<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 29, 1998
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------
MULTEX SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 7375 22-3253344
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
33 MAIDEN LANE, 5TH FLOOR
NEW YORK, NEW YORK 10038
(212) 859-9800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
ISAAK KARAEV
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MULTEX SYSTEMS, INC.
33 MAIDEN LANE, 5TH FLOOR
NEW YORK, NEW YORK 10038
(212) 859-9800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------------
COPIES TO:
ALEXANDER D. LYNCH, ESQ. JOHN A. BURGESS, ESQ.
BRIAN B. MARGOLIS, ESQ. JOSEPH E. MULLANEY III, ESQ.
BROBECK, PHLEGER & HARRISON LLP HALE AND DORR LLP
1633 BROADWAY, 47TH FLOOR 60 STATE STREET
NEW YORK, NEW YORK 10019 BOSTON, MASSACHUSETTS 02109
(212) 581-1600 (617) 526-6000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
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, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM
SECURITIES TO BE AGGREGATE OFFERING AMOUNT OF
REGISTERED PRICE(1)(2) REGISTRATION FEE(2)
- ---------------------------------------------------------------
<S> <C> <C>
Common Stock, par value
$.01 per share........ $51,750,000 $15,267
</TABLE>
- -------------------------------------------------------------------------------
(1) Includes shares of Common Stock which the Underwriters have the option
to purchase from the Company solely to cover over-allotments, if any.
(2) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(a) under the Securities Act of 1933,
as amended.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 29, 1998
PROSPECTUS
SHARES
[LOGO]
COMMON STOCK
All of the shares of Common Stock offered hereby are being sold by
Multex Systems, Inc. ("Multex" or the "Company"). Prior to the offering, there
has been no public market for the Common Stock of the Company. It is currently
anticipated that the initial public offering price will be between $ and
$ per share. See "Underwriting" for a discussion of the factors to be
considered in determining the initial public offering price. The Company has
applied to have the Common Stock approved for quotation on the Nasdaq National
Market under the symbol MLTX.
--------
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 5.
--------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT (1) COMPANY (2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.................................... $ $ $
- --------------------------------------------------------------------------------
Total (3).................................... $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) See "Underwriting" for indemnification arrangements with the several
Underwriters.
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company and certain stockholders have granted to the Underwriters a 30-
day option to purchase up to additional shares of Common Stock solely
to cover over-allotments, if any. If all such shares are purchased, the
total Price to Public, Underwriting Discount, Proceeds to Company and
Proceeds to Over-Allotment Selling Stockholders will be $ , $ , $
and $ , respectively. The Company will not receive any of the proceeds
from the sale of shares by the Over-Allotment Selling Stockholders. See
"Underwriting" and "Principal Stockholders."
--------
The shares of Common Stock are offered by the several Underwriters subject to
prior sale, receipt and acceptance by them and subject to the right of the
Underwriters to reject any order in whole or in part and certain other
conditions. It is expected that certificates for such shares will be made
available for delivery on or about , 1998, at the office of the agent of
Hambrecht & Quist LLC in New York, New York.
HAMBRECHT & QUIST
BANCAMERICA ROBERTSON STEPHENS
SALOMON SMITH BARNEY
DAIN RAUSCHER WESSELS
A DIVISION OF DAIN RAUSCHER INCORPORATED
, 1998
<PAGE>
[COLOR ARTWORK TO BE PROVIDED]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING BY ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING
TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."
---------------------
MultexNET(R) and the Multex logos are registered trademarks and service
marks of the Company. MultexEXPRESS, Multex Research-On-Demand, Multex
Investor Network, MX Investor Magazine and the Multex logo are trademarks and
service marks of the Company. This Prospectus contains other trade names,
trademarks and service marks of the Company and of other organizations, all of
which are the property of their respective owners.
---------------------
INFORMATION ON THE COMPANY'S WEB SITE SHALL NOT BE DEEMED TO CONSTITUTE A PART
OF THIS PROSPECTUS.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements and the Notes thereto
appearing elsewhere in this Prospectus. The Common Stock offered hereby
involves a high degree of risk. See "Risk Factors." This Prospectus contains
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from those discussed in the forward-
looking statements as a result of certain factors, including those set forth in
"Risk Factors" and elsewhere in this Prospectus.
THE COMPANY
Multex is a leading provider of online investment research and information
services designed to meet the needs of institutional investors, investment
banks, brokerage firms, corporations and individual investors. The Company's
services enable timely online access to over 500,000 research reports and other
investment information from more than 300 leading investment banks, brokerage
firms and third-party research providers worldwide, including Merrill Lynch,
Morgan Stanley Dean Witter and Goldman Sachs. More than 400,000 investors and
financial professionals, including mutual funds managers, portfolio managers,
institutional investors, brokers and their clients, have access to the
Company's services. In addition to making its services available through its
own Web sites, the Company has established a number of strategic distribution
relationships to reach the institutional market, including relationships with
Automatic Data Processing, Inc., Bloomberg L.P., Bridge Information Systems,
Inc., Dow Jones & Co. Inc. and Reuters Limited. To target the individual
investor market, the Company recently entered into an agreement with America
Online, Inc. to serve as an anchor tenant on the AOL Personal Finance channel,
and intends to launch the Multex Investor Network in 1998 to offer a wide range
of research reports and other financial information to individual investors.
In recent years, there has been substantial growth in the ownership and
trading volume of equity and fixed income securities worldwide. According to
the Investment Company Institute, total financial assets of U.S. households
were $14.0 trillion at the end of 1995, and are expected to grow to over $22.5
trillion by the year 2000. The proliferation in equity ownership and trading
activity has created a need for more investment research and market information
on the part of investors who seek higher returns on their portfolios.
Institutional investors are increasingly demanding access to commingled
investment research and other market information on a "real-time" basis in
order to quickly find and retrieve relevant research online. Conventional
methods used to distribute investment research have significant shortcomings,
including the delay and expense incurred in printing and mailing research
reports in traditional paper format, the inability to control who receives and
accesses such research, and the expense of sorting, reviewing and distributing
such reports manually.
The Company's services provide timely and efficient online access to a wide
range of research reports and other investment information from leading
investment banks, brokerage firms and third-party research providers worldwide.
The Company's MultexNET service enables entitled institutional investors to
access investment research reports (including complete text, tables and charts)
on a real-time basis. MultexEXPRESS enables investment banks, brokerage firms
and other financial institutions to distribute their proprietary financial
research as well as other corporate documents to their employees and customers.
Multex Research-On-Demand gives institutional investors, corporations and
individual investors the ability to access research reports on a pay-per-view
basis from a majority of the contributors to MultexNET. Key features of the
Company's services include real-time or delayed delivery of high-quality
multimedia and rich-text research reports, advanced searching features,
customizable delivery options and easy-to-use viewing, printing, faxing, and e-
mail options. The Company recently began publishing MX Investor Magazine, an
online investment magazine available through the Company's home page on the
World Wide Web, and intends to launch the Multex Investor Network, which will
offer a wide range of investment research services to the individual investor
market.
The Company's objective is to be the leading online investment research
network for the financial and investment community. The Company uses leading
Internet technologies to provide a unique, integrated platform for the
efficient distribution of investment research and financial information
worldwide. Key elements of the Company's strategy include (i) providing the
most comprehensive investment research and information, (ii) continuing to
expand its distribution channels, (iii) increasing awareness of the Multex
brand, (iv) extending the Company's global presence, (v) maintaining its
technological leadership and (vi) focusing on multiple revenue opportunities.
The Company was incorporated in Delaware in 1993. The Company's principal
executive offices are located at 33 Maiden Lane, 5th Floor, New York, New York
10038, and its telephone number at that location is (212) 859-9800.
3
<PAGE>
THE OFFERING
Common Stock offered by the Company..... shares
Common Stock to be outstanding after shares (1)
the Offering...........................
Use of Proceeds......................... Expansion of sales and marketing, ex-
pansion of international operations,
capital expenditures, general corpo-
rate purposes, including working cap-
ital, and possible acquisitions. See
"Use of Proceeds."
Proposed Nasdaq National Market symbol.. MLTX
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------- ----------------
1995 1996 1997 1997 1998
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenues........................ $ 1,005 $ 2,647 $ 6,014 $ 950 $ 2,714
Gross profit.................... 601 1,837 4,782 708 2,020
Loss from operations............ (5,520) (6,470) (8,162) (2,246) (1,573)
Net loss........................ $(5,494) $(6,410) $(8,037) $(2,223) $(1,644)
Pro forma net loss per share
(2)(3)......................... $ (0.92) $ (0.19)
======= =======
Pro forma weighted average
shares outstanding (2)(3)...... 8,694 8,874
======= =======
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1998
------------------------------------
AS
ACTUAL PRO FORMA(3) ADJUSTED(3)(4)
------- ------------ --------------
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents, and
marketable securities.................. $ 8,844 $ 8,844 $
Working capital......................... 7,656 7,656
Total assets............................ 14,613 14,613
Deferred revenues....................... 2,125 2,125
Redeemable preferred stock.............. 37,896 --
Total stockholders' equity (deficit).... (28,460) 9,436
</TABLE>
- --------------------
(1) Based on the number of shares of Common Stock outstanding on March 31,
1998. Excludes 1,399,335 shares of Common Stock issuable pursuant to stock
options outstanding as of March 31, 1998 (of which options to purchase
approximately 413,000 shares were then exercisable) with a weighted average
price of $0.60 per share. See "Management--1998 Stock Option Plan" and
"Description of Capital Stock--Options."
(2) See Note 4 of Notes to Consolidated Financial Statements for an explanation
of the method used to determine the number of shares used to compute pro
forma net loss per share.
(3) Gives effect to the Preferred Stock Conversion (as defined below). See Note
3 of Notes to Consolidated Financial Statements.
(4) As adjusted to give effect to the sale of shares of Common Stock
offered hereby at an assumed initial public offering price of $ per
share, after deducting the underwriting discount and the estimated offering
expenses payable by the Company, and the application of the net proceeds
therefrom. See "Use of Proceeds" and "Capitalization."
----------------
Except as otherwise noted, all information in this Prospectus (i) reflects
the automatic conversion of all outstanding shares of the Company's Redeemable
Preferred Stock (the "Preferred Stock") into an aggregate of 7,240,741 shares
of Common Stock (the "Preferred Stock Conversion") upon the consummation of the
offering; (ii) reflects the filing of an Amended and Restated Certificate of
Incorporation which, among other things, authorizes the issuance of "blank
check" preferred stock upon the consummation of the offering; and (iii) assumes
no exercise of the Underwriters' over-allotment option. Except as otherwise
noted, the information in this Prospectus also reflects a one-for-three reverse
stock split of the Common Stock to be effected immediately prior to the
offering (the "Reverse Split"). See "Description of Capital Stock" and
"Underwriting."
4
<PAGE>
RISK FACTORS
This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results and the timing of certain events
could differ materially from those contained in the forward-looking statements
as a result of certain factors, including those set forth below and elsewhere
in this Prospectus. In addition to the other information contained in this
Prospectus, the following risk factors should be considered carefully in
evaluating the Company and making an investment in the Common Stock offered
hereby.
RISKS RELATED TO THE COMPANY'S OPERATIONS
Limited Operating History; History of Losses; Anticipation of Continued
Losses; Accumulated Deficit. The Company commenced operations in April 1993
and its prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies with limited operating
histories, particularly companies in the new and rapidly evolving market for
the Internet and Internet services, including the market for the electronic
distribution of investment research. There can be no assurance that the
Company will ever be successful in addressing such risks, and the failure to
do so could have a material adverse effect on the Company's business, results
of operations and financial condition. The Company incurred net losses of $5.5
million, $6.4 million and $8.0 million for the years ended December 31, 1995,
1996 and 1997, respectively, and $2.2 million and $1.6 million for the three
months ended March 31, 1997 and 1998, respectively. Given the level of planned
operating and capital expenditures, the Company anticipates that it will
continue to incur operating losses for the forseeable future. There can be no
assurance that operating losses will not increase in the future or that the
Company will ever achieve or sustain profitability on a quarterly or annual
basis. The extent of these losses will be contingent on, among other things,
the timing and amount of the Company's revenues and the Company's ability to
control expenses. The Company has generated only limited revenues to date and
its ability to generate significant revenues is subject to substantial
uncertainty. The Company's historical growth in revenues may not be sustained
and are not necessarily indicative of future operating results. To the extent
that revenues do not grow at anticipated rates, that increases in operating
expenses precede or are not subsequently followed by commensurate increases in
revenues or that the Company is unable to adjust operating expense levels
accordingly, the Company's business, results of operations and financial
condition will be materially and adversely affected. At March 31, 1998, the
Company had an accumulated deficit of $24.0 million. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Significant Fluctuations in Quarterly Results of Operations. The Company's
quarterly revenues, margins and results of operations have fluctuated
significantly in the past and are expected to continue to fluctuate
significantly in the future. Causes of such fluctuations have included and may
include, among other factors, demand for the Company's services, the size and
timing of both new and renewal subscriptions, the number, timing and
significance of new services introduced by the Company and its competitors,
the ability of the Company to develop, market and introduce new and enhanced
services on a timely basis, the level of service and price competition,
changes in operating expenses, changes in the mix of services offered, changes
in the Company's sales incentive strategy, sharp declines in the volume or
price levels of securities transactions and general economic factors. Any one
or more of these factors could have a material adverse effect on the Company's
business, results of operation and financial condition, and makes the
prediction of results of operations on a quarterly basis unreliable. As a
result, the Company believes that period-to-period comparisons of its
historical results of operations are not necessarily meaningful and should not
be relied upon as any indication for future performance.
The Company's cost of revenues consists principally of distribution fees and
royalties which fluctuate depending upon the demand for the Company's services
and fixed telecommunications costs. In addition, a substantial portion of the
Company's operating expenses is related to personnel costs, marketing programs
and overhead, which cannot be adjusted quickly and are therefore relatively
fixed in the short term. The
5
<PAGE>
Company's operating expense levels are based, in significant part, on the
Company's expectations of future revenues on a quarterly basis. If actual
revenues on a quarterly basis are below management's expectations, both gross
margins and results of operations are likely to be adversely affected because
a relatively small amount of the Company's costs and expenses varies with its
revenues in the short term.
Due to the foregoing and other factors, it is possible that in some future
quarter the Company's results of operations will be below the expectations of
public market analysts and investors. In such event, the price of the
Company's Common Stock would likely be materially adversely affected. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Selected Unaudited Quarterly Results of Operations."
Dependence on Research and Information Providers. The Company is dependent
upon the continued provision of high-quality investment research reports from
investment banks, brokerage firms and third-party research providers. Certain
of these arrangements are not embodied in written contracts and certain other
of these arrangements can be terminated by the provider on short notice. At
present, approximately 60% of the Company's over 300 information providers
permit the Company to offer the research for sale after a certain embargo
period, generally 15 days. The remaining information providers do not permit
such sales. Many of these information providers compete with one another and,
to some extent, with the Company for subscribers. None of the providers of
research reports and other information to the Company have arrangements to
provide such research or information exclusively to the Company. The loss of
one or more significant information provider agreements would decrease the
research and other information which the Company can offer its users and could
have a material adverse effect on the Company's business, results of
operations and financial condition. Royalties payable to the Company's
information providers to obtain distribution rights to research reports
included in Multex Research-On-Demand constitute a significant portion of the
Company's cost of revenues. If the Company is required to increase the
royalties payable to such information providers, such increased royalty
payments would have a material adverse effect on the Company's business,
results of operations and financial condition. See "Business--Research and
Information Providers."
