional Shares that such non-defaulting
Underwriters would have been obligated to purchase on such date in the absence
of such default. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of any such
Underwriter under this Agreement.
SECTION 11. AGREEMENTS OF THE SELLING STOCKHOLDERS. Each Selling
Stockholder agrees with you and the Company:
(a) To pay or to cause to be paid all transfer taxes payable in
connection with the transfer of the Shares to be sold by such Selling
Stockholder to the Underwriters.
(b) To do and perform all things to be done and performed by such
Selling Stockholder under this Agreement prior to the Closing Date and to
satisfy all conditions precedent to the delivery of the Shares to be sold by
such Selling Stockholder pursuant to this Agreement.
SECTION 12. MISCELLANEOUS. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (i) if to the Company, to Media
Metrix, Inc., 35 East 21st Street, New York, New York 10010, (ii) if to the
Selling Stockholders, to Tod Johnson and Thomas A. Lynch c/o Media Metrix, Inc.,
35 East 21st Street, New York, New York 10010 and (iii) if to any Underwriter or
to you, to you c/o Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park
Avenue, New York, New York 10172, Attention: Syndicate Department, or in any
case to such other address as the person to be notified may have requested in
writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Selling Stockholders and the
several Underwriters set forth in or made pursuant to this Agreement shall
remain operative and in full force and effect, and will survive delivery of and
payment for the Shares, regardless of (i) any investigation, or
24
<PAGE>
statement as to the results thereof, made by or on behalf of any Underwriter,
the officers or directors of any Underwriter, any person controlling any
Underwriter, the Company, the officers or directors of the Company, any person
controlling the Company, any Selling Stockholder or any person controlling such
Selling Stockholder, (ii) acceptance of the Shares and payment for them
hereunder and (iii) termination of this Agreement.
If for any reason the Shares are not delivered by or on behalf of any
Seller as provided herein (other than as a result of any termination of this
Agreement pursuant to Section 10), the Sellers agree, jointly and severally, to
reimburse the several Underwriters for all out-of-pocket expenses (including the
fees and disbursements of counsel) incurred by them. Notwithstanding any
termination of this Agreement, the Company shall be liable for all expenses
which it has agreed to pay pursuant to Section 5(i) hereof. The Sellers also
agree, jointly and severally, to reimburse the several Underwriters, their
directors and officers and any persons controlling any of the Underwriters for
any and all fees and expenses (including, without limitation, the reasonable
fees and disbursements of counsel) incurred by them in connection with enforcing
their rights hereunder (including, without limitation, pursuant to Section 8
hereof).
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Selling
Stockholders, the Underwriters, the Underwriters' directors and officers, any
controlling persons referred to herein, the Company's directors and the
Company's officers who sign the Registration Statement and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Shares from any of the several Underwriters merely because of such
purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Selling Stockholders and the several Underwriters.
Very truly yours,
MEDIA METRIX, INC.
By:
---------------------------
Title:
THE SELLING STOCKHOLDERS
NAMED IN SCHEDULE II
HERETO, ACTING SEVERALLY
25
<PAGE>
By:
---------------------------
Attorney-in-fact
26
<PAGE>
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
THOMAS WEISEL PARTNERS LLC
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto
By DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
---------------------------
27
<PAGE>
SCHEDULE I
Number of Firms Shares
Underwriters to be Purchased
- --------------------------------------------------- -------------------------
Donald, Lufkin & Jenrette Securities Corporation
BancBoston Robertson Stephens Inc.
Thomas Weisel Partners LLC
-------------------------
Total
<PAGE>
SCHEDULE II
SELLING STOCKHOLDERS
Number of Additional
Name Shares Being Sold
- --------------------------------------------------- -------------------------
Jeffrey C. Levy 100,000
Timothy F.S. Cobb 100,000
-------------------------
Total
<PAGE>
Annex I
[Insert names of stockholders of the Company who will be required to sign lock
ups]
<PAGE>
Exhibit 3.2
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
MEDIA METRIX, INC.
(Under Sections 242 and 245 of the Delaware General Corporation Law)
It is hereby certified that:
1. The name of the Corporation is Media Metrix, Inc. (the
"Corporation").
2. The Certificate of Incorporation of the Corporation originally
filed with the Secretary of State of the State of Delaware on
March 26, 1997 is hereby amended and restated in its entirety
to read as follows:
FIRST: The name of the corporation is MEDIA METRIX, INC. (the
"Corporation").
SECOND: The address of the Corporation's registered office in the
State of Delaware is United Corporate Services, Inc., 15 East North Street,
Dover, DE 19901. The name of the Corporation's registered agent at such address
is United Corporate Services.
THIRD: 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 (the "GCL").
FOURTH: Section 1. CLASSES AND NUMBER OF SHARES. The total number
of shares of all classes of stock which the Corporation has authority to
issue is sixty-five million (65,000,000) shares, consisting of sixty million
(60,000,000) shares of Common Stock, par value $.01 per share (the "Common
Stock") and five million (5,000,000) shares of Preferred Stock, par value $0.1
per share, which shall have such designations as may be authorized by the Board
of Directors from time to time (the "Preferred Stock").
Section 2. PREFERRED STOCK. The Board of Directors is hereby
authorized, subject to the provisions contained in this Article Fourth, 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
<PAGE>
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
7. whether shares shall be cumulative, noncumulative, or
partially cumulative as to dividends and the date
from which any cumulative dividends are to
accumulate.
FIFTH: 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.
SIXTH: 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. Notwithstanding anything
in this Amended and Restated Certificate of Incorporation to the contrary, Bylaw
Sections 2.04, 3.02, 3.03, and Article XII may not be repealed or amended in any
respect, and no provision inconsistent therewith may be adopted by the
stockholders unless such action is approved by either (a) a majority of the
Continuing Directors or (b) the affirmative vote of the holders of (i) eighty
percent (80%) of the outstanding shares of capital stock of the Corporation
entitled to vote generally, and (ii) if an Interested Stockholder is proposing
such amendment, sixty-six and two-thirds percent (66 2/3%) of the outstanding
shares of the capital
-2-
<PAGE>
stock of the Corporation entitled to vote generally which are not beneficially
owned, directly or indirectly, by such Interested Stockholder.
SEVENTH: Subject to the rights of the holders of any series of
Preferred Stock:
(a) any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly
called annual or special meeting of stockholders of the
Corporation and may not be effected by any consent in writing
of such stockholders and
(b) special meetings of stockholders of the Company may be called
only the (i) the Chairman of the Board or (ii) the Secretary
of the Corporation within 10 calendar days after receipt of
the written request of a majority of the total number of
Directors which the Corporation would have if there were no
vacancies.
At any annual or special meeting of stockholders of the Corporation,
only such business will be conducted or considered as has been brought before
such meeting in the manner provided in the By Laws or the Corporation.
Notwithstanding anything contained in this Amended and Restated Certificate of
Incorporation to the contrary, the affirmative vote of at least 80% of the
Voting Stock, voting together as a single class, will be required to amend or
repeal, or adopt any provision inconsistent with, this Article Seventh.
EIGHTH: (a) CLASSIFICATION OF BOARD OF DIRECTORS. The Board of
Directors shall consist of six (6) directors; provided that the number of
directors may be increased from time to time by resolution adopted by the
affirmative vote of a majority of the Continuing Directors. Upon the
consummation of the Corporation's initial public offering of its Common Stock,
directors shall be divided into three classes, designated Class I, Class II and
Class III. Each class shall consist, as nearly as may be possible, of one-third
of the total number of directors constituting the entire Board of Directors.
Class I directors shall serve until the 2000 Annual Meeting of Stockholders,
Class II directors shall serve until the 2001 Annual Meeting of Stockholders and
Class III directors shall serve until the 2002 Annual Meeting of Stockholders.
At each annual meeting of stockholders beginning in 2000, successors to the
class of directors whose term expires at that annual meeting shall be elected
for a three-year term. If the number of directors is changed, any increase or
decrease shall be apportioned among the classes so as to maintain the number of
directors in each class as nearly equal as possible, and any additional director
of any class elected to fill a vacancy resulting from an increase in such class
shall hold office for a term that shall coincide with the remaining term of the
class, but in no case will a decrease in the number of directors shorten the
term of any incumbent director. A director shall hold office until the annual
meeting for the year in which his or her term expires and until his or her
successor shall be elected and qualified. Any vacancy on the Board of Directors
for any reason, and any directorships resulting from any increase in the number
of directors of the Board of Directors, may be filled by a majority of the Board
of Directors then in office, although less than a quorum, and any directors so
chosen shall hold office until the next election of the class for which such
directors shall have been chosen and until their successors shall
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<PAGE>
be elected and qualified. Notwithstanding the foregoing, whenever the holders of
any one or more classes or series of stock issued by the Corporation shall have
the right, voting separately by class or series, to elect directors at an
annual or special meeting of stockholders, the election, term of office,
filling of vacancies and other features of such directorships shall be governed
by the terms of this Certificate of Incorporation applicable thereto, such
directors so elected shall not be divided into classes pursuant to this Article
Eighth Section(a), and the number of such directors shall not be counted in
determining the maximum number of directors permitted under the foregoing
provision of this Article Eighth, Section (a), in each case unless expressly
provided by such terms.
(b) AMENDMENT OR REPEAL. Notwithstanding anything in this Amended and
Restated Certificate of Incorporation to the contrary, the provisions set forth
in this Article Eighth may not be repealed or amended in any respect, unless
such action is approved by either (a) a majority of the Continuing Directors (in
addition to the vote otherwise required by the GCL) or (b) the affirmative vote
of the holders of (i) eighty percent (80%) of the Voting Shares voting as a
single class, and (ii) if an Interested Stockholder is proposing such amendment,
sixty-six and two-thirds percent (66 2/3%) of the Voting Shares which are not
beneficially owned, directly or indirectly, by such Interested Stockholder,
voting as a single class.