Certain leading investment banks, brokerage firms and third-party research
providers are parties to exclusive distribution arrangements with the
Company's competitors, including First Call Corporation ("First Call") and The
Investext Group ("Investext") (both of which are subsidiaries of Thomson
Financial Services, a leading worldwide provider of financial information
services). Consequently, the Company cannot provide its users with the
investment research and other information provided by such investment banks,
brokerage firms and third-party research providers, which may put the Company
at a competitive disadvantage. In the event that additional investment banks,
brokerage firms and third-party research providers enter into such exclusive
distribution arrangements or that the Company is hindered in its ability to
offer its own services due to the lack of content from such investment banks,
brokerage firms and third-party research providers, the Company's business,
results of operations and financial condition would be materially and
adversely affected. See "Business--Strategy" and "--Services."
The Company's proprietary software technology enables it to distribute a
particular research report or other financial information only to those users
who have been authorized or entitled to access such report by the information
provider. The Company might inadvertently distribute a particular report to a
user who is not so authorized or entitled, which could subject the Company to
a claim for damages by the provider of the report or which could harm the
Company's reputation in the marketplace, either of which could have a material
adverse effect on the Company's business, results of operations and financial
condition.
Emerging Market for Electronic Investment Research. The market for the
online distribution of electronic investment research has only recently begun
to develop, is rapidly evolving and is characterized by an increasing number
of market entrants who have introduced or developed electronic investment
research distribution services by facsimile and over public and private
networks, online services and the Internet. As is typical of a rapidly
evolving industry, demand and market acceptance for new services are subject
to a high level of uncertainty.
6
<PAGE>
Because the market for the Company's services is new and rapidly evolving,
it is difficult to predict with any assurance the growth rate, if any, and
size of this market. There can be no assurance that the market for the
Company's services will develop or that the Company's services will ever
achieve market acceptance. If the market fails to develop, develops more
slowly than expected, or becomes saturated with competitors; if the Company's
services do not achieve market acceptance; or if pricing becomes subject to
significant competitive pressures, the Company's business, results of
operations and financial condition would be materially and adversely affected.
The Company's future results of operations will depend, in substantial part,
on its ability to increase the market acceptance of its services. The future
viability of MultexNET will depend, among other factors, on the ability of the
Company to expand its direct and indirect sales and marketing channels, to
attract and retain high-quality research providers and to deliver its services
across multiple delivery platforms. The future viability of MultexEXPRESS will
depend, among other factors, on the continued desire of investment banks,
brokerage firms and other information providers to distribute proprietary
investment research and company news over the Internet or through private
networks to their employees and customers. The future viability of Multex
Research-On-Demand will depend, among other factors, on the acceptance of the
Internet as a medium for the purchase and distribution of investment research,
as well as on the Company's ability to build a direct and indirect sales force
to sell its services, to attract and retain high-quality information
providers, and to develop and increase its base of users. If the Company is
unable to increase the number of users of MultexNET, MultexEXPRESS and Multex
Research-On-Demand or to attract and retain investment research providers, the
Company's business, results of operations and financial condition would be
materially and adversely affected. See "Business--Strategy" and "--Services."
The Company has distribution arrangements for its services with a number of
third-party distributors, including Bloomberg L.P. ("Bloomberg") and Reuters
Limited ("Reuters"), distributors that are currently generating revenues for
the Company, and with America Online, Inc. ("America Online" or "AOL"),
Automatic Data Processing, Inc. ("ADP"), Bridge Information Systems, Inc.
("Bridge") and Dow Jones & Co. Inc. ("Dow Jones"), distributors that are not
currently generating revenues for the Company. The Company's future results of
operations will be affected by the extent to which customers of these third-
party distributors choose to subscribe to the various services provided by the
Company. There can be no assurance that the customers of these third-party
distributors will continue to subscribe to the Company's services or that such
third-party distributors will continue to actively market such services. If
the Company is unable to retain and increase the utilization of its services
by such customers, the Company's business, results of operations and financial
condition would be materially and adversely affected. See "Business--Strategy"
and "--Services."
Dependence on Strategic Distribution Relationships. The Company is dependent
on its strategic partners for the marketing and distribution of investment
research reports and other information. To date, the Company has entered into
six principal strategic relationships: ADP, AOL, Bloomberg, Bridge, Dow Jones
and Reuters. There can be no assurance that the Company will be successful in
entering into additional strategic relationships, nor that any additional
relationships, if entered into, will be on terms favorable to the Company. The
Company's receipt of revenues from its strategic relationships is directly
affected by the levels of effort of its partners. There can be no assurance
that the Company's strategic distributors will devote the necessary resources
necessary to successfully market the Company's services. Each of these
distributors offers services, either of their own or from competitors of the
Company, which are in one or more respects competitive with the service
offerings of the Company. In addition, the Company's strategic distributors
have the right to terminate their agreements with the Company under certain
circumstances, in some circumstances on short notice. Furthermore, there can
be no assurance that the Company will be able to renew such agreements when
they expire on acceptable terms, if at all. The failure of the Company to
enter into additional strategic distribution relationships, the failure of the
Company's strategic distributors to devote the resources necessary to
effectively market the Company's services, a reduction or discontinuation of
such efforts by these distributors or the termination of these relationships
could have a material adverse effect on the Company's business, results of
operations and financial condition. See "Business--Strategic Distribution
Relationships."
7
<PAGE>
Competition. The market for the electronic distribution of investment
research and related services is intensely competitive and such competition is
expected to continue to increase. The Company believes that its ability to
compete will depend upon many factors, both within and beyond its control,
including continuing relationships with leading providers of investment
research, the timing and market acceptance of new services and enhancements to
existing services developed by the Company and its competitors, ease of use,
performance, price, reliability, customer service and support, and sales and
marketing efforts. The Company's competitors vary in size and in the scope and
breadth of services offered. Further, the Company encounters direct and
indirect competition from a number of sources, including traditional media,
companies that provide investment research (including investment banks and
brokerage firms that have their own Web sites), investment newsletters,
personal financial magazines and other Internet providers of either free or
subscription research services.
The Company's MultexNET and Multex Research-On-Demand services compete with
large and well-established distributors of financial information, such as
Thomson Financial Services, through its subsidiaries First Call and Investext,
and Institutional Brokers Estimate System ("I/B/E/S"), a subsidiary of Primark
Corp. In addition, the Company's MultexEXPRESS service competes with services
provided by in-house management information services personnel and independent
systems integrators. Each of the Company's strategic distributors described
above offers services, either of their own or from competitors of the Company,
which are in one or more respects competitive with the service offerings of
the Company. In addition, numerous prospective competitors, such as Market
Guide, Standard & Poor's, Moody's, Zacks Investment Research and others offer
similar investment research based services that compete, or may in the future
compete, directly and indirectly with the Company's services. Many of the
Company's existing competitors, as well as a number of and prospective
competitors, have longer operating histories, greater name recognition, larger
customer bases and significantly greater financial, technical and marketing
resources than the Company. As a result, they may be able to respond more
quickly to new or emerging technologies and changes in investor requirements,
or to devote greater resources to the development, promotion and sale of their
services than the Company. Such competitors may be able to undertake more
extensive marketing campaigns, adopt more aggressive pricing policies and make
more attractive offers to potential employees, subscribers, strategic partners
and providers of investment research information. Further, the Company's
competitors may develop services that are equal or superior to the services
then offered by the Company or that achieve greater market acceptance than the
Company's services. The Company also expects that competition may increase as
a result of industry consolidation. In addition, current and prospective
competitors have established or may establish cooperative relationships among
themselves or with third parties to improve their ability to address the needs
of the Company's existing and prospective customers. Accordingly, it is
possible that new competitors or alliances among existing or potential
competitors may emerge and rapidly acquire significant market share. Increased
competition is likely to result in price reductions, reduced gross margins and
loss of market share, any of which would have a material adverse effect on the
Company's business, results of operations and financial condition. There can
be no assurance that the Company will be able to compete successfully against
existing or potential competitors or that competitive pressures will not have
a material adverse effect on the Company's business, results of operations and
financial condition. See "Business--Competition."
Concentration of Revenues. Historically, a few of the Company's subscribers
and distributors have accounted for a substantial majority of the Company's
revenues. Specifically, in the years ended December 31, 1995, 1996 and 1997,
70%, 75% and 68%, respectively, of the Company's revenues were generated by
subscribers or distributors that each individually generated 10% or more of
the Company's consolidated revenues in such period. The loss of any major
subscriber or distributor, or any reduction or delay in subscriptions by any
such subscriber or distributor, or the failure of the Company to successfully
market its services to new subscribers or distributors could have a material
adverse effect on the Company's business, results of operations and financial
condition. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Overview" and Note 12 of Notes to the Consolidated
Financial Statements.
Dependence on Financial Services Industry. The Company is dependent upon the
continued need for the electronic distribution of high-quality investment
research reports and other financial information, making
8
<PAGE>
the Company's business susceptible to a downturn in the financial services
industry. For example, a decrease in the number of analysts that prepare
investment research reports or in the capital investments dedicated to the
dissemination of such research could result in a decrease in the number of
research reports and other financial information available for distribution
and a concomitant decrease in demand by the Company's subscribers for such
reports and other information. In addition, U.S. financial institutions are
continuing to consolidate, increasing the leverage of the Company's
information providers to negotiate price and decreasing the overall potential
market for certain of the Company's services. These factors, as well as other
changes occurring in the financial services industry, could have a material
adverse effect on the Company's business, financial condition and results of
operations.
Management of Growth. The Company has experienced rapid growth in its
operations. This rapid growth has placed, and is expected to continue to
place, a significant strain on the Company's managerial, operational and
financial resources. As of March 31, 1998, the Company had grown to 120
employees from 79 employees at December 31, 1996. The Company expects that the
number of its employees will continue to increase for the foreseeable future.
As a result, the Company will need to continue to improve its financial and
management controls, reporting systems and procedures, and expand, train and
manage its work force. There can be no assurance that the Company's systems,
procedures or controls will be adequate to support the Company's expanding
operations or that Company management will be able to achieve the rapid
execution necessary to successfully offer its services and implement its
business plan. The Company's future results of operations will also depend on
its ability to expand its sales and marketing organization both domestically
and internationally and expand its customer support organization. The failure
of the Company to manage its growth effectively would have a material adverse
effect on the Company's business, results of operations and financial
condition. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
Dependence on Key Personnel. The Company's future operating results depend,
in significant part, upon the continued service of its key technical, sales
and senior management personnel, particularly Isaak Karaev, the Company's
Chairman, President and Chief Executive Officer, none of whom has entered into
an employment agreement with the Company, other than a non-competition/non-
disclosure agreement. The loss of the services of one or more of the Company's
key personnel could have a material adverse effect on the Company's business,
results of operations and financial condition. The Company's future success
also depends on its continuing ability to attract and retain highly qualified
technical, sales and marketing, customer support, financial and accounting,
and managerial personnel. Competition for such personnel, in particular
information technology professionals, is intense, and there can be no
assurance that the Company will be able to retain its key personnel or that it
can attract, assimilate or retain other highly qualified personnel in the
future. The Company has from time to time in the past experienced, and expects
to continue to experience in the future, difficulty in hiring and retaining
candidates with appropriate qualifications. See "Management."
Risks Associated with International Operations. The Company has recently
commenced operations in a number of international markets and a key component
of the Company's strategy is to continue to expand its international
operations. To date, the Company has limited experience in developing and
obtaining research and other financial information relating to companies whose
securities are traded on foreign markets and in marketing, selling and
distributing its services internationally. There can be no assurance that the
Company will be able to successfully market, sell and deliver its services in
these markets. In certain markets, including Hong Kong, the Company intends to
rely on the sales and marketing efforts of independent representatives. The
failure of such independent representatives to successfully solicit
information providers or market the Company's services in such markets could
have a material adverse effect on the Company's business, results of
operations and financial condition.
There are certain risks inherent in doing business in international markets,
such as unexpected changes in regulatory requirements, potentially adverse tax
consequences, export restrictions and controls, tariffs and other trade
barriers, difficulties in staffing and managing foreign operations, political
instability, fluctuations in currency exchange rates, and seasonal reductions
in business activity during the summer months in Europe
9
<PAGE>
and certain other parts of the world, any of which could have a material
adverse effect on the success of the Company's international operations and,
consequently, on the Company's business, results of operations and financial
condition. Furthermore, there can be no assurance that governmental regulatory
agencies in one or more foreign countries will not determine that the services
provided by the Company constitute the provision of investment advice, which
could result in the Company having to register in such countries as an
investment advisor or in the Company having to cease selling its services into
such countries, either of which could have a material adverse effect on the
Company's business, results of operations or financial condition.
Risks Associated with Potential Acquisitions. The Company may, from time to
time, pursue acquisitions of businesses, customer bases, products or
technologies that complement or expand its existing business. The Company
evaluates potential acquisition opportunities from time to time, including
those that could be material in size and scope. Acquisitions involve a number
of risks, including the diversion of management's attention from day-to-day
operations to the assimilation of the operations and personnel of the acquired
companies and the incorporation of acquired operations, customer bases,
products or technologies. Such acquisitions could also have adverse effects on
the Company's operating results, and could result in dilutive issuances of
equity securities, the incurrence of debt and the loss of key employees. In
addition, many acquisitions must be accounted for as purchases and, because
most software-related acquisitions involve the purchase of significant
intangible assets, these acquisitions typically result in substantial
amortization charges and charges for acquired research and development
projects, which could have a material adverse effect on the Company's
operating results. There can be no assurance that any such acquisitions will
occur or that, if such acquisitions do occur, the acquired businesses,
customer bases, products or technologies will generate sufficient revenue to
offset the associated costs or effects.
Risks Associated with Technological Change. The market in which the Company
competes is characterized by rapidly changing technology, evolving industry
standards, frequent new service announcements, introductions and enhancements,
and changing customer demands. These market characteristics are exacerbated by
the emerging nature of the Internet and the electronic distribution of
investment research. Accordingly, the Company's future success will depend on
its ability to adapt to rapidly changing technologies and industry standards,
and its ability to continually improve the performance, features and
reliability of its services in response to both changing customer demands and
competitive service offerings. The inability of the Company to successfully
adapt to such changes in a timely manner could have a material adverse effect
on the Company's business, results of operations and financial condition.
Furthermore, there can be no assurance that the Company will not experience
difficulties that could delay or prevent the successful design, development,
testing, introduction or marketing of new services, or that any enhancements
to existing services will adequately meet the requirements of its current and
prospective customers and achieve any degree of significant market acceptance.
If the Company is unable, for technological or other reasons, to develop and
introduce new services or enhancements to existing services in a timely manner
or in response to changing market conditions or customer requirements, or if
its services or enhancements contain defects or do not achieve a significant
degree of market acceptance, the Company's business, results of operations and
financial condition would be materially and adversely affected.
Risk of System Failure or Security Breach. Distribution of the Company's
services utilizes proprietary technology which resides principally on one
computer system. The continuing and uninterrupted performance of such computer
system is critical to the success of the Company's business. Any system
failure that causes interruptions in the Company's ability to service its
customers, including failures that affect the ability of the Company to
collect research from its contributors or provide electronic investment
research to its subscribers, could reduce customer satisfaction and, if
sustained or repeated, would reduce the attractiveness of the Company's
services. An increase in the volume of research reports handled by the
Company's servers, or in the rate of users' requests for such research, could
strain the capacity of the software or hardware deployed by the Company, which
could lead to slower response time or system failures. Furthermore, the
Company faces the risk of a security breach of its computer system which could
disrupt the distribution of research and other reports. To the extent that any
capacity constraints or potential security breaches are not effectively
addressed by the Company, such constraints or breaches would have a material
adverse effect on the
10
<PAGE>
Company's business, results of operations and financial condition. Although
the Company carries general liability insurance, the Company's insurance may
not cover any of these claims or may not be adequate to indemnify the Company
for all liability that may be imposed. Any resulting litigation could have a
material adverse effect on the Company's business, results of operations and
financial condition.
The Company's operations are dependent upon its ability to protect its
computer systems against damage from computer viruses, fire, power loss,
telecommunications failures, vandalism and other malicious acts, and similar
unexpected adverse events. In addition, failure of the Company's
telecommunications providers to provide the data communications capacity in
the time frame required by the Company for any reason could cause
interruptions in the delivery of the services provided by the Company.
Unanticipated problems affecting the Company's systems have from time to time
in the past caused, and in the future could cause, interruptions in the
delivery of the Company's services. Although the Company is currently in the
planning stages of acquiring and implementing a redundant back-up, off-site
computer system, there can be no assurance that the Company will be successful
in acquiring and implementing such a system or that such a system, if
operational, will be successful in preventing any damage or failure that
interrupts or delays the Company's operations, either of which could have a
material adverse effect on the Company's business, results of operations and
financial condition.
Dependence on Intellectual Property; Risk of Infringement Claims. The
Company regards its intellectual property as critical to its future success,
and the Company relies upon copyright, patent, trade secret and trademark laws
in the United States and other jurisdictions to protect its proprietary
rights. The Company owns copyrights in the computer software and on-line
materials that it has developed or acquired, and currently holds limited
licenses to use and distribute certain software in which third parties own
copyrights. The Company has also entered into limited license agreements with
certain of the numerous investment banks, brokerage firms and other third-
party research providers that own the copyrights in research reports that the
Company distributes electronically. The Company distributes other research
reports without the benefit of written licenses with the providers of those
reports, solely on the basis of implied licenses that the Company believes
such providers have granted. There can be no assurance that the Company will
be able to maintain its licenses of research content or of third-party
software, that the Company will be able to obtain such licenses in the future
on commercially reasonable terms or at all, that the Company will be able to
continue to distribute those research reports for which it does not have
written licenses or that the Company's competitors will not be able to
independently develop competing software or on-line materials so as to avoid
infringing upon the Company's copyrights. Also, because the Company's licenses
of third-party software and research content are not exclusive, such software
and content is and will be available to the Company's current and future
competitors. The Company's failure to protect or secure ownership of, or to
maintain licensed rights to use and distribute software and content of others,
or the ability of the Company's competitors to obtain rights to distribute the
same research reports that the Company distributes, could have a material
adverse effect on the Company's business, results of operations and financial
condition.
The Company also relies on trade secret laws, and has filed five patent
applications with the United States Patent and Trademark Office and
applications corresponding to three of those United States applications in
other countries to protect its proprietary software technology and systems for
electronic contribution, storage, searching and distribution of investment
research reports. To date, no patents have been issued to the Company. There
can be no assurance that any of the Company's pending patent applications will
be allowed, that any patents will be issued to the Company even if the
respective applications have been or will be allowed, or that any patents that
are issued to the Company will not be successfully challenged by others and
invalidated through administrative process or litigation. The Company seeks to
protect its trade secrets through the use of confidentiality agreements with
employees, representatives, advisors and others. There can be no assurance
that such agreements will provide adequate protection for the Company's trade
secrets in the event of any unauthorized use or disclosure, that employees of
the Company, its representatives and advisors and others will maintain the
confidentiality of such trade secrets, or that such trade secrets will not
otherwise become known, or be independently developed, by competitors.
11
<PAGE>
The Company relies upon and seeks to protect the trademarks and service
marks that it currently uses, and those that it intends to use in the future,
through registration in the United States and other jurisdictions. There can
be no assurance that any of the Company's pending trademark applications will
be allowed or granted and, if they are allowed or granted, that they, or any
of the registrations that have already been granted to the Company, will not
be successfully challenged by others and invalidated through administrative
process or litigation. The Company has not yet sought to register, in the
United States or elsewhere, other trademarks and service marks that it
currently uses or intends to use. There can be no assurance that the Company's
use of and interest in such trademarks and service marks will be subject to
any legal protection in any of the jurisdictions in which the Company now does
business or might do business in the future. As the Company's business is
dependent on brand recognition in the marketplace, any failure to maintain and
protect the Company's trademarks and service marks could have a material
adverse effect on the Company's business, results of operations and financial
condition.
The Company expects to license certain of its proprietary rights to third
parties, including in connection with the establishment of its international
business operations, which may be controlled by such third parties. While the
Company will attempt to ensure that its proprietary interests will be
protected by its business partners, no assurances can be given that such
partners will not take actions that could materially and adversely affect the
value of the Company's proprietary rights or the reputation of its services
and technologies. The Company currently licenses certain aspects of its text
search functionality and relational database technologies from third parties.
The failure by the Company to maintain these licenses, or to find a
replacement for such technologies in a timely and cost-effective manner, could
have a material adverse effect on the Company's business, results of
operations and financial condition.
Legal standards relating to the validity, enforceability and scope of
protection of certain proprietary rights in Internet-related businesses are
uncertain and still evolving, and no assurance can be given as to the future
viability or value of any proprietary rights of the Company or other companies
within the industry. There can be no assurance that the steps taken by the
Company to protect its proprietary rights will be adequate or that third
parties will not infringe or misappropriate the Company's proprietary rights.
Any such infringement or misappropriation, should it occur, could have a
material adverse effect on the Company's business, results of operations and
financial condition. Furthermore, there can be no assurance that the Company's
business activities will not infringe upon the proprietary rights of others,
or that other parties will not assert infringement claims against the Company.
From time to time the Company has been, and expects to continue to be, subject
to claims in the ordinary course of its business, including claims of alleged
infringement of the patents, trademarks and other intellectual property rights
of third parties by the Company and its business partners. Although such
claims have not resulted in litigation or had an adverse effect on the
Company's business, results of operations or financial condition, such claims
and any resulting litigation, should it occur, could subject the Company to
significant liability for damages and could result in invalidation of the
Company's proprietary rights and, even if not meritorious, could be time-
consuming and expensive to defend, and could result in the diversion of
management time and attention, any of which could have a material adverse
effect on the Company's business, results of operations and financial
condition. See "Business--Intellectual Property."
Year 2000 Compliance. Many currently installed computer systems and software
products are coded to accept or recognize only two digit entries in the date
code field. These systems and software products will need to accept four digit
entries to distinguish 21st century dates from 20th century dates. As a
result, in less than two years, computer systems and/or software used by many
companies may need to be upgraded to comply with such "Year 2000"
requirements. Significant uncertainty exists in the software industry
concerning the potential effects associated with such compliance.
Although the Company has implemented a program designed to ensure that all
software used in connection with the Company's services is Year 2000
compliant, there can be no assurance either that such
12
<PAGE>
software is in fact compliant or that there will not be problems caused by
subscribers' or information providers' hardware or software. Efforts to comply
with Year 2000 requirements may disrupt or delay the Company's ability to
continue developing and marketing its services. The Company may also incur
certain unexpected expenditures in connection with Year 2000 compliance. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Year 2000 Compliance."
RISKS RELATED TO THE INTERNET INDUSTRY
Dependence on Continued Growth in Use of the Internet. The Company's success
will depend, in substantial part, upon the continued growth in the use of the
Internet generally and, in particular, as a medium for information services.
Use of the Internet is at a very early stage of development, and market
acceptance of the Internet as a medium for information services and commerce
is subject to a high level of uncertainty. The rapid growth of global commerce
and the exchange of information on the Internet and other online services is
new and evolving, making it difficult to predict whether the Internet will
prove to be a viable commercial marketplace. The Company believes that its
future success will require the development and widespread acceptance of the
Internet and online services as a medium for obtaining and distributing
investment research information. There can be no assurance that the Internet
will support a successful commercial marketplace. The Internet may not prove
to be a viable information channel due to inadequate development of the
necessary infrastructure, such as reliable network backbones, or complementary
services, such as high speed modems and security procedures for financial
transactions. The Internet has experienced, and is expected to continue to
experience, significant growth in the number of users and amount of traffic.
There can be no assurance that the Internet infrastructure will continue to be
able to support the demands placed on it by sustained growth.
Dependence on the Web Infrastructure. The Company's success will depend, in
large part, upon the maintenance of the Web infrastructure, such as a reliable
network backbone with the necessary speed, data capacity and security, and
timely development of enabling products such as high speed modems, for
providing reliable and timely Web access and services. To the extent that the
Web continues to experience increased numbers of users, frequency of use or
increased bandwidth requirements of users, there can be no assurance that the
Web infrastructure will continue to be able to support the demands placed on
it or that the performance or reliability of the Web will not be adversely
affected. Furthermore, the Internet has experienced a variety of outages and
other delays as a result of damage to portions of its infrastructure or
otherwise, and such outages and delays could adversely affect the Web sites of
subscribers or distributors utilizing or distributing the Company's services.
In addition, the Web could lose its viability as a form of media due to delays
in the development or adoption of new standards and protocols (for example,
the next-generation Internet protocol) that can handle increased levels of
activity. There can be no assurance that the infrastructure or complementary
products or services necessary to maintain the Web as a viable commercial
medium will be developed, or, if they are developed, that the Web will
continue to be a viable commercial medium. If the necessary infrastructure,
standards or protocols or complementary products, services or facilities are
not developed, or if the Web does not continue to be a viable commercial
medium, the Company's business, results of operations and financial condition
would be materially and adversely affected. Even if such infrastructure,
standards or protocols or complementary products, services or facilities are
developed, the Company may be required to incur substantial expenditures in
order to adapt its services to changing or emerging technologies, which could
have a material adverse effect on the Company's business, results of
operations and financial condition. Moreover, critical issues concerning the
commercial use and government regulation of the Internet (including security,
cost, ease of use and access, intellectual property ownership and other legal
liability issues) remain unresolved and could materially and adversely impact
both the growth of the Internet and the Company's business, results of
operations and financial condition.
Liability for Content. As a publisher and distributor of online content, the
Company faces potential direct and indirect liability for defamation,
negligence, copyright, patent or trademark infringement, violation of the
securities laws and other claims based upon the reports and data published by
the Company. For example, by distributing a negative investment research
report, the Company may find itself subject to
13
<PAGE>
defamation claims, regardless of the merits of such claims. Computer failures
may also result in incorrect data being published and distributed widely. In
these and other instances, the Company may be required to engage in protracted
and expensive litigation, which could have the effect of diverting
management's attention and require the Company to expend significant financial
resources. The Company's general liability insurance may not cover any of
these claims or may not be adequate to indemnify the Company for all liability
that may be imposed. Any such claims or resulting litigation could have a
material adverse effect on the Company's business, results of operations and
financial condition.
Government Regulation and Legal Uncertainties. As the popularity and use of
the Internet continues to increase, it is possible that a number of laws and
regulations may be adopted covering issues such as user privacy, pricing,
characteristics, acceptable content, taxation and quality of products and
services. Such legislation could dampen the growth in use of the Web generally
and decrease the acceptance of the Web as a communications and commercial
medium, which could have a material adverse effect on the Company's business,
results of operations and financial condition. In addition, because the
growing popularity and use of the Web has burdened the existing
telecommunications infrastructure and many areas with high Web use have begun
to experience interruptions in phone service, certain local telephone carriers
have petitioned governmental bodies to regulate Internet service providers
("ISPs") and online service providers ("OSPs") in a manner similar to long
distance telephone carriers and to impose access fees on ISPs and OSPs. If any
of these petitions or the relief sought therein is granted, the costs of
communicating on the Web could increase substantially, potentially adversely
affecting the growth in use of the Web. Further, due to the global nature of
the Web, it is possible that, although transmissions relating to the Company's
services originate in the State of New York, the governments of other states
or foreign countries might attempt to regulate the Company's transmissions or
levy sales or other taxes relating to the Company's activities. There can be
no assurance that violations of local laws will not be alleged or charged by
local, state or foreign governments, that the Company might not
unintentionally violate such laws or that such laws will not be modified, or
new laws enacted, in the future. Any of the foregoing developments could have
a material adverse effect on the Company's business, results of operations and
financial condition. See "Business--Government Regulation."
RISKS RELATED TO THE OFFERING
No Prior Public Market for Common Stock; Possible Volatility of Stock
Price. Prior to the offering, there has been no public market for the Common
Stock. Accordingly, there can be no assurance that an active trading market
for the Common Stock will develop or be sustained upon the consummation of the
offering or that the market price of the Common Stock will not decline below
the initial public offering price. The initial public offering price will be
determined by negotiations among the Company and the representatives of the
Underwriters. See "Underwriting."
The trading price of the Company's Common Stock could be subject to wide
fluctuations in response to variations in quarterly results of operations, the
gain or loss of significant research and information providers or subscribers,
changes in earning estimates by analysts, announcements of technological
innovations or new services by the Company or its competitors, general
conditions in Internet-related industries and other events or factors, many of
which are beyond the Company's control. In addition, the stock market in
general has experienced extreme price and volume fluctuations which have
affected the market price for many companies in industries similar or related
to that of the Company and which have been unrelated to the operating
performance of these companies. These market fluctuations may have a material
adverse effect on the market price of the Company's Common Stock.
Control by Existing Stockholders, Directors and Executive Officers. Upon the
consummation of this offering, the existing stockholders, directors and
executive officers and their affiliates will beneficially own approximately %
of the outstanding Common Stock ( % if the Underwriters' over-allotment option
is exercised in full). As a result, these stockholders will be able to
exercise control over all matters requiring
14
<PAGE>
stockholder approval, including the election of directors and approval of
significant corporate transactions. This concentration of ownership may have
the effect of delaying or preventing a change in control of the Company. See
"Management" and "Principal Stockholders."