(c) REMOVAL OF DIRECTORS. Notwithstanding anything in this Amended
and Restated Certificate of Incorporation to the contrary, the Corporation's
Certificate of Incorporation may not be amended to provide for removal of
directors without cause as permitted by the GCL, unless such action is
approved by either (a) a majority of the Continuing Directors (in addition to
the vote otherwise required by the GCL) or (b) the affirmative vote of the
holders of (i) eighty percent (80%) of the Voting Shares voting as a single
class, and (ii) if an Interested Stockholder is proposing such amendment,
sixty-six and two-thirds percent (66 2/3%) of the Voting Shares which are not
beneficially owned, directly or indirectly, by such Interested Stockholder,
voting as a single class; PROVIDED, HOWEVER, whenever the holders of any
class or series of the Corporation's outstanding securities are entitled to
elect one or more directors by this Amended and Restated Certificate of
Incorporation, this subsection shall apply, in respect to the removal without
cause of a director or directors so elected, to the vote of the holders of
the outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole.
(d) DEFINITIONS. A majority of the Continuing Directors shall have the
power and duty to determine for purposes of Article Sixth and Article Eighth, on
the basis of information known to them, the applicability of certain defined
terms used in Article Sixth and Article Eighth, in addition to such other
matters with respect to which a determination is required under Article Sixth
and Article Eighth. Any such determination shall be conclusive and binding for
all purposes of Article Sixth and Article Eighth.
For purposes of Article Sixth and Article Eighth, the following
definitions shall apply:
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"Affiliate" and "Associate" shall have the respective meanings ascribed
to them in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchang e Act").
A person shall be a "beneficial owner" of any Voting Shares:
(i) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; or
(ii) which such person or any of its Affiliates or Associates
has (1) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise
or (2) the right to vote or to direct the voting thereof pursuant to
any agreement, arrangement or understanding; or
(iii) which is beneficially owned, directly or indirectly, by
any other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any Voting
Shares.
A "Continuing Director" is any member of the Corporation's Board of
Directors who is unaffiliated with, and not a nominee of, an Interested
Stockholder, and any successor of a Continuing Director who is
unaffiliated with, and not a nominee of, an Interested Stockholder and
is approved to succeed a Continuing Director by a majority of
Continuing Directors then on the Board of Directors.
"Interested Stockholder" shall mean any Person (other than the
Corporation, any Parent or Subsidiary of the Corporation, [the 1995
Scott Johnson Trust, the 1995 Stacey Johnson Trust, or any successor in
interest to any Parent, Subsidiary or the aforementioned trusts,] any
employee benefit plan of the Corporation or any Subsidiary of the
Corporation or any entity holding shares of Common Stock for or
pursuant to the terms of any such plan or any person who acquires more
than [10]% of the outstanding Voting Shares with the prior approval of
a majority of the Continuing Directors), who or which:
(i) is the beneficial owner, directly or indirectly, of more
than [10]% of the combined voting power of the then outstanding Voting
Shares; or
(ii) is an assignee of or has otherwise succeeded to the
beneficial ownership of any Voting Shares which were at any time within
the three-year period immediately prior to the date in question
beneficially owned by an Interested Stockholder.
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For the purposes of determining whether a person is an Interested
Stockholder, the number of Voting Shares deemed to be outstanding shall
include shares deemed owned through application of the definition of
the definition of beneficial ownership provided above but shall not
include any Voting Shares beneficially owned by any person other than
the Interested Stockholder which may be issuable pursuant to any
agreement, arrangement or understanding or upon exercise of conversion
rights, warrants or options, or otherwise.
"Person" shall mean any individual, firm, trust, partnership,
association, corporation, unincorporated organization or other entity
(other than the Corporation, any Subsidiary of the Corporation for
itself or a trustee holding stock for the benefit of the employees of
the Corporation or its Subsidiaries, or any one of them, pursuant to
one or more employee benefit plans or arrangements), as well as two or
more persons acting as a partnership, limited partnership, syndicate,
association or other group for the purpose of acquiring, holding or
disposing of shares of stock.
"Subsidiary" shall mean any corporation, partnership or other entity of
which a majority of any class of equity security (as defined in Rule
3a(11)-1 of the General Rules and Regulations under the Exchange Act),
is owned, directly or indirectly, by the Corporation; provided,
however, that for purposes of the definition of Interested Stockholder
set forth above, the term "Subsidiary" shall mean only a corporation,
partnership or other entity of which a majority of each class of equity
security is beneficially owned, directly or indirectly, by the
Corporation.
"Voting Shares" shall mean shares of all classes and series of the
Corporation entitled to vote generally in the election of the
Corporation's directors.
NINTH: 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 GCL 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 GCL, 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
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creditors, and/or on all the stockholders or class of stockholders, of the
Corporation, as the case may be, and also on the Corporation.
TENTH: 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 GCL, or (iv) for any
transaction from which the director derived an improper personal benefit. If the
GCL 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 GCL. 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.
ELEVENTH: The Corporation shall have the power to provide
indemnification to the fullest extent permitted by Section 145 of the GCL.
TWELFTH: The Corporation reserves the right to amend, alter, change or
repeal any provisions contained in this Amended and Restated 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.
3. This Amended and Restated Certificate of Incorporation was
duly adopted in accordance with the provisions of Sections 242
and 245 of the GCL by written consent of a majority of the
stockholders outstanding and entitled to vote thereon in
accordance with Section 228 of the GCL.