Benefits of the Offering to Current Stockholders. The Company's current
stockholders will benefit from this offering by the creation of a public
market for their shares of Common Stock and an immediate increase in the net
tangible book value of such shares. In addition, the Over-Allotment Selling
Stockholders participating in this offering will recognize a gain of
approximately $ million based upon the difference between the aggregate
acquisition price and the aggregate initial public offering price for the
shares of Common Stock, net of underwriting discount, sold in this offering by
the Over-Allotment Selling Stockholders. The Company's existing stockholders
will recognize an aggregate unrealized gain of approximately $ million upon
completion of this offering based upon the difference between the aggregate
cost of the shares of Common Stock to be held by current stockholders and the
aggregate initial public offering price of such shares of Common Stock. See
"Dilution" and "Principal Stockholders."
Broad Management Discretion as to Use of Proceeds. The Company has not
designated any specific use for the net proceeds from the sale by the Company
of the Common Stock offered hereby. Rather, the Company intends to use the net
proceeds from this offering for expansion of the Company's sales and marketing
efforts, expansion of international operations, capital expenditures, general
corporate purposes, including working capital, and possible acquisitions of or
investments in businesses, products and technologies that are complementary to
those of the Company. Consequently, the Board of Directors and management of
the Company will have significant flexibility in applying the net proceeds of
this offering to uses which the public stockholders may not deem desirable,
and there can be no assurance that the proceeds will yield a significant
return. The failure of management to apply such funds effectively could have a
material adverse effect on the Company's business, results of operations and
financial condition. See "Use of Proceeds."
Anti-Takeover Effects of Certain Charter, Bylaws and Delaware Law
Provisions; Possible Issuance of Preferred Stock. The Company's Board of
Directors has the authority to issue up to 5,000,000 shares of preferred stock
without any further vote or action by the stockholders, and to determine the
price, rights, preferences, privileges and restrictions, including voting
rights of such shares. Since the preferred stock could be issued with voting,
liquidation, dividend and other rights superior to those of the Common Stock,
the rights of the holders of Common Stock will be subject to, and may be
adversely affected by, the rights of the holders of any such preferred stock.
The issuance of preferred stock could have the effect of making it more
difficult for a third party to acquire a majority of the outstanding voting
stock of the Company. Further, certain provisions of the Company's Certificate
of Incorporation, including provisions that create a classified Board of
Directors, and certain provisions of the Company's Bylaws and of Delaware law
could have the effect of delaying or preventing a change in control of the
Company. See "Description of Capital Stock--Anti-Takeover Effects of Certain
Provisions of Delaware Law and the Company's Certificate of Incorporation and
Bylaws."
Shares Eligible for Future Sale; Registration Rights. Sales of significant
amounts of Common Stock in the public market after the offering or the
perception that such sales will occur could materially and adversely affect
the market price of the Common Stock or the future ability of the Company to
raise capital through an offering of its equity securities. Of the shares
of Common Stock to be outstanding upon the closing of the offering, the
shares offered hereby will be eligible for immediate sale in the public market
without restriction unless the shares are purchased by "affiliates" of the
Company within the meaning of Rule 144 promulgated under the Securities Act of
1933, as amended (the "Securities Act"). The remaining shares of Common
Stock held by existing stockholders upon the closing of the offering will be
"restricted securities" as that term is defined in Rule 144 under the
Securities Act. Restricted securities may be sold in the public market only if
registered or if they qualify for an exemption from registration under Rules
144, 144(k) or 701 promulgated under the Securities Act. The Company's
directors and officers and certain of its stockholders have agreed that they
will not sell, directly or indirectly, any Common Stock without the prior
consent of the representatives of the Underwriters for a period of 180 days
from the date of this Prospectus.
15
<PAGE>
Subject to these lock-up agreements and the provisions of Rules 144, 144(k)
and 701, additional shares will be available for sale in the public market
(subject in the case of shares held by affiliates to compliance with certain
volume restrictions) as follows: (i) shares will be available for
immediate sale in the public market on the date of this Prospectus, (ii)
shares will be eligible for sale 90 days after the date of this Prospectus,
and (iii) shares will be eligible for sale upon the expiration of lock-up
agreements 180 days after the date of this Prospectus. The remaining shares
will be eligible for sale in the public market from time to time after the
expiration of the lock-up agreements. In addition, certain stockholders,
representing approximately shares of Common Stock, and certain
optionholders, with respect to an aggregate of shares of Common Stock
issuable upon the exercise of stock options, have the right, subject to
certain conditions, to include their shares in future registration statements
relating to the Company's securities and to cause the Company to register
certain shares of Common Stock owned by them.
The Company intends to file a Form S-8 registration statement under the
Securities Act shortly after the date of this Prospectus to register all
shares of Common Stock issuable under the Company's 1998 Stock Option Plan.
Such registration statement will automatically become effective upon filing.
Accordingly, shares covered by that registration statement will thereupon be
eligible for sale in the public markets, unless such options are subject to
vesting restrictions or the contractual restrictions described above. See
"Management--1998 Stock Option Plan," "Shares Eligible for Future Sale" and
"Underwriting."
Immediate and Substantial Dilution. Investors purchasing shares of Common
Stock in the offering will incur immediate and substantial dilution in net
tangible book value per share. To the extent outstanding options to purchase
Common Stock are exercised, there will be further dilution. See "Dilution."
Absence of Dividends. The Company has never declared or paid any cash
dividends on its Common Stock and does not expect to pay any cash dividends
for the foreseeable future. The Company currently intends to retain future
earnings, if any, to finance the expansion of its business. In addition, the
Company's bank line of credit prohibits the payment of cash dividends without
the bank's prior written consent. See "Dividend Policy."
16
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common
Stock offered by the Company hereby, after deducting the underwriting discount
and estimated offering expenses payable by the Company, are estimated to be
approximately $ ($ if the Underwriters' over-allotment option is
exercised in full), assuming an initial public offering price of $ per
share. The Company will not receive any proceeds from the sale of shares by
the Over-Allotment Selling Stockholders.
The Company intends to use the net proceeds of the offering for expansion of
the Company's sales and marketing efforts, expansion of international
operations, capital expenditures, general corporate purposes, including
working capital, and possible acquisitions of or investments in businesses,
products and technologies that are complementary to those of the Company.
However, there are no agreements or pending negotiations with respect to any
such acquisitions, investments or other transactions.
Pending such uses, the net proceeds will be invested in short-term,
investment grade instruments, certificates of deposit or direct or guaranteed
obligations of the United States.
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its capital
stock and does not expect to pay any cash dividends for the foreseeable
future. The Company currently intends to retain future earnings, if any, to
finance the expansion of its business. The payment of any future cash
dividends will depend upon the future earnings and capital requirements of the
Company, the terms of any loan agreements to which the Company is then a party
and such other factors as the Company's Board of Directors considers
appropriate.
17
<PAGE>
CAPITALIZATION
The following table sets forth, as of March 31, 1998, the capitalization of
the Company (i) on an actual basis, (ii) on a pro forma basis to reflect the
Preferred Stock Conversion, and (iii) on an as adjusted basis to give effect
to the sale of shares of Common Stock offered by the Company hereby at an
assumed initial public offering price of $ per share, after deducting the
underwriting discount and estimated offering expenses payable by the Company,
and the application of the net proceeds therefrom. See "Use of Proceeds." This
information should be read in conjunction with the Company's Consolidated
Financial Statements and the related Notes thereto appearing elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1998
------------------------------
ACTUAL PRO FORMA AS ADJUSTED
------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Redeemable Preferred Stock, $.01 par value,
Series A, Series B, Series C and Series D,
$33,000,000 aggregate liquidation preference,
217,222 shares issued and outstanding on an
actual basis; no shares issued and outstanding
on a pro forma or as adjusted basis............ $37,896 -- --
Stockholders' equity (deficit):
Preferred Stock, $.01 par value, 5,000,000
shares authorized; no shares issued and
outstanding on an actual, pro forma or as
adjusted basis...............................
Common Stock, $.01 par value, 50,000,000
shares authorized; 1,698,333 shares issued
and outstanding on an actual basis; 8,939,074
shares issued and outstanding on a pro forma
basis; and shares issued and outstanding
on an as adjusted basis(1)................... 17 234
Additional paid-in capital...................... (3,337) 34,342
Accumulated deficit............................. (24,038) (24,038)
Deferred compensation........................... (1,087) (1,087)
Translation adjustment.......................... (15) (15)
------- -------
Total stockholders' equity (deficit).......... (28,460) 9,436
------- -------
Total capitalization........................ $9,436 $9,436
======= =======
</TABLE>
- ---------------------
(1) Excludes 1,399,335 shares of Common Stock issuable pursuant to stock
options outstanding as of March 31, 1998 (of which options to purchase
approximately 413,000 shares were then exercisable) with a weighted
average price of $0.60 per share. See "Management--1998 Stock Option Plan"
and "Description of Capital Stock--Options."
18
<PAGE>
DILUTION
The pro forma net tangible book value of the Company as of March 31, 1998,
after giving effect to the Preferred Stock Conversion, was $ , or $ per
share of Common Stock. Pro forma net tangible book value per share is equal to
the amount of the Company's total tangible assets (total assets less
intangible assets), divided by the number of shares of Common Stock
outstanding as of March 31, 1998. Assuming the sale by the Company of
shares of Common Stock offered hereby at an assumed initial public offering
price of $ per share (the mid-point of the range set forth on the cover page
of this Prospectus), and the application of the estimated net proceeds
therefrom, the pro forma net tangible book value of the Company as of March
31, 1998 would have been $ , or $ per share of Common Stock. This
represents an immediate increase in pro forma net tangible book value of $
per share to existing stockholders and an immediate dilution in pro forma net
tangible book value of $ per share to new investors. The following table
illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.................... $
Pro forma net tangible book value per share as of March 31, 1998. $
Pro forma increase attributable to new investors.................
-----
Pro forma net tangible book value per share after the offering.....
-----
Pro forma dilution per share to new investors...................... $
=====
</TABLE>
The following table summarizes, on a pro forma basis as of March 31, 1998,
the total number of shares of Common Stock purchased from the Company, the
total consideration paid to the Company and the average price per share paid
by existing stockholders and by new investors:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
----------------- ---------------------
AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
-------- -------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Existing stockholders .. % $ %
New investors...........
-------- ------- ---------- ---------
Total................. 100.0% $ 100.0%
======== ======= ========== =========
</TABLE>
The foregoing tables and calculations assume no exercise of outstanding
options. At March 31, 1998, there were 1,399,335 shares of Common Stock
reserved for issuance upon exercise of outstanding options at a weighted
average exercise price of $0.60 per share. To the extent that these options
are exercised, there will be further dilution to new investors. See
"Management--1998 Stock Option Plan."
19
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data set forth below with respect to the
Company's consolidated statement of operations for the years ended December
31, 1995, 1996 and 1997 and with respect to the Company's consolidated balance
sheet as of December 31, 1996 and 1997 are derived from the audited
Consolidated Financial Statements of the Company which are included elsewhere
in this Prospectus and are qualified by reference to such Consolidated
Financial Statements and the related Notes thereto. The consolidated statement
of operations data for the three months ended March 31, 1997 and 1998 and the
consolidated balance sheet data as of March 31, 1998 are derived from
unaudited Consolidated Financial Statements included elsewhere in this
Prospectus. The selected consolidated statement of operations data for the
years ended December 31, 1993 and 1994 and the selected consolidated balance
sheet data as of December 31, 1993, 1994 and 1995 are derived from audited
Consolidated Financial Statements which are not included herein. The unaudited
Consolidated Financial Statements include all adjustments, consisting only of
normal recurring adjustments, necessary for the fair presentation of the
Company's consolidated financial position and the consolidated results of its
operations for those periods. Results of operations for the three months ended
March 31, 1998 are not necessarily indicative of the results that may be
expected for the entire year or for any future period. The selected
consolidated financial data set forth below is qualified in its entirety by,
and should be read in conjunction with, "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Consolidated
Financial Statements and the related Notes thereto included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------ ----------------
1993 1994 1995 1996 1997 1997 1998
------ ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Revenues................ $2,026 $ 2,155 $ 1,005 $ 2,647 $ 6,014 $ 950 $ 2,714
Cost of revenues........ 565 752 404 810 1,232 242 694
------ ------- ------- ------- ------- ------- -------
Gross profit............ 1,461 1,403 601 1,837 4,782 708 2,020
Operating expenses:
Sales and marketing... 145 943 1,892 2,339 3,507 652 1,164
Research and
development.......... 620 975 1,520 1,415 1,601 370 440
General and
administrative....... 1,199 1,609 2,709 4,553 7,836 1,932 1,989
------ ------- ------- ------- ------- ------- -------
Total operating
expenses........... 1,964 3,527 6,121 8,307 12,944 2,954 3,593
------ ------- ------- ------- ------- ------- -------
Loss from operations.... (503) (2,124) (5,520) (6,470) (8,162) (2,246) (1,573)
Net interest income
(expense).............. 5 52 26 60 125 23 (196)
Other income (expense).. (23) 23 -- -- -- -- 125
------ ------- ------- ------- ------- ------- -------
Net loss................ $ (521) $(2,049) $(5,494) $(6,410) $(8,037) $(2,223) $(1,644)
====== ======= ======= ======= ======= ======= =======
Pro forma net loss per
share (1)(2)........... $ (0.92) $ (0.19)
======= =======
Pro forma weighted
average shares
outstanding(1)(2)...... 8,694 8,874
======= =======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------- MARCH 31,
1993 1994 1995 1996 1997 1998
------ ------- ------- -------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE
SHEET DATA:
Cash and cash
equivalents, and
marketable securities.. $1,323 $ 4,975 $ 255 $ 8,730 $ 10,197 $ 8,844
Working capital......... 960 4,803 (1,487) 7,249 8,021 7,656
Total assets............ 1,416 6,295 2,799 12,548 14,733 14,613
Deferred revenues....... 167 -- 286 1,085 1,447 2,125
Redeemable preferred
stock.................. 1,463 8,146 8,798 25,066 37,234 37,896
Total stockholders'
equity (deficit)..... (437) (2,657) (8,791) (16,601) (26,750) (28,460)
</TABLE>
- ---------------------
(1) See Note 4 of Notes to Consolidated Financial Statements for an
explanation of the method used to determine the number of shares used to
compute pro forma net loss per share.
(2) Pro forma to give effect to the Preferred Stock Conversion.
20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the Consolidated
Financial Statements and the related Notes thereto included elsewhere in this
Prospectus. This discussion contains forward-looking statements that involve
risks and uncertainties. The Company's actual results may differ materially
from those anticipated in these forward-looking statements as a result of
certain factors, including, but not limited to, those set forth under "Risk
Factors" and elsewhere in this Prospectus.
OVERVIEW
Multex is a leading provider of online investment research and information
services designed to meet the needs of institutional investors, investment
banks, brokerage firms, corporations and individual investors. The Company's
services enable timely online access to over 500,000 research reports and
other investment information from more than 300 leading investment banks,
brokerage firms and third-party research providers worldwide, including
Merrill Lynch, Morgan Stanley Dean Witter and Goldman Sachs. More than 400,000
investors and financial professionals, including mutual funds managers,
portfolio managers, institutional investors, brokers and their clients, have
access to the Company's services. In addition to making its services available
through its own Web sites, the Company has established a number of strategic
distribution relationships to reach the institutional market, including
relationships with ADP, Bloomberg, Bridge, Dow Jones and Reuters. To target
the individual investor market, the Company recently entered into an agreement
with America Online to serve as an anchor tenant on the AOL Personal Finance
channel, and intends to launch the Multex Investor Network in 1998 to offer a
wide range of research reports and other financial information to individual
investors.
The Company offers three main services: (i) MultexNET which was launched in
June 1996; (ii) MultexEXPRESS which was launched in January 1997; and (iii)
Multex Research-On-Demand which was launched in April 1997. MultexNET,
typically offered as a one to three year subscription, allows entitled
institutional investors to access full-text investment research reports on a
real-time basis from leading investment banks, brokerage firms and other
third-party research providers over the Internet or through other distribution
channels. MultexEXPRESS, also provided pursuant to one to three year
subscriptions, enables financial institutions to distribute their proprietary
financial research, as well as other corporate documents, over the Internet,
through intranets and other private networks. Multex Research-On-Demand gives
institutional investors, corporations and individual investors the ability to
access research reports on a pay-per-view basis from a majority of the
contributors to MultexNET, over the Internet or through other distribution
channels.
Pricing of the Company's services is based on a number of factors. The
subscription fee for MultexNET typically ranges from $3,540 to $25,000 per
year based on the number of users within the subscribing organization. For
MultexEXPRESS, the subscription fees vary based on the number of users, but
typically average $100,000 annually per subscriber installation. Fees for
information and research offered through Multex Research-On-Demand typically
range from $10 to $150 per report, depending on the length and type of
document.
Revenues from subscriptions to MultexNET and MultexEXPRESS are recognized in
equal installments over the term of the subscription. Revenues from Multex
Research-On-Demand are recognized upon sale. Certain users of Multex Research-
On-Demand pay a flat annual fee for the service, which entitles them to
receive research and other reports at a discounted rate. Revenues from these
users are recognized in equal installments over the term of the subscription.
All costs associated with revenues from MultexNET, MultexEXPRESS and Multex
Research-On-Demand are expensed as and when incurred. The Company pays
distribution fees to its distributors and, with respect to Multex Research-On-
Demand, royalties to the investment banks, brokerage firms or third-party
research providers that authored the research.
21
<PAGE>
The Company has expanded its operations in recent years and has grown from
79 employees at December 31, 1996 to 120 employees at March 31, 1998. In
January 1997, the Company opened its London office, and in February 1998, the
Company engaged the services of an independent representative in Hong Kong.
The Company expects to add additional personnel both in the United States and
abroad as its operations expand. The Company currently expects to
significantly increase its operating expenses both on an absolute basis and as
a percentage of revenues in order to expand its sales and marketing
operations, to continue to expand internationally and to continuously upgrade
and enhance its services and technologies. As a result of these and other
factors, there can be no assurance that the Company will not incur significant
losses on a quarterly and annual basis for the foreseeable future.
The Company has incurred significant losses since its inception, and as of
March 31, 1998 had an accumulated deficit of $24.0 million. In addition, the
Company has recorded cumulative deferred compensation of $1.2 million, which
represents the difference between the exercise price and the fair market value
of the Company's Common Stock at the date of grant for shares of Common Stock
issuable upon the exercise of certain stock options granted to employees. Of
the total deferred compensation amount, $64,000 was amortized during the three
months ended March 31, 1998. The remaining deferred compensation amount is
expected to be amortized over the remaining vesting periods of the related
options. The Company believes that period-to-period comparisons of its
operating results are not necessarily meaningful and that the results for any
period should not be relied upon as an indication of future performance.
Historically, a few of the Company's subscribers and distributors have
accounted for a substantial majority of the Company's revenues. Specifically,
for the year ended December 31, 1997, Bloomberg, Reuters, Merrill Lynch & Co.
and Gruntal & Co. each individually accounted for 10% or more of the Company's
consolidated revenues. The loss of any of these subscribers or distributors
could have a material adverse effect on the Company's business, results of
operations and financial condition. See "Risk Factors--Concentration of
Revenues" and Note 12 of Notes to the Consolidated Financial Statements.
The Company was incorporated in April 1993. In October 1993, Multex Systems,
Inc., a New York corporation, merged with and into Multex Publisher, Inc., a
Delaware corporation, which subsequently changed its name to Multex Systems,
Inc. From 1993 to June 1996, the Company was engaged in the development of
software which is the underlying technology of MultexNET and provided software
development services to ADP. Starting in September 1995, the Company generated
revenues from the distribution of research reports and other information
through Bloomberg.
RESULTS OF OPERATIONS
The following table sets forth the consolidated statement of operations data
for the periods indicated as a percentage of revenues:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
------------------------ ------------------
1995 1996 1997 1997 1998
------ ------ ------ -------- -------
<S> <C> <C> <C> <C> <C>
Revenues....................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues............... 40.2 30.6 20.5 25.5 25.6
------ ------ ------ -------- -------
Gross profit................... 59.8 69.4 79.5 74.5 74.4
Operating expenses:
Sales and marketing.......... 188.4 88.4 58.3 68.7 42.9
Research and development..... 151.3 53.5 26.6 38.9 16.2
General and administrative... 269.7 172.0 130.3 203.3 73.3
------ ------ ------ -------- -------
Total operating expenses..... 609.4 313.9 215.2 310.9 132.4
------ ------ ------ -------- -------
Loss from operations........... (549.6)% (244.5)% (135.7)% (236.4)% (58.0)%
Net interest income (expense).. 2.7 2.3 2.1 2.5 (7.2)
Other income................... -- -- -- -- 4.6
------ ------ ------ -------- -------
Net loss....................... (546.9)% (242.2)% (133.6)% (233.9)% (60.6)%
====== ====== ====== ======== =======
</TABLE>
22
<PAGE>
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
Revenues
The Company's revenues consist of subscription fees for MultexNET and
MultexExpress, and sales of investment research on a pay-per-view basis
through Multex Research-On-Demand. Multex also provides professional services
to select MultexEXPRESS clients, including software development, customization
and integration services. These services are typically billed to clients on a
time and material basis. On occasion, as a service to its clients, the Company
has acquired equipment for resale. To date, the Company has not derived
significant revenues from its international operations.
Total revenues increased 185.7% to $2.7 million for the three months ended
March 31, 1998 from $950,000 for the three months ended March 31, 1997. The
increase was due to increased demand for MultexNET and MultexEXPRESS, price
increases for MultexNET and the introduction of Multex Research-On-Demand in
April 1997.
Cost of Revenues
Cost of revenues consists primarily of fees payable to distributors of
MultexNET and Multex Research-On-Demand, royalties payable to the providers of
investment research offered through Multex Research-On-Demand, purchases of
equipment for resale and telecommunications costs.
Cost of revenues increased 186.8% to $694,000 for the three months ended
March 31, 1998 compared to $242,000 for the three months ended March 31, 1997.
As a percentage of revenues, cost of revenues were 25.6% and 25.5% for the
three months ended March 31, 1998 and 1997, respectively. The increase in
dollar terms was primarily due to royalty and distribution fee payments as a
result of the introduction of Multex Research-On-Demand in April 1997 and
additional telecommunication charges resulting from increased sales of
subscriptions for MultexNET and MultexEXPRESS. The Company did not incur any
royalty and distribution expense in the three months ended March 31, 1997
related to Multex Research-On-Demand, which service had not yet been launched.
While the gross margin for the three months ended March 31, 1998 remained flat
as compared to the gross margin for the same period in 1997, the Company
achieved higher margins on the sale of its services due to raising the prices
of its services and improved operating efficiencies, which was offset by the
lower margins associated with equipment resales.
Operating Expenses
Sales and Marketing. Sales and marketing expenses consist primarily of
salaries, commissions, advertising, public relations, tradeshow expenses, and
costs of marketing materials. Sales and marketing expenses increased 78.3% to
$1.2 million for the three months ended March 31, 1998 compared to $652,000
for the three months ended March 31, 1997. As a percentage of revenues, sales
and marketing expenses decreased to 42.9% from 68.7% for the three months
ended March 31, 1998 and 1997, respectively. The increase in dollar terms was
due primarily to an expansion of the sales force and increased marketing
activities. The Company expects sales and marketing expenses to increase
significantly as the Company introduces the Multex Investor Network, increases
brand awareness, hires additional sales and marketing personnel and expands
internationally.
Research and Development. Research and development expenses consist
primarily of salaries and benefits. Research and development expenses
increased 19.0% to $440,000 for the three months ended March 31, 1998 compared
to $370,000 for the three months ended March 31, 1997. As a percentage of
revenues, research and development expenses decreased to 16.2% from 38.9% for
the three months ended March 31, 1998 and 1997, respectively. The increase in
research and development expenses in dollar terms was primarily due to an
increase in the number of developers hired by the Company and salary
increases. The Company believes that continued investment in product
development is critical to attaining its strategic objectives and, as a
result, expects research and development expenses to increase significantly in
future periods.
23
<PAGE>
General and Administrative. General and administrative expenses consist
primarily of salaries and benefits, fees for professional services and
facility expenses, including depreciation of assets. General and
administrative expenses increased 3.0% to $2.0 million for the three months
ended March 31, 1998 compared to $1.9 million for the three months ended March
31, 1997. As a percentage of revenues, general and administrative expenses
decreased to 73.3% from 203.3% for the three months ended March 31, 1998 and
1997, respectively. The increase in general and administrative expenses in
dollar terms was primarily due to increased personnel, professional service
fees and facility expenses necessary to support the Company's domestic and
international growth. The Company expects general and administrative expenses
to increase in future periods as the Company hires additional personnel and
incurs additional costs related to the growth of its business and its
operations as a public company.
Loss from Operations
For the foregoing reasons, loss from operations decreased 30.0% to $1.6
million for the three months ended March 31, 1998 as compared to $2.2 million
for the three months ended March 31, 1997. As a percentage of revenues, loss
from operations was (58.0)% and (236.4)% for the three months ended March 31,
1998 and 1997, respectively.
Interest Income (Expense) and Other Income
Net interest expense was $196,000 for the three months ended March 31, 1998
as compared to net interest income of $24,000 for the three months ended March
31, 1997. The increase in net interest expense was due principally to interest
payable upon the early repayment of loans used to acquire equipment which
amounted to $265,000.
Other income was $125,000 for the three months ended March 31, 1998 as
compared to none for the three months ended March 31, 1997. Other income
consists of the gain on sale of fixed assets, primarily computer equipment.
YEARS ENDED DECEMBER 31, 1997 AND 1996 AND 1995
Revenues
Total revenues increased 127.2% to $6.0 million in 1997 from $2.6 million in
1996, and increased 163.5% in 1996 from $1.0 million in 1995. The increase in
revenues in 1997 was primarily due to increased demand for MultexNET, and the
introduction of MultexEXPRESS and Multex Research-On-Demand. The increase in
revenues in 1996 was due to increased revenues from the Company's services on
Bloomberg and the introduction and increasing demand for MultexNET, which was
made available over the Internet in June 1996.
Cost of Revenues
Cost of revenues increased 52.2% to $1.2 million in 1997 from $809,000 in
1996, and increased 100.6% in 1996 from $403,000 in 1995. As a percentage of
revenues, cost of revenues decreased to 20.5% in 1997 from 30.6% and 40.2% in
1996 and 1995, respectively. The increase in cost of revenues in dollar terms
in each period was primarily due to increased distributor fees relating to
MultexNET, increased royalty and distribution fee payments as a result of the
introduction of Multex Research-On-Demand in April 1997 and additional
telecommunication charges resulting from increased sales of subscriptions for
MultexNET and MultexEXPRESS. Cost of revenues as a percentage of revenues has
decreased as the Company has been able to raise the prices of its services and
improve operating efficiencies. The Company has also reduced the proportion of
its revenues resulting from equipment resales, which have significantly lower
margins as compared to revenues generated by the Company's services.
Operating Expenses
Sales and Marketing. Sales and marketing expenses increased 49.9% to $3.5
million in 1997 from $2.3 million in 1996, and increased 23.6% in 1996 from
$1.9 million in 1995. As a percentage of revenues, sales
24
<PAGE>
and marketing expenses decreased to 58.3% in 1997 from 88.4% and 188.4% in
1996 and 1995, respectively. The increase in sales and marketing expenses in
dollar terms in each period was due to an expansion of the Company's sales
force and increased marketing activities.
Research and Development. Research and development expenses increased to
$1.6 million in 1997 from $1.4 million in 1996, and increased from $1.5
million in 1995, representing an increase of 13.1% and a decrease of 6.9%,
respectively. As a percentage of revenues, research and development expenses
decreased to 26.6% in 1997 from 53.5% and 151.3% in 1996 and 1995,
respectively. The increase in research and development expenses in dollar
terms was due to an increase in the numbers of developers employed by the
Company and salary increases.
General and Administrative. General and administrative expenses increased
72.1% to $7.8 million in 1997 from $4.6 million in 1996, and increased 68.0%
in 1996 from $2.7 million in 1995. As a percentage of revenues, general and
administrative expenses decreased to 130.3% in 1997 from 172.0% and 269.7% in
1996 and 1995, respectively. The increase in general and administrative
expenses in dollar terms in each period was primarily due to increased
personnel, professional service fees and facility expenses necessary to
support the Company's domestic and international growth.
Loss from Operations
For the foregoing reasons, loss from operations increased 26.2% to $8.2
million in 1997 from $6.5 million for 1996 and 17.2% in 1996 from $5.5 million
in 1995. As a percentage of revenues, loss from operations was (135.7)%,
(244.5)% and (549.6)% for 1997, 1996 and 1995, respectively.
Interest Income (Expense) and Other Income
Net interest income increased 108.7% to $125,000 for 1997 from $60,000 in
1996 and increased 124.9% in 1996 from $26,000 in 1995. The increase in net
interest income was due principally to an increase in the amount of cash
available for investment purposes.
INCOME TAXES
At December 31, 1997, the Company had net operating loss carryforwards of
approximately $18,600,000 and research and development credits of
approximately $500,000 for income tax purposes that expire in 2008 through
2012. The utilization of approximately $15,600,000 and $400,000 of such loss
carryforwards and credits, respectively, are subject to an annual limitations
of approximately $1,900,000, pursuant to Section 382 of the Internal Revenue
Code of 1986, as amended.