IN WITNESS WHEREOF, said Media Metrix, Inc. has caused this certificate
to be signed by Tod Johnson, its Chief Executive Officer, this day of May, 1999.
MEDIA METRIX, INC.
By: ______________________________________
Name: Tod Johnson
Title: Chief Executive Officer
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Exhibit 3.3
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, that 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 sixty-five million
(65,000,000) shares, consisting of sixty million (60,000,000)
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 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 _______ day of April,
1999.
MEDIA METRIX, INC.
By:_____________________________
Tod Johnson
Chief Executive Officer
<PAGE>
Exhibit 3.5
AMENDED AND RESTATED
BYLAWS
OF
MEDIA METRIX, INC.
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 Dover, County of
Kent, and the name of its registered agent shall be United Corporate Services,
Inc.
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
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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 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 of Directors or by the President of the corporation or by the Board of
Directors or by written order of a majority of the directors. Such request or
order shall state the purposes of the proposed meeting. The Chairman of the
Board of Directors or the President of the corporation or directors so calling
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
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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
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. 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 2.09. 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 2.10. 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
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may be, notwithstanding any transfer of any stock on the books of the
corporation after any such record date fixed as aforesaid.
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 Board of Directors will be
divided into three classes which will serve staggered three year terms as set
forth in Article Eighth of the Certificate of Incorporation. The directors shall
be elected at the annual meeting of stockholders in the manner provided in
Article Eighth of the Certificate of Incorporation, except as provided in
Section 3.03 hereof, 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. Directors may only be removed in
accordance with Article SEVENTH of the Certificate of Incorporation.
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
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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 in a
manner reasonably calculated to reach such 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 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.
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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.
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.
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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 by telephone,
facsimile 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. If
sent by facsimile, notice to director or member of a committee shall be deemed
given when sender receives confirmation of receipt of the facsimile by the other
party.
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.
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ARTICLE VI
OFFICERS
SECTION 6.01. OFFICERS. The officers of the corporation shall be
a Chairman of the Board of Directors and a Vice Chairman of the Board of
Directors (if such offices are created by the Board of Directors), a Chief
Executive Officer (if such office is created by the Board of Directors) and 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 of Directors. 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 of Directors shall be elected from among the directors. With the foregoing
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.
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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
of Directors (if such office is created by the Board of Directors) 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 of Directors (if such office is created by the Board of Directors)
shall, in the absence or disability of the Chairman of the Board of Directors,
perform the duties and exercise the powers of the Chairman of the Board of
Directors. 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 of Directors.
SECTION 6.08. CHIEF EXECUTIVE OFFICER. Should the Board of
Directors create the independent position of Chief Executive Officer, the chief
executive officer, 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 of Directors or the Vice Chairman of
the Board of Directors (if such offices are created by the Board of Directors),
the Chief Executive Officer 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 of Directors if he is so
designated by the 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
Chief Executive Officer 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 Chief Executive Officer and such other duties as may
be prescribed by the stockholders, the Board of Directors, or the Executive
Committee from time to time.
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SECTION 6.09. PRESIDENT. If the Board of Directors does not
create the independent position of Chief Executive Officer, the President shall
be the chief executive officer of the corporation, subject to the control of the
Board of Directors, and shall have all of the powers of the chief executive
officer as set forth in Section 6.08. In addition, the President shall also be
the chief operating officer of the corporation and shall report directly to the
Chief Executive Officer, if the Board of Directors creates such a position. The
President shall perform such other duties as from time to time are assigned to
him by the Chief Executive Officer, the Board of Directors or the Executive
Committee.
SECTION 6.10. VICE PRESIDENTS. In the absence of the Chief
Executive Officer and/or 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 of Directors) shall perform the duties and exercise the
powers of the Chief Executive Officer and/or 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 Chief Executive Officer, the
President, the Board of Directors or the Executive Committee.
SECTION 6.11. 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 Chief Executive Officer, 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 Chief Executive Officer, the President, the Board of Directors or
the Executive Committee.
SECTION 6.12. 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
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Directors, the Chief Executive Officer, the President or 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 Chief Executive Officer, the President, the Board of Directors or
the Executive Committee.
SECTION 6.13. 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 Chief Executive Officer, 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 Chief
Executive Officer, 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
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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 Chief Executive Officer, 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 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
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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.
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.
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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
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
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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 there 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 may 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 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;
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(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.
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ARTICLE XII
AMENDMENT
Except as provided in Article SIXTH of the Certificate of
Incorporation, 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.
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Exhibit 5.1
[LETTERHEAD OF FULBRIGHT & JAWORSKI L.L.P.]
April 29, 1999
Media Metrix, Inc.
900 West Shore Road
Port Washington, NY 11050
Dear Sirs:
In connection with Amendment No. 3 to the Registration Statement on Form
S-1 (the "Registration Statement") filed by Media Metrix, Inc., a Delaware
corporation (the "Company"), under the Securities Act of 1933, as amended (the
"Act"), relating to the public offering by the Company of up to 3,000,000 shares
(the "Shares") of its Common Stock ("Common Stock"), par value $.01 per share
(including up to 450,000 shares of Common Stock which will be purchased by the
underwriters if the underwriters exercise the option granted to them to cover
over-allotments), we, as counsel for the Company, have examined such corporate
records, other documents and questions of law as we have considered necessary or
appropriate for the purposes of this opinion. Our opinion set forth below is
limited to the General Corporation Law of the State of Delaware.
We assume that appropriate action will be taken, prior to the offer and
sale of the Shares, to register and qualify the Shares for sale under all
applicable state securities or "blue sky" laws.
In our examination of the foregoing documents, we have assumed the
genuineness of all signatures and the authenticity of all documents submitted to
us as originals, the conformity to original documents of all documents submitted
to us as certified or photostatic copies, and the authenticity of the originals
of such latter documents.
Based on the foregoing, we advise you that in our opinion the Shares have
been duly and validly authorized and, when issued and sold in the manner
contemplated by the Underwriting Agreement, a form of which has been filed as an
exhibit to the Registration Statement (the "Underwriting Agreement"), and upon
receipt by the Company of payment therefor as provided in the Underwriting
Agreement, will be legally issued, fully paid and non-assessable.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the reference to this firm under the caption "Legal
Matters" in the Prospectus contained therein. This consent is not to be
construed as an admission that we are a party whose consent is required to be
filed with the Registration Statement under the provisions of the Act or the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
The opinion expressed herein is solely for your benefit, and may be
relied upon only by you.
Very truly yours,
/s/ Fulbright & Jaworski L.L.P.
<PAGE>
Exhibit 10.6
INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT is made as of __________ __,
1999 between Media Metrix, Inc., a Delaware corporation ("Media Metrix"), and
_______________________ (collectively with such person's heirs, executors,
administrators and other personal representatives, the "Indemnitee"), an officer
or director of Media Metrix.
WHEREAS, the Board of Directors has concluded that Media
Metrix's executive officers and directors should be provided with reasonable and
appropriate protection against inordinate risks in order to ensure that the most
capable persons will be attracted to such positions; and, therefore, has
determined to contractually obligate itself to indemnify in a reasonable and
adequate manner its officers and directors, and to assume for itself liability
for expenses and damages in connection with claims lodged against such persons
as a result of their service to Media Metrix;
WHEREAS, applicable law empowers corporations to indemnify a
person who serves as a director, officer, employee or agent of a corporation or
a person who serves at the request of a corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust, or
other enterprise; and
WHEREAS, the parties believe it appropriate to memorialize and
reaffirm Media Metrix's indemnification obligations to Indemnitee and, in
addition, to set forth the agreements contained herein.
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the parties agree as follows:
1. INDEMNIFICATION. Indemnitee shall be indemnified and held
harmless by Media Metrix against any judgments, penalties, fines, amounts paid
in settlement and Expenses (as hereinafter defined) incurred in connection with
any actual or threatened Proceeding (as hereinafter defined) to the fullest
extent permitted by Media Metrix's Certificate of Incorporation (the
"Certificate"), by-laws ("By-Laws") and the General Corporation Law of the State
of Delaware ("Delaware Law") as in effect on the date hereof and to such greater
extent as Delaware Law may hereafter from time to time permit. In addition,
Media Metrix agrees to advance to Indemnitee Expenses incurred in connection
with the foregoing. "Proceeding" includes, without limitation, any action, suit,
arbitration, alternate dispute resolution mechanism, investigation,
administrative hearing or any other actual, threatened or contemplated
proceeding, whether civil, criminal, administrative or investigative, whether by
a third party, by or in the right of Media Metrix or by Indemnitee to enforce
any rights under this Agreement or otherwise against Media Metrix or its
affiliates.
<PAGE>
2. INTERIM EXPENSES. Expenses (including attorneys' fees)
incurred by Indemnitee in defending any civil, criminal, administrative, or
investigative action, suit or proceeding for which Indemnitee may be entitled to
indemnification hereunder shall be paid by Media Metrix in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of Indemnitee to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by Media Metrix
hereunder. "Expenses" means all attorneys' fees and expenses, retainers, court
costs, transcript costs, duplicating costs, fees of experts, fees of witnesses,
travel expenses, printing and binding costs, telephone charges, postage and
delivery fees, service fees, all other costs and expenses of the types
customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating or being or preparing to be a witness in a
Proceeding, and per diem payments to Indemnitee in an amount equal to the last
annual salary payable under any employment agreement between the Company and
Indemnitee divided by 365 for each day spent by Indemnitee in connection with
prosecuting, defending, preparing to prosecute or defend, investigating or being
or preparing to be a witness in a Proceeding.