25
<PAGE>
SELECTED UNAUDITED QUARTERLY RESULTS OF OPERATIONS
The following table sets forth certain unaudited quarterly statement of
operations data for each of the five quarters ended March 31, 1998. In the
opinion of management, the unaudited financial results include all
adjustments, consisting only of normal recurring adjustments, necessary for
the fair presentation of the Company's consolidated results of operations for
those periods. The consolidated quarterly data should be read in conjunction
with the audited Consolidated Financial Statements of the Company and the
Notes thereto appearing elsewhere in this Prospectus. The results of
operations for any quarter are not necessarily indicative of the results of
operations for any future period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1997 1997 1997 1997 1998
-------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS)
Revenues.................... $ 950 $ 1,212 $ 1,404 $ 2,448 $ 2,714
Cost of revenues............ 242 284 303 403 694
------- ------- ------- ------- -------
Gross profit................ 708 928 1,101 2,045 2,020
Operating expenses:
Sales and marketing....... 652 943 733 1,179 1,164
Research and development.. 370 393 424 414 440
General and
administrative........... 1,932 1,849 1,875 2,180 1,989
------- ------- ------- ------- -------
Total operating
expenses............... 2,954 3,185 3,032 3,773 3,593
------- ------- ------- ------- -------
Loss from operations........ (2,246) (2,257) (1,931) (1,728) (1,573)
Net interest income
(expense).................. 23 (5) 40 67 (196)
Other income................ -- -- -- -- 125
------- ------- ------- ------- -------
Net loss.................... $(2,223) $(2,262) $(1,891) $(1,661) $(1,644)
======= ======= ======= ======= =======
<CAPTION>
PERCENTAGE OF TOTAL REVENUES
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues.................... 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Cost of revenues............ 25.5 23.4 21.6 16.5 25.6
------- ------- ------- ------- -------
Gross profit................ 74.5 76.6 78.4 83.5 74.4
Operating expenses:
Sales and marketing....... 68.7 77.8 52.2 48.2 42.9
Research and development.. 38.9 32.4 30.2 16.9 16.2
General and
administrative........... 203.3 152.6 133.5 89.1 73.3
------- ------- ------- ------- -------
Total operating
expenses............... 310.9 262.8 215.9 154.2 132.4
------- ------- ------- ------- -------
Loss from operations........ (236.4)% (186.2)% (137.5)% (70.7)% (58.0)%
Net interest income
(expense).................. 2.5 (0.4) 2.8 2.7 (7.2)
Other income................ -- -- -- -- 4.6
------- ------- ------- ------- -------
Net loss.................... (233.9)% (186.6)% (134.7)% (68.0)% (60.6)%
======= ======= ======= ======= =======
</TABLE>
The Company's revenues have increased in all quarters presented as a result
of increased acceptance of MultexNET, which was launched in June 1996,
MultexEXPRESS, which was launched in January 1997, and increased purchases of
the Multex Research-On-Demand service, which was launched in April 1997. The
Company's gross profit has generally increased during the quarters presented
due to price increases and improved operating efficiencies. Operating expenses
have increased in dollar terms during the quarters presented. Sales and
marketing expenses have increased in dollar terms as a result of increased
personnel and increased marketing, advertising and promotional activity.
Research and development expenses increased in dollar terms as a result of
expanded technological development efforts to support the launch of new
services and to enhance the features and functionality of its services.
26
<PAGE>
The Company's quarterly revenues, margins and results of operations have
fluctuated significantly in the past and are expected to continue to fluctuate
significantly in the future. Causes of such fluctuations have included and may
include, among other factors, demand for the Company's services, the size and
timing of both new and renewal subscriptions, the number, timing and
significance of new services introduced by the Company and its competitors,
the ability of the Company to develop, market and introduce new and enhanced
services on a timely basis, the level of service and price competition,
changes in operating expenses, changes in the mix of services offered, changes
in the Company's sales incentive strategy, sharp declines in the volume or
price levels of securities transactions and general economic factors. Any one
or more of these factors could have a material adverse effect on the Company's
business, results of operation and financial condition, and makes the
prediction of results of operations on a quarterly basis unreliable. See "Risk
Factors--Significant Fluctuations in Quarterly Results of Operations."
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations primarily through the sale of equity
securities. The Company has received an aggregate of $32.7 million in net
proceeds from the sale of four series of Preferred Stock. At March 31, 1998,
the Company had $3.9 million of cash and cash equivalents and $4.9 million of
marketable securities. The Company's principal commitments consisted of
obligations under operating leases.
Net cash used in operating activities was $7.1 million, $5.5 million and
$4.6 million for the years ended December 31, 1997, 1996 and 1995,
respectively, and $1.3 million and $2.1 million for the three months ended
March 31, 1998 and 1997, respectively. The principal use of cash for all
periods was to fund the Company's losses from operations.
Net cash used in investing activities was $945,000, $9.2 million and
$905,000 for the years ended December 31, 1997, 1996 and 1995, respectively.
Net cash provided by investing activities was $2.8 million and $1.7 million
for the three months ended March 31, 1998 and 1997, respectively. Cash used in
investing activities was primarily related to purchases of property, equipment
and marketable securities and cash provided by investing activities was
primarily related to the sale of marketable securities. In 1996, the Company
purchased marketable securities following one of its Preferred Stock
financings pending use of those funds.
Net cash provided by financing activities was $9.7 million, $15.4 million
and $771,000 for the years ended December 31, 1997, 1996 and 1995,
respectively, and $12,000 for the three months ended March 31, 1997. For the
three months ended March 31, 1998, the Company used $168,000 in financing
activities. Net cash provided by financing activities primarily consisted of
net proceeds from the sale of equity securities and borrowings under bank
lines of credit, which were offset in part by repayments of bank debt and
lease obligations.
Although the Company has no material commitments for capital expenditures,
management anticipates that it will experience a substantial increase in its
capital expenditures and lease commitments consistent with its anticipated
growth in operations, infrastructure and personnel, including the
implementation of an off-site backup computer system and certain capital
expenditures associated with expanding the Company's facilities. The Company
currently anticipates that it will continue to experience significant growth
in its operating expenses for the foreseeable future and that its operating
expenses will be a material use of the Company's cash resources. The Company
believes that the net proceeds of the offering, together with its existing
cash, cash equivalents and marketable securities, will be sufficient to meet
its anticipated cash needs for working capital and capital expenditures at
least through the end of 1999.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded to
accept or recognize only two digit entries in the date code field. These
systems and software products will need to accept four digit entries to
distinguish 21st century dates from 20th century dates. As a result, in less
than two years, computer
27
<PAGE>
systems and/or software used by many companies may need to be upgraded to
comply with such Year 2000 requirements. While significant uncertainty exists
concerning the potential effects associated with such compliance, the Company
does not believe that year 2000 compliance will result in a material adverse
effect on its business, results of operations or financial condition.
The Company and its customers may be affected by Year 2000 issues.
Specifically, even if the Company's services are Year 2000 compliant, the
software and hardware products used by subscribers or customers of the
Company's services may not be Year 2000 compliant, thereby disrupting the
ability of the Company's customers to use the Company's services. Furthermore,
if subscribers or customers are unable to view research reports and other
financial information distributed by the Company because of Year 2000
compliance problems, there can be no assurance that such parties will not
commence litigation against the Company for such an electronic distribution
failure. See "Risk Factors--Year 2000 Compliance."
RECENT ACCOUNTING PRONOUNCEMENTS
See Note 1 to Notes to Consolidated Financial Statements for recently
adopted and recently issued accounting standards.
28
<PAGE>
BUSINESS
The following Business section contains forward-looking statements which
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those set forth in "Risk Factors" and
elsewhere in this Prospectus.
Multex is a leading provider of online investment research and information
services designed to meet the needs of institutional investors, investment
banks, brokerage firms, corporations and individual investors. The Company's
services enable timely online access to over 500,000 research reports and
other investment information from more than 300 leading investment banks,
brokerage firms and third-party research providers worldwide, including
Merrill Lynch, Morgan Stanley Dean Witter and Goldman Sachs. More than 400,000
investors and financial professionals, including mutual funds managers,
portfolio managers, institutional investors, brokers and their clients, have
access to the Company's services. In addition to making its services available
through its own Web sites, the Company has established a number of strategic
distribution relationships to reach the institutional market, including
relationships with ADP, Bloomberg, Bridge, Dow Jones and Reuters. To target
the individual investor market, the Company recently entered into an agreement
with AOL to serve as an anchor tenant on the AOL Personal Finance channel, and
intends to launch the Multex Investor Network in 1998 to offer a wide range of
research reports and other financial information to individual investors.
INDUSTRY OVERVIEW
In recent years, there has been substantial growth in the ownership of
equity and fixed income securities worldwide. According to the Investment
Company Institute, total financial assets of U.S. households were $14.0
trillion at the end of 1995, and are expected to grow to over $22.5 trillion
by the year 2000. These assets are invested in, among other things, over 8,500
publicly traded companies in the United States, including over 2,900 companies
that have completed initial public offerings in the last five years, and
thousands more internationally. The growth in financial assets has resulted
from a number of factors, including an increase in the number of mutual funds
and increased cash in-flows into those mutual funds, households allocating
more of their assets to equity investments, sustained high returns in the
equity markets over a number of years, and lower trading costs as a result of
regulatory changes and improved technologies. These also have resulted in an
increased use of online trading and the increased acceptance of electronic
transmission of data and other information. The proliferation in equity
ownership and associated trading activity has created a need for more
investment research and market information on the part of investors who seek
higher returns on their portfolios.
Investment research is one of the primary tools mutual fund managers,
portfolio managers and other institutional investors use to assist them in
deciding whether to invest in a company or industry and when to buy and sell a
particular security. Investment banks and brokerage firms, as the primary
providers of investment research, have invested billions of dollars developing
their research capabilities, which they use to build their brand name
recognition, enhance customer loyalty and generate investment banking and
trading revenues. Many of these firms are expanding the breadth and scope of
their research by hiring additional analysts and increasing the number of
companies and industries covered by their research and providing research on
international markets. As the industry becomes more competitive, investment
banks and brokerage firms want to distribute their research in the fastest and
most efficient manner possible in order to meet increasing investor demand for
better access to investment research and market information.
Institutional investors are increasingly demanding access to investment
research and other market information--such as SEC reports, business and
financial news, stock quotes, stock price graphs and annual reports--on a
"real-time" basis. These investors are also seeking ways to quickly find and
retrieve relevant research and market information online. They are also
demanding faster, more efficient and cost-effective
29
<PAGE>
access to other industry and corporate information, as well as better methods
to filter and organize the information they receive from various sources. In
addition, large users of investment research and other financial information
also include investment banks and brokerage firms, which utilize their
proprietary research and other corporate documents, as well as research
purchased from other sources, to support their own banking, sales, trading and
marketing functions. These firms seek to quickly and efficiently distribute
research and other documents to their investment bankers, brokers and traders
in geographically dispersed locations.
Individual investors are also increasingly demanding investment research and
other market information to support their investing activities. Many
individual investors currently do not have timely access to investment
research to satisfy their needs. The ability to offer investment research to
customers is increasingly becoming a competitive advantage and a key
differentiator for full service brokerage firms seeking to compete with
discount and online brokerage firms. In addition, personnel within
corporations, such as corporate executives, investor relations departments and
strategic planning departments, as well as professional service firms, such as
legal, accounting and consulting firms, require access to investment research
from investment banks, brokerage firms and other third-party providers. With
the cost of personal computers and Internet access continuing to decline,
individual investors and corporate users are increasingly using the Internet
as a source of investment information.
Investment research traditionally has been mailed to institutional
investors, which results in a delay in the receipt of the research and
printing, duplicating and mailing costs. In order to distribute research
reports on a more timely basis, some reports are increasingly being sent by
facsimile transmission to investors. However, these conventional distribution
methods do not allow investment banks or brokerage firms to control which
investors access and view their research. Moreover, large institutional
investors often receive hundreds of paper reports, totaling thousands of
pages, each week. These paper-based reports must be manually sorted,
distributed, stored, reviewed and prioritized, which can be time consuming and
expensive.
In response to the shortcomings of the traditional research distribution
methods, investment banks and brokerage firms have tried new distribution
methods, including e-mail and distribution through their Web sites, with only
limited success. Distribution by e-mail requires the recipient to open and
view the e-mail to determine if it is useful and is difficult to differentiate
from the other e-mail messages received by the investor. Also, e-mail messages
cannot be searched on a full-text basis and are not easily archived or
retrieved by others. Web-site distribution by investment banks and brokerage
firms requires the investor to visit and search numerous Web sites that
provide research, which is time-consuming and inefficient. Institutional
investors need a real-time, commingled source for their investment research
needs. Investment banks and brokerage firms need a solution to their internal
and client investment research distribution needs. Individual investors need
access to research from investment banks, brokerage firms and other third-
party providers.
THE MULTEX SOLUTION
Multex is a leading provider of online investment research services designed
to meet the needs of institutional investors, investment banks, brokerage
firms, corporations and individual investors. The Company's services provide
users with online access to a wide range of research and other investment
information from leading investment banks, brokerage firms and third-party
research providers worldwide, including Merrill Lynch, Morgan Stanley Dean
Witter and Goldman Sachs. The Company's Internet-based technology solution
ensures timely receipt of information for critical investment decisions and
enables research providers to target their research more efficiently. At the
same time, recipients of the information can use the Company's proprietary
search tools to locate and retrieve the desired information, saving the time
and expense of manually searching through printed reports. Online availability
also eliminates costs otherwise incurred in printing, mailing, sorting and
filing printed reports. Finally, Multex enables research and information
providers to market more efficiently, not only by reaching their target
customers more effectively, but also by providing feedback regarding their
access and usage patterns. The Company's services provide the following key
benefits:
30
<PAGE>
Extensive Research Database. Multex provides entitled investors access to an
online database of more than 500,000 research reports from more than 300
leading investment banks, brokerage firms and third-party research providers.
More than 400,000 investors and financial professionals, including mutual fund
managers, portfolio managers, institutional investors, brokers and their
clients, have access to the Company's services. The Company typically adds
reports to its database at the rate of more than 10,000 new reports each week.
Multex also provides more than 200,000 recently published research reports
from more than 200 leading contributors to buy-side professionals, corporate
executives, investor relations specialists and individual investors electronic
access on a pay-per-view basis. Research reports in the Multex database
include all text, charts, graphs, tables, color and document formatting
contained in the original report. For certain customers, Multex also provides
access to delayed stock quotes through Quote.com and real-time Securities and
Exchange Commission filings through EDGAR Online as part of their
subscription.
Efficient, Cost-Effective Research Distribution. Multex enables investment
banks, brokerage firms and third-party research providers to electronically
distribute their research reports to their brokers, bankers and traders and
their customers via the Internet or intranets on a real-time basis. Through
services offered by Multex, research can be distributed to multiple locations
simultaneously. By using such services, research providers can target
investors worldwide, monitor investor requests for research reports and
determine who has accessed their reports. As services offered by Multex are
distributed over the Internet or intranets, research providers save printing
and mailing costs and can more easily target their research to their
customers. The Company's services are password protected and research included
in the Multex database can be accessed only by authorized users.
Comprehensive Search Capabilities. Multex has incorporated extensive search
capabilities into its services, thereby enabling users to rapidly and easily
locate relevant commingled research from hundreds of sources and to reduce the
costs of indexing, organizing and distributing research reports. Users can
search for a particular research report by a number of criteria, including
company name, industry, ticker symbol or analyst. Additionally, users can
search on a full text basis for words or phrases. Multex also enables
customers to create searchable, customized research profiles and portfolios,
to further facilitate document location and retrieval.