3. EXCEPTIONS TO INDEMNIFICATIONS. Notwithstanding the
foregoing, no indemnity pursuant to Sections 1 or 2 shall be paid by Media
Metrix:
(a) on account of any suit in which judgment is
rendered against Indemnitee for an accounting of profits made from the purchase
or sale by Indemnitee of securities of Media Metrix pursuant to the provisions
of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto
or similar provisions of any federal, state or local statutory law;
(b) on account of Indemnitee's conduct which is
finally adjudged to have been knowingly fraudulent or deliberately dishonest,
or to constitute willful misconduct;
(c) on account of Indemnitee's conduct which is
finally adjudged to have constituted a breach of Indemnitee's duty of loyalty to
Media Metrix or resulted in any personal profit or advantage to which Indemnitee
was not legally entitled;
(d) for which payment is actually made to
Indemnitee under a valid and collectible insurance policy or under a valid and
enforceable indemnity clause, bylaw or agreement, except in respect of any
excess beyond payment under such insurance, clause, bylaw or agreements;
(e) if a final decision by a court having
jurisdiction in the matter shall determine that such indemnification is not
lawful; or
(f) in connection with any proceeding (or part
thereof) initiated by Indemnitee, or any proceeding by Indemnitee against Media
Metrix or its directors, officers, employees or other indemnitees, unless (i)
such indemnification is expressly required to be made by law, (ii) the
proceeding was authorized by the Board of Directors of Media Metrix, (iii) such
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<PAGE>
indemnification is provided by Media Metrix, in its sole discretion, pursuant to
the powers vested in Media Metrix under applicable law, or (iv) the proceeding
is initiated pursuant to Section 4 hereof.
4. FAILURE TO INDEMNIFY. (a) If a claim under this Agreement,
under any statute, or under any provision of the Certificate or By-Laws
providing for indemnification, is not paid in full by Media Metrix within 45
days after a written request for payment thereof has first been received by
Media Metrix, Indemnitee may, but need not, at any time thereafter bring an
action against Media Metrix to recover the unpaid amount of the claim and, if
successful in whole or in part, Indemnitee shall also be entitled to be paid for
Indemnitee's reasonable expenses, including attorneys' fees, actually and
necessarily incurred in connection with successfully establishing the right to
indemnification, in whole or in part, in any such action shall also be
indemnified by Media Metrix.
(b) It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
connection with any action, suit or proceeding in advance of its final
disposition) that Indemnitee has not met the standards of conduct which make it
permissible under the General Corporation Law of the State of Delaware for Media
Metrix to indemnify Indemnitee for the amount claimed, but the burden of proving
such defense shall be on Media Metrix and Indemnitee shall be entitled to
receive interim payments of Expenses pursuant to Paragraph 2 unless and until
such defense may be finally adjudicated by court order or judgment from which no
further right of appeal exists.
5. CERTAIN AGREEMENTS OF INDEMNITEE.
(i) Indemnitee agrees to do all things reasonably requested by
the Board of Directors of Media Metrix to enable Media Metrix to coordinate
Indemnitee's defense with, if applicable, Media Metrix's defense, provided,
however, that Indemnitee shall not be required to take any action that would in
any way prejudice his or her defense or waive any defense or position available
to him or her in connection with any action;
(ii) Indemnitee agrees to do all things reasonably requested
by the Board of Directors of Media Metrix to subrogate to Media Metrix any
rights of recovery (including rights to insurance or indemnification from
persons other than Media Metrix) which Indemnitee may have with respect to any
action;
(iii) Indemnitee agrees to be represented in any action by a
law firm mutually acceptable to Media Metrix and Indemnitee; and
(iv) Indemnitee agrees to cooperate with Media Metrix and its
counsel and maintain any confidences revealed to him or her by Media Metrix in
connection with Media Metrix's defense of any action. Media Metrix agrees to
cooperate with Indemnitee and his or her counsel and
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maintain any confidences revealed to it by Indemnitee in connection with
Indemnitee's defense of any action.
6. SUCCESSORS. This Agreement establishes contract rights
which shall be binding upon, and shall inure to the benefit of, the successors,
assigns, heirs and legal representatives of the parties hereto.
7. CONTRACT RIGHTS NOT EXCLUSIVE. The contract rights
conferred by this Agreement shall be in addition to, but not exclusive of, any
other right which Indemnitee may have or may hereafter acquire under any
statute, provision of the Certificate or By-Laws, agreement, vote of
shareholders or disinterested directors or otherwise.
8. INDEMNITEE'S OBLIGATIONS. Indemnitee shall promptly advise
Media Metrix in writing of the institution of any investigation, claim, action,
suit, or proceeding which is or may be subject to this Agreement and generally
keep Media Metrix informed of, and consult with Media Metrix with respect to,
the status of any such investigation, claim action, suit or proceeding.
9. SEVERABILITY. Should any provision or paragraph of this
Agreement, or any clause hereof, be held to be invalid, illegal or
unenforceable, in whole or in part, the remaining provisions, paragraphs and
clauses of this Agreement shall remain fully enforceable and binding on the
parties.
10. CHOICE OF LAW. The validity, interpretation, performance
and enforcement of this Agreement shall be governed by the laws of the State of
Delaware.
11. CONTINUATION OF INDEMNIFICATION. The indemnification under
this Agreement shall continue as to Indemnitee even though he or she may have
ceased to be a director, officer, employee and/or agent of Media Metrix. Media
Metrix acknowledges that, in providing services to Media Metrix, Indemnitee is
relying on this Agreement. Accordingly, Media Metrix agrees that its obligations
hereunder will survive (i) any actual or purported termination of this Agreement
by Media Metrix or its successors or assigns whether by operation of law or
otherwise, (ii) any change in Media Metrix's certificate of incorporation or
by-laws and (iii) termination of the Indemnitee's services to Media Metrix
(whether such services were terminated by Media Metrix or the Indemnitee),
whether or not a claim is made or an action or Proceeding is threatened or
commenced before or after the actual or purported termination of this Agreement,
change in the certificate of incorporation or by-laws or termination of
Indemnitee's services.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and signed as of the day and year first above
written.