Ease and Efficiency of Use. The Company's services are designed to
facilitate the electronic contribution and online distribution of investment
research. The Company's proprietary software allows sell-side research
departments and third-party information providers to easily contribute
research reports, financial models, graphic presentations and other documents
in real-time directly to the Multex database. Research and information
providers can use existing word processing and desktop publishing software,
such as Microsoft Word, Excel, PowerPoint, WordPerfect, and HTML and
multimedia creation software, and are not required to modify their method of
document creation. For users accessing research, the Company's proprietary
technology incorporates a graphical user interface and provides access through
leading browser technologies to simplify finding, retrieving, viewing and
printing research reports.
STRATEGY
The Company's objective is to be the leading online investment research
network for the financial and investment community. The Company uses leading
Internet technologies to provide a unique, integrated platform for the
efficient distribution of investment research and financial information
worldwide. The following are the key elements of the Company's strategy:
Provide Extensive Investment Research and Information. The Company intends
to continue to leverage its success as an investment research and information
source for institutional investors. The Company continuously targets leading
investment banks and brokerage firms in an effort to add their research to the
Multex research database. The Company's database is growing rapidly and the
Company adds approximately 10,000 new research reports to its database each
week. By establishing relationships with other third-party providers of
investment and financial information, including EDGAR Online, Jupiter
Communications,
31
<PAGE>
Standard & Poor's, ValueLine, The Yankee Group and others, Multex offers
extensive third-party investment research and information. The Company,
through RDG-Multex, Inc., its majority-owned subsidiary ("RDG-Multex"), is
also developing the ability to provide proprietary earnings estimates and
related financial reports. Multex believes that by continually incorporating
additional sources of investment and financial information into its database,
the Company will be positioned to become the premier source of high-value
investment information.
Expand Distribution Channels. The Company employs a broad array of
distribution channels for its services and is continuously identifying and
developing new channels. For the institutional investor market, Multex has
entered into agreements with leading distributors of financial information,
including ADP, Bloomberg, Bridge, Dow Jones and Reuters. In order to enhance
the distribution of investment research to individual investors, Multex has
also recently entered into an agreement with America Online to be an anchor
tenant on the investment research area within the AOL Personal Finance channel
and has also entered into agreements to distribute Multex services with a
number of leading Internet-based financial Web sites and distributors,
including CNNfn, Data Broadcasting Corporation (which includes CBS
MarketWatch) and Disclosure.
Increase Multex Brand Awareness. Multex believes that increasing the brand
name awareness of the Company and its services in the financial community will
contribute to its success. Multex has successfully built a brand name among
institutional investors and research providers and is targeting its marketing
efforts to expand the recognition of its corporate and service names through
advertising, direct mail, trade shows, seminars and conferences as well as
joint marketing initiatives with information providers and distributors.
Multex seeks to incorporate its branded logo on each Web site that utilizes
its technology to increase awareness of Multex and its services. To address
the individual investor market, the Company intends to capitalize on its
arrangement with America Online and intends to develop links to the Multex
Investor Network from other leading personal finance Web sites. In addition,
the Company has recently launched MX Investor Magazine, an online investment
magazine, which will be available on the Multex Investor Network and is
designed to attract individual investors to the Company's Web sites and
increase brand awareness of the Company's services.
Extend Global Presence. To provide U.S. and foreign investors with access to
investment research prepared by leading investment banks and brokerage firms
throughout the world, the Company targets international contributors and
subscribers from its headquarters in New York, from an office in London and
through an independent representative in Hong Kong. The Company intends to
open offices in other leading financial centers. The Company believes that
institutional investors in Europe, the Pacific Rim and numerous emerging
markets require access to high quality online investment research and
information. Since many investors are investing in markets throughout the
world, they also require research and information from investment banks and
brokerage firms in local markets. In addition, many investment banks and
brokerage firms in U.S. and foreign markets are seeking to distribute their
research worldwide.
Maintain Technology Leadership. Multex intends to continuously develop and
incorporate new technologies to enhance its services. The Company intends to
maintain its leadership position by continuing to enhance its technology
through investment in research and development activities, use of new
Internet, intranet and extranet technologies and integration of each of its
services. In particular, the Company is extending the available document
formats to support spreadsheets, presentation applications, HTML-based pages,
URL references, and audio and video files. The Company is also developing
integrated and directed user alerts and e-mail and fax capabilities. Using its
technological capabilities and expertise, the Company focuses on enhancing its
scalable and open architecture.
Focus on Multiple Revenue Opportunities. The Company is pursuing multiple
revenue opportunities for future growth with a particular focus on
establishing a recurring revenue stream from subscriptions. The Company
believes that subscriptions, professional service fees, pay-per-view
transactions and advertising represent key opportunities. By expanding the
number of research providers and the amount and formats of
32
<PAGE>
information available, the Company believes that it may be able to generate
additional revenue from these enhanced services. In addition, the Company
believes that by targeting individual investors and corporations, the Company
may be able to increase the pay-per-view revenues from Multex Research-On-
Demand and the Multex Investor Network services. The Company also expects to
generate advertising revenue from the Multex Investor Network and its other
Web sites.
SERVICES
The following table sets forth certain information concerning the Company's
principal service offerings:
MULTEX SERVICE OFFERINGS
<TABLE>
<CAPTION>
Name of Number Revenue
Service Description Target Market of Users Model
- ---------------- ------------------------- --------------------------------- ------------ -------------------
<S> <C> <C> <C> <C>
MultexNET Access to real-time Buyside institutions 15,000+ Annual subscription
commingled research and corporations
MultexEXPRESS Real-time distribution of Sellside investment 350,000+ Annual subscription
proprietary research and banks and brokerage firms
other information
Multex Research- Access to commingled Commercial and investment banks, Available on Pay-per-view
On-Demand research on a delayed corporations, financial advisors, the Internet
basis professional services firms and
individual investors
</TABLE>
MULTEXNET
MultexNET enables subscribers to access on a real-time basis over the
Internet commingled full-text investment research reports supplied by leading
investment banks, brokerage firms and third-party research providers. Typical
subscribers include mutual fund managers, other portfolio managers,
institutional investors, research analysts and other financial services
professionals. Subscribers to MultexNET are offered advanced searching and
filtering capabilities, and the ability to retrieve investment research
reports over the Internet. The Company's proprietary software enables it to
distribute a particular research or other financial report only to those users
who have been authorized or entitled to access such report by the firm that
authored the report. MultexNET enables research and other information
providers to monitor requests for their research reports and determine who has
accessed and viewed the report. Subscribers whose subscription does not
entitle them to access particular embargoed research and third-party research
information may be able to access such reports through Multex Research-On-
Demand on a pay-per-view basis after the embargo period (typically 15 days)
has ended.
Features of MultexNET include real-time access to high-quality multimedia
and rich text research reports, the ability to utilize advanced searching
features which permit searches by company name, ticker symbol, brokerage firm,
analyst, industry/subject codes and date, the ability to create and modify
customized portfolios and profiles in order to ensure the delivery of updated
research information about those companies in a particular user's portfolio or
profile, and easy-to-use document viewing, printing, faxing, and e-mail
options. The Company also provides access to delayed stock quotes through
Quote.com and real-time filings with the Securities and Exchange Commission
filings through EDGAR Online as part of the MultexNET subscription. In
addition, features currently under development will enable subscribers to
arrange for automated fax and/or e-mail distribution of research reports to
the subscriber's end-users.
Research reports and other financial information available through MultexNET
are stored on the Company's database servers and delivered over its Internet
servers. MultexNET requires subscribers to have an Internet connection or a
connection to an extranet maintained by Multex, Microsoft Internet Explorer or
Netscape Navigator Web browsers, and the Adobe Acrobat viewer installed on
their workstation, desktop or laptop computer.
33
<PAGE>
Subscriptions to MultexNET are generally priced at $3,540 to $25,000
annually, depending upon the number of "seats" or users who can access the
service.
MULTEXEXPRESS
MultexEXPRESS enables investment banks, brokerage firms and other financial
institutions to distribute proprietary financial research as well as internal
corporate documents, forms, news and other proprietary content over the
Internet or through intranets and other private networks. Using MultexEXPRESS,
investment banks, brokerage firms and other financial institutions are able to
reduce the cost of printing and distributing research reports and other
internal information and can disseminate more timely information to their
employees and customers. Like MultexNET, MultexEXPRESS offers the contributing
firm the ability to identify which users are actually accessing research
through the usage reporting system incorporated into MultexEXPRESS.
MultexEXPRESS can be implemented as a unique Internet site or seamlessly
integrated into a firm's existing online presence to target information to
employees and key clients on a real-time basis. MultexEXPRESS is built on the
same technology platform and provides users with the same core functionality
found in MultexNET. MultexEXPRESS also offers additional features and
integration options targeted to the internal distribution needs of investment
banks, brokerage firms and other financial institutions.
MultexEXPRESS has been installed at 24 leading investment banking and
brokerage firms, with more than 350,000 users, at March 31, 1998.
MultexEXPRESS is generally contracted for a one to three year period at a
fixed rate dependent upon the scale of the enterprise-wide solution offered to
the customer. Currently, the average price is approximately $100,000 for each
year of the contract.
MULTEX RESEARCH-ON-DEMAND
Multex Research-On-Demand gives libraries, corporations, financial advisors,
pension funds, banks, insurance companies, other professional service firms,
as well as institutional and individual investors, the ability to access
certain research reports and other information from a majority of the
MultexNET research providers. Each report can be purchased on a pay-per-view
basis after an embargo period during which the research providers make the
report available on a proprietary basis only to their own customers. A growing
subset of the content in the Multex database, 40% as of April 30, 1998, is
available on Multex Research-On-Demand. This service is available either on a
stand-alone basis, through strategic distribution channels or as a part of
MultexNET, MultexEXPRESS or Multex Investor Network. While the majority of the
reports available on Multex Research-On-Demand relate to U.S. equities and
investment opportunities, the Company is adding information relating to
foreign equities and investment opportunities.
Multex Research-On-Demand customers can purchase and download the research
reports to their own computer using advanced searching and filtering
technology that locates documents by symbol, industry, brokerage firm, full-
text words and phrases, or user-defined portfolios and profiles. Users can
receive e-mail alerts throughout the day, which may be keyed to their
portfolios or other user-provided specifications. The financial research
reports available to Multex Research-On-Demand customers include both those
relating to a particular company and those relating to an industry as a whole.
Research from independent research providers (such as Jupiter Communications,
Standard & Poor's and The Yankee Group) is also available for purchase. An
online purchase history provides a specific list of all of the reports
purchased by an individual user.
Prices per document available through Multex Research-On-Demand generally
range from $10 to $150, based on the length and type of document. The pay-per-
view fees are generally shared between the investment bank, brokerage firm or
third-party research provider that supplied the original research report, the
distributor through which the purchase was initiated, if any, and the Company.
There is no registration or subscription fee for use of this service. Certain
users have purchased an annual subscription which enables them to purchase
individual research reports at a discounted price. The Company is also adding
analysis from leading third-party advisory services, some of which offer
single reports at prices in excess of $1,000 per report.
34
<PAGE>
OTHER SERVICES
The Company, through RDG-Multex, maintains an earnings estimate database
which is resold through various distributors and offers its proprietary
earnings estimates and related financial reports. These reports, which combine
information from the Company's earnings estimates database with other
fundamental data obtained from a variety of sources, are sold on a pay-per-
view basis through Multex Research-On-Demand and may be offered in the future
on a subscription basis.
The Company recently began publishing MX Investor Magazine, an investment
magazine available through the Company's home page on the Internet. Articles
in MX Investor Magazine are either produced by an in-house publishing group or
acquired from freelance journalists. The content is designed to offer an
overview of market developments and a convenient point of reference for
relevant recurring information, such as the timing and location of conferences
and seminars.
The Multex Investor Network is intended to target the individual investor
market. Using the free content available from MX Investor Magazine, and
offering reports for sale from investment banks, brokerage firms and third-
party research providers through Multex Research-On-Demand, as well as reports
from RDG-Multex, the Company intends to offer a wide range of services to the
individual investor market. In addition to subscription fees for a premium
version of MX Investor Magazine and pay-per-view fees from Multex Research-On-
Demand, the Company intends to generate revenues from its individual investor
services by selling advertising on the Multex Investor Network.
35
<PAGE>
RESEARCH AND INFORMATION PROVIDERS
The Company has dedicated substantial resources to develop relationships
with an extensive range of domestic and international investment banks,
brokerage firms and third-party research providers. The Company has a
dedicated sales force which is continually recruiting research providers. The
Company manages its relationship with each major research provider through
account representatives.
Currently, the Multex database consists of more than 500,000 research
reports and is growing at the rate of more than 10,000 new reports each week.
Research contributors include more than 300 leading investment banks,
brokerage firms and third-party research providers. Set forth below is a
representative list of the Company's research and information providers:
Selected North American Information Providers
<TABLE>
<CAPTION>
<S> <C> <C>
ABN Amro Chicago Corporation ING Barings Needham & Co.*
BancAmerica Robertson Stephens* Interstate/Johnson Lane* PaineWebber*
Brown Brothers Harriman* J.P. Morgan Securities Piper Jaffray*
BT Alex. Brown* J.C. Bradford & Co. * Prudential Securities
Chase Securities Janney Montgomery Scott* Ragen McKenzie*
CIBC Oppenheimer* Jefferies & Co. * Raymond James & Associates*
Cowen & Co.* Keefe, Bruyette & Woods* Robinson-Humphrey*
CS First Boston Legg Mason Wood Walker* Salomon Smith Barney*
Dain Rauscher Wessels* Merrill Lynch SBC Warburg Dillon Read*
Goldman Sachs & Co. Morgan Keegan & Company* Soundview Financial Group*
Gruntal & Co.* Morgan Stanley Dean Witter UBS Securities
Hambrecht & Quist* NationsBanc Montgomery Securities Volpe Brown Whelan
Selected International Information Providers
ABN Amro Deutsche Morgan Grenfell NatWest Markets
Alfred Berg Dresdner Kleinwort Benson Nomura Securities
Auerbach Grayson* Fox American International+
Bankers Trust Australia Limited Goldman Sachs International PaineWebber International*
Caspian Securities HSBC James Capel Paribas
Cazenove & Co. Indosuez WI Carr Salomon Smith Barney*
Clarion Securities ING Barings Santander Investment Securities
Credit Lyonnais Securities Asia JP Morgan Securities Ltd. SBC Warburg Dillon Read
Credit Suisse First Boston Merrill Lynch International SocGen Crosby Securities
Daiwa Institute of Research Ltd.* Morgan Stanley International Union Bank of Switzerland
Selected Third-Party Information Providers
CNBC/Dow Jones* IPO Maven* The Red Chip Review*
Company Guides* Jupiter Communications* Value Line Mutual Fund Survey*
Disclosure* Renaissance Capital* Wall Street Transcript*
Instinet Research* Standard & Poor's* Yankee Group*
</TABLE>
- -------------------
* Also provides research and information for Multex Research-On-Demand
36
<PAGE>
CUSTOMERS
The Company has dedicated substantial resources to developing relationships
with an extensive range of buyside institutions, investment banks, brokerage
firms, libraries, corporations, and other professional service firms. As a
result, MultexNET is used at over 4,000 financial institutions and
corporations, MultexEXPRESS is used by 24 of the world's leading brokerage
firms, and thousands of users access Multex Research-On-Demand.