_____________________________________________
MEDIA METRIX, INC.
By:__________________________________________
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Exhibit 10.9
CONSULTING AGREEMENT
CONSULTING AGREEMENT (the "Agreement"), dated as of
January 31, 1999, by and between Media Metrix, Inc., a Delaware corporation
(the "Company"), and Timothy F. S. Cobb ("Consultant").
W I T N E S S E T H
WHEREAS, the Company and Consultant are parties to an
Employment Agreement dated as of November 5, 1998 (the "Employment Agreement");
WHEREAS, the Company wishes to retain Consultant to render
certain advice to the Company with respect to the operations of
RelevantKnowledge, Inc. which was merged with and into the Company on November
5, 1998, and Consultant is desirous of being so retained;
WHEREAS, the Company and Consultant desire to enter into this
Agreement and to replace the provisions of Sections 7, 8, 9 and 10 of the
Employment Agreement with Sections 4, 5, 6 and 7 of this Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein contained, the parties hereto agree as
follows:
1. DUTIES AND ACCEPTANCE. The Company hereby retains Consultant to
provide such services to the Company as may be mutually agreed to by Company and
Consultant from time to time.
2. TERM OF AGREEMENT. The term of Consultant's engagement under this
Agreement will commence as of the date hereof and shall end upon the Company or
Consultant giving the other prior written notice of termination.
3. COMPENSATION; REIMBURSEMENT OF EXPENSES. Consultant shall be paid a
one-time retainer fee of $59,615.40 to be paid on the signing of this Agreement.
Consultant shall be entitled to reimbursement of all properly-vouchered,
pre-approved and reasonable travel and other business expenses incurred on the
Company's behalf.
4. NON-COMPETITION.
(a) Consultant agrees that from the date hereof until March 5,
2001 (the "NonCompetitive Period"), Consultant 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
<PAGE>
purposes of this Agreement, the term "Business" shall mean new media market
measurement services. In addition, Consultant 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) Consultant shall not, during the Non-Competitive Period,
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 Consultant which
are required by, or are within the scope of, the services requested of him by
the Company. In addition, during the Non-Competitive Period, Consultant 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
Consultant without encouragement by Consultant and (ii) such former employee has
not been employed by the Company for at least six months at the time such former
employee approaches Consultant.
(c) If any portion of the restrictions set forth in this
Section 4 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) Consultant acknowledges and agrees that the territorial
and time limitations set forth in this Section 4 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, Consultant agrees to the reduction of the territorial or
time limitation to the area or period which such court shall deem reasonable.
(e) The existence of any claim or cause of action by
Consultant 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) Consultant acknowledges and agrees that the execution of
the Employment Agreement, and specifically Consultant's agreement to the
provisions contained in Section 7 of the Employment Agreement, were conditions
to the consummation by the Company of the transactions contemplated by the
Agreement and Plan of Reorganization between the Company and RelevantKnowledge,
Inc. dated as of September 30, 1998, and that this Agreement and specifically
Section 4 of this Agreement, replace that agreement and provision, respectively.
5. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) The Consultant acknowledges that he has learned and
developed and had access to, and will continue to 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. The
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Company is engaged in a highly competitive business; its competitive position
depends in great measure upon the ability to develop or acquire and maintain the
confidentiality of confidential information; and it has expended and is likely
to continue to expend considerable efforts and resources in the development or
acquisition of confidential information. Based upon the foregoing, the
Consultant 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.
(b) Consultant shall not, while this Agreement is in effect 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 Consultant 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 5(a),
directly or indirectly, by Consultant, (ii) was in the public domain prior to
disclosure to Consultant, or (iii) is disclosed to Consultant 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 Consultant shall use his best efforts to
prevent any publication or disclosure thereof. Upon termination of the
Agreement, all documents, records, reports, writings and other similar documents
containing confidential information, including copies thereof, then in
Consultant's possession or control shall be returned and left with the Company.
6. INVENTIONS AND DISCOVERIES.
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(a) Consultant 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 Consultant (whether or not at the request or
upon the suggestion of the Company) prior to the date hereof, 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) Consultant 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 Consultant 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.
7. SPECIFIC PERFORMANCE. Consultant agrees that if he breaches, or
threatens to commit a breach of, any of the provisions of Sections 4, 5, 6 or 7
(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.
8. NOTICES. All notices, requests, consents and other communications
required or permitted to be given hereunder shall be in writing and shall be
delivered as follows (or to such other address as either party shall designate
by notice in writing to the other in accordance herewith): if to the Company:
Media Metrix, Inc., 900 West Shore Road, Port Washington, NY 11050, Attention:
Chief Executive Officer, telephone: (516) 625-2300, fax: (516) 625-4888; if to
Consultant: Timothy F. S. Cobb; 1656 Merton Road NE, Atlanta, Georgia 30306;
telephone: (404) 874-6284.
9. GENERAL.
(a) This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely in New York.
(b) Upon the due execution and delivery of this Agreement by
the parties hereto, the Employment Agreement shall terminate and shall cease to
be of any further force and effect. This Agreement and the Supplemental Terms
(attached hereto) sets forth the entire agreement and understanding of the
parties relating to the subject matter hereof, and supersedes all prior
agreements, arrangements and understandings, written or oral, relating to the
subject matter hereof, including the Employment Agreement. No representation,
promise or inducement has been made by
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either party that is not embodied in this Agreement, and neither party shall be
bound by or liable for any alleged representation, promise or inducement not so
set forth.
(c) This Agreement may be amended, modified, superseded,
canceled, renewed or extended, and the terms or covenants hereof may be waived,
only by a written instrument executed by the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of a party at any time or
times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by a party of the
breach of any term or covenant contained in this Agreement, whether by conduct
or otherwise, or any one or more or continuing waivers of any such breach, shall
constitute a waiver of the breach of any other term or covenant contained in
this Agreement.
(d) The parties have contracted with each other only for the
purpose and to the extent set forth herein and the relationship between the
Company and Consultant shall, during the term of this Agreement, be that of
independent contractors. Nothing herein shall be construed to create a
partnership, joint venture or other similar enterprise between the Company and
Consultant.
(e) This Agreement shall be binding upon the legal
representatives, heirs, distributees, successors and assigns of the parties
hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
MEDIA METRIX, INC.
By:_____________________________
________________________________
Timothy F. S. Cobb
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SUPPLEMENTAL TERMS
1. SALE OF SHARES IN THE IPO. The Company agrees to use its best efforts
to allow Consultant tosell shares of common stock of the Company owned
directly or beneficially by Consultant as part of the over-allotment
option granted to the underwriters in connection with the initial
public offering of securities of the Company, in an amount designated
by the Company but not to exceed 100,000 shares; provided, that if the
underwriters selected by the Company elect to reduce the number of
shares that may by sold by selling shareholders in the over-allotment
option as set forth in the registration statement filed or to be filed
with the Securities and Exchange Commission ("SEC") or if the Company
is advised by the underwriters that the inclusion of Consultant's
shares in the over-allotment option will have an adverse effect on the
marketing of the IPO, then the shares to be sold by Consultant in the
over-allotment option shall be reduced pro rata along with the other
stockholders selling shares in the over-allotment option.
2. DIRECTED SHARES. The Company agrees that in connection with any
distribution of "friends and family" shares of the Company in the
initial public offering, the Company shall consider granting shares to
Consultant on a similar basis as directors of the Company.
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Exhibit 10.10
AMENDED AND RESTATED
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 and new
media resources and computer software and hardware 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 a Management Services Agreement among MMX, NPD and Johnson, dated as
of September 30, 1998 (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
<PAGE>
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:
(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).
<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.
Further, NPD and Johnson hereby agree that from the date of
execution of this agreement (the "Execution Date") and for a period of six (6)
months thereafter, Johnson shall devote at least twenty (20) hours per week to
the business and affairs of MMX. From six (6) months after the Execution Date to
one (1) year after the Execution Date, Johnson shall devote no less than fifteen
(15) hours per week to the business and affairs of MMX. After the date that is
one year after the Execution Date, Johnson shall devote such time to the
business and affairs of MMX as shall be mutually agreed upon by Johnson and MMX.
The parties will adjust this provision in the event that MMX retains a Chief
Executive Officer to replace Johnson.
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
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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
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.
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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.
NPD acknowledges that the amounts charged by NPD under the Prior
Management Services Agreement did not reflect the full amounts due from MMX
pursuant to the Prior Management Services Agreement. NPD hereby waives all right
to any sums in addition to those already paid to it by MMX pursuant to the Prior
Management Services Agreement and any amounts in addition to those amounts
accrued on the books and records on the Execution Date.
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 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
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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.
(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.
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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 agreementsbetween 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 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
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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.
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Dated as of May __, 1999.
MEDIA METRIX, INC.
By: ____________________________________
Name: Mary Ann Packo
Title: President
THE NPD GROUP, INC.
By: ____________________________________
Name: Rupert Walters
Title: President
________________________________________
TOD JOHNSON
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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.
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.
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<PAGE>
NPD CHARGES ON AN OVERHEAD BASIS
NPD - Rent: Charge from NPD Dept. 130 and Dept. 131 for space at
Uniondale. Based on actual square footage used and
standard square 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
footage and actual usage.
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. At the rate of
$15,000 per calendar month.
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.
-11-
<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 I - Organization as to which the date is ,
1999, in Amendment No. 3 to the Registration Statement (Form S-1 No. 333-72883)
and related Prospectus of Media Metrix, Inc. for the registration of 3,000,000
shares of its common stock.
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
April 30, 1999
<PAGE>
Exhibit 23.3
Consent of Independent Accountants
We consent to the inclusion in the Media Metrix, Inc. Amendment No. 3 to the
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
April 30, 1999
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