Set forth below is a representative list of the Company's customers:
<TABLE>
<CAPTION>
<S> <C> <C>
AIM Advisors Franklin Research and Development Merrill Lynch Asset
Alliance Capital Management Gabelli Asset Management Management
Arthur Andersen & Company GE Capital Morgan Stanley Asset
BancAmerica Robertson Stephens Goldman Sachs & Co. Management
Barclays Global Investors Gruntal & Co. Oppenheimer Funds
BT Alex. Brown Heidrick & Struggles PaineWebber
Conseco Inc. Hewlett-Packard Piper Jaffray
Cowen & Co. Invesco Asset Management T. Rowe Price
Dain Rauscher Wessels J.C. Bradford & Co. Ragen McKenzie
Delaware Management Jefferies & Co. Salomon Smith Barney
Dresdner/RCM Global Investors John Hancock Advisors Asset Management
Ernst & Young Kleinwort Benson Investment SBC Warburg Dillon Read
Fidelity Capital Markets Management Soundview Financial Group
Fleet Investment Advisors-- Legg Mason Wood Walker UBS Securities
Equity Partners McKinsey & Co. Vanguard
</TABLE>
STRATEGIC DISTRIBUTION RELATIONSHIPS
The Company has established a number of strategic distribution relationships
to provide marketing and additional distribution for its services, to build
traffic on its Web site and to increase investor awareness of the Multex brand.
These strategic relationships target one of two markets: institutional
investors and individual investors.
The Company has entered into certain agreements and strategic relationships
with ADP, Bloomberg, Bridge and Reuters to assist the Company in marketing its
services to institutional investors. In each case, the Company shares in
revenues generated from sales to end-users through the strategic partners'
distribution networks. The principal services distributed by these strategic
partners are MultexNET, which is made available as a service through the
partners' distribution network on similar terms to those available to
subscribers to MultexNET over the Internet, and Multex Research-On-Demand.
In order to enhance the distribution of investment research to the individual
investor market, the Company has recently entered into an agreement with
America Online. This agreement is for an initial two-year term and is
automatically renewable unless either party give advance notice of its
intention not to renew. Under its agreement with AOL, the Company has secured a
position as an anchor tenant on the AOL Personal Finance channel as well as a
programming presence on other screens within the AOL service, with links from
those locations back to the Company's Web site.
In addition to the strategic relationships described above, the Company has
entered into agreements with numerous other distributors, including Big Charts,
CBS Marketwatch, CNNfn, Data Broadcasting Corp., Disclosure, Edgar Online,
Hoover's, PetroChemNet, Quote.com, StockPoint, WSRN and Ziff Davis Interactive
Investor, to further attract traffic to the Multex Investor Network and the
Company's other Web sites.
37
<PAGE>
SALES AND MARKETING
The Company sells its services through a sales and marketing organization,
which consisted of an aggregate of 36 employees at March 31, 1998. The sales
force is organized into geographic teams focused on sales of subscriptions to
MultexNET, sales of the MultexEXPRESS service, and sales of Multex Research-
On-Demand on a pay-per-view or subscription basis. The sales force develops
sales presentations, demonstrates the Company's services, and manages the
complete sales cycle. The Company currently has sales personnel in New York,
Washington D.C. and London, as well as an independent representative in Hong
Kong, who are responsible for specific geographic territories as well as named
accounts and prospects around the world. The Company recently opened a sales
office in San Francisco and plans to add additional sales personnel from time
to time as necessary.
In addition to its direct sales efforts, the Company's services are also
sold over a growing number of third-party channels including Bloomberg,
Reuters, Disclosure and others, which reach institutional and individual
investors around the world. The Company believes that its presence on these
channels also serves as a significant and continuous source of brand marketing
for the Company and its services. See "--Strategic Distribution
Relationships."
To support its sales efforts, the Company employs a variety of methods to
market and promote its services and the Multex brand name. These methods
include direct mail, print advertisements, Internet advertisements, trade
shows and conferences, and telemarketing. In addition, the Company's quarterly
newsletter is designed to alert clients to new services and features and serve
as a vehicle for furthering brand awareness. The Company also utilizes its Web
site, which incorporates MX Investor Magazine, and which is continually
updated with corporate and industry news, new information about the Company's
services and other financial information, to provide links and other
registration opportunities, all designed to create awareness, generate leads
and sell services.
RESEARCH AND DEVELOPMENT
The Company's future success will depend upon its ability to maintain and
develop competitive technologies, to continue to enhance its current services
and to develop and introduce new services in a timely and cost-effective
manner that meet changing conditions such as evolving customer needs, new
competitive service offerings, emerging industry standards, and changing
technology. The Company has a dedicated research and development organization
that develops new features and functionality for its existing services as well
as the software that supports new services. The research and development team
has expertise in network development and maintenance, Internet and intranet
protocols, software development, database maintenance and development and a
variety of programming tools and languages and operating systems. At March 31,
1998, Multex had 21 employees engaged in research and development. Research
and development expenses were $1.4 million in 1996, $1.6 million in 1997 and
$440,000 in the three months ended March 31, 1998. The Company anticipates
making substantial expenditures on research and development in the future.
The market for investment analysis software is characterized by rapidly
changing technology, evolving industry standards in computer hardware,
programming tools, programming languages, operating systems, database
technology and information delivery systems, changes in customer requirements
and frequent new product introductions and enhancements. There can be no
assurance that the Company will be able to develop and market, on a timely
basis, if at all, service enhancements or new services that respond to
changing market conditions or that will be accepted by investors. Any failure
by the Company to anticipate or to respond quickly to changing market
conditions, or any significant delays in service development or introduction,
could cause users to delay or decide against purchases of the Company's
services and would have a material adverse effect on the Company's business,
financial condition and results of operations. See "Risk Factors--Emerging
Market for Electronic Investment Research."
CUSTOMER SERVICE AND NETWORK SUPPORT
The Company is committed to providing a high level of service and support to
its customers. As the Company's services are available to users 24 hours-a-
day, 7 days-a-week, the Company's network support
38
<PAGE>
services are continuously available. Customer service is generally available
weekdays from 8AM to 6PM (EST). Inquiries come in through the Company's Web
sites and via e-mail and telephone. At March 31, 1998, Multex had 27 employees
engaged in customer service and network support.
SYSTEM ARCHITECTURE AND TECHNOLOGY
Multex believes that its system architecture and proprietary technology
provides it with an important competitive advantage. Multex uses open standard
components including Windows NT, Microsoft Internet Information Server,
Microsoft SQL Server, and Fulcrum Server. The infrastructure of the Company's
Production Site is built to provide continuous availability of service to the
clients over Internet and intranet channels. All the critical components of
the system are redundant, which allows continuous service in case of
unexpected component failure, maintenance and upgrades. The Company's
infrastructure is scalable, allowing Multex to quickly adjust to an expanding
client base and a research information database.
The Company's operations are dependent on its ability to maintain its
computer and telecommunications systems in effective working order and to
protect its systems against damage from fire, natural disaster, power loss,
telecommunications failure or similar events. Although the Company is
currently in the planning stages of acquiring and implementing a redundant
back-up, off-site computer system, this measure does not eliminate the
significant risk to the Company's operations from a natural disaster or system
failure at its principal site. In addition, any failure or delay in the timely
transmission or receipt of feeds and computer downloads from its information
providers, due to system failure of the information providers, the public
network or other failures, could disrupt the Company's operations. See "Risk
Factors--Risk of System Failure or Security Breach."
COMPETITION
The market for the electronic distribution of investment research and
related services is intensely competitive and such competition is expected to
continue to increase. The Company believes that its ability to compete depends
upon many factors within and beyond its control, including continuing
relationships with leading providers of investment research, the timing and
market acceptance of new services and enhancements to existing services
developed by the Company and its competitors, ease of use, performance, price,
reliability, customer service and support, and sales and marketing efforts.
The Company's competitors vary in size and in the scope and breadth of
services offered. Further, the Company encounters direct and indirect
competition from a number of sources, including traditional media, companies
that provide investment research (including investment banks and brokerage
firms that have their own Web sites), investment newsletters, personal
financial magazines and other Internet providers of either free or
subscription research services.
The Company believes that the principal competitive factors in attracting
and retaining information providers include the ability to provide full-text,
publication-quality research reports electronically on a real time basis,
relationships with institutional investors interested in receiving such
research and the flexibility of open architecture systems which enable any
computer user with access to a browser to receive research reports regardless
of which operating system controls the information provider's computer. The
Company believes that the principal competitive factors in attracting and
retaining subscribers include price of the service, the depth, breadth and
timeliness of content, the full-text search features available and the ease of
use. The Company believes that the principal competitive factors in attracting
advertisers will include the number of subscribers, the demographics of such
subscribers and the "pre-qualification" features that can be offered to
investment banks and brokerage firms. There can be no assurance that the
Company will be able to compete favorably with respect to these or any other
competitive factors.
The Company's MultexNET and Multex Research-On-Demand services compete with
large and well-established distributors of financial information, such as
First Call, Investext and I/B/E/S. In addition, the
39
<PAGE>
Company's MultexEXPRESS service competes with services provided by in-house
management information services personnel and independent systems integrators.
Numerous other competitors, such as Market Guide, Standard & Poor's, Moody's
and others offer similar investment research based services that compete, or
may in the future compete, directly and indirectly with the Company's
services. Many of the Company's existing competitors, as well as a number of
prospective competitors, have longer operating histories, greater name
recognition, larger customer bases and significantly greater financial,
technical and marketing resources than the Company. As a result, they may be
able to respond more quickly to new or emerging technologies and changes in
investor requirements, or to devote greater resources to the development,
promotion and sale of their services than the Company. Such competitors may be
able to undertake more extensive marketing campaigns, adopt more aggressive
pricing policies and make more attractive offers to potential employees,
subscribers, strategic partners and providers of investment research
information. See "Risk Factors--Competition."
INTELLECTUAL PROPERTY
The Company regards its intellectual property as critical to its future
success, and the Company relies upon copyright, patent, trade secret and
trademark laws in the United States and other jurisdictions to protect its
proprietary rights. The Company owns copyrights in the computer software and
on-line materials that it has developed or acquired, and currently holds
limited licenses to use and distribute certain software in which third parties
own copyrights, including software for electronic document and database
management. The Company has also entered into limited license agreements with
certain of the numerous investment banks, brokerage firms and other third-
party research providers that own the copyrights in research reports that the
Company distributes electronically. The Company distributes other research
reports without the benefit of written licenses with the providers of those
reports, solely on the basis of implied licenses that the Company believes
such providers have granted. There can be no assurance that the Company will
be able to maintain its licenses of research content or of third-party
software, that the Company will be able to obtain such licenses in the future
on commercially reasonable terms or at all, that the Company will be able to
continue to distribute those research reports for which it does not have
written licenses or that the Company's competitors will not be able to
independently develop competing software or on-line materials so as to avoid
infringing upon the Company's copyrights. Also, because the Company's licenses
of third-party software and research content are not exclusive, such software
and content is and will be available to the Company's current and future
competitors. The Company's failure to protect or secure ownership of, or to
maintain licensed rights to use and distribute software and content of others,
or the ability of the Company's competitors to obtain rights to distribute the
same research reports that the Company distributes, could have a material
adverse effect on the Company's business, results of operations and financial
condition.
The Company also relies on trade secret laws, and has filed five patent
applications with the United States Patent and Trademark Office and
applications corresponding to three of those United States applications in
other countries through an international patent filing, to protect its
proprietary software technology and systems for electronic contribution,
storage, searching and distribution of investment research reports. To date,
no patents have been issued to the Company. There can be no assurance that any
of the Company's pending patent applications will be allowed, that any patents
will be issued to the Company even if the respective applications have been or
will be allowed, or that any patents that are issued to the Company will not
be successfully challenged by others and invalidated through administrative
agreements with employees, representatives, advisors and others. There can be
no assurance that such unauthorized use or disclosure, that employees of the
Company, its representatives and advisors and others will maintain the
confidentially of such trade secrets, or that such trade secrets will not
otherwise become known, or be independently developed, by competitors.
The Company relies upon and seeks to protect trademarks and service marks
that it currently uses, and those that it intends to use in the future,
through registration in the United States and other jurisdictions. The Company
has been granted United States federal and German registrations for MultexNET,
and two MultexNET logos, as trademarks and service marks, and has applied for
registration of the same marks in
40
<PAGE>
Japan, Taiwan, Hong Kong, the United Kingdom and the European Union. There can
be no assurance that any of the Company's pending trademark applications will
be allowed or granted and, if they are allowed or granted, that they, or any
of the registrations that have already been granted to the Company, will not
be successfully challenged by others and invalidated through administrative
process or litigation. The Company has not yet sought to register, in the
United States or elsewhere, other trademarks and service marks that it
currently uses or intends to use, including MultexEXPRESS, Multex Research-On-
Demand, Multex Investor Network and MX Investor Magazine. There can be no
assurance that the Company's use of and interest in such trademarks and
service marks will be subject to any legal protection in any of the
jurisdictions in which the Company now does business or might do business in
the future. As the Company's business is dependent on brand recognition in the
marketplace, any failure to maintain and protect the Company's trademarks and
service marks could have a material adverse effect on the Company's business,
results of operations and financial condition.
The Company expects to license certain of its proprietary rights to third
parties, including in connection with the establishment of its international
business operations, which may be controlled by such third parties. While the
Company will attempt to ensure that its proprietary interests will be
protected by its business partners, no assurances can be given that such
partners will not take actions that could materially and adversely affect the
value of the Company's proprietary rights or the reputation of its services
and technologies. The Company currently licenses certain aspects of its text
search functionality and relational database technologies from third parties.
The failure by the Company to maintain these licenses, or to find a
replacement for such technologies in a timely and cost-effective manner, could
have a material adverse effect on the Company's business, results of
operations and financial condition.
Legal standards relating to the validity, enforceability and scope of
protection of certain proprietary rights in Internet-related businesses are
uncertain and still evolving, and no assurance can be given as to the future
viability or value of any proprietary rights of the Company or other companies
within the industry. See "Risk Factors--Dependence on Intellectual Property;
Risk of Infringement Claims."
GOVERNMENT REGULATION
The Company is subject, both directly and indirectly, to various laws and
governmental regulations relating to its business. There are currently few
laws or regulations directly applicable to access to or commerce on commercial
online services or the Internet. However, due to the increasing popularity and
use of commercial online services and the Internet, it is possible that a
number of laws and regulations may be adopted with respect to commercial
online services and the Internet. Such laws and regulations may cover issues
such as user privacy, pricing and characteristics and quality of products and
services. Moreover, the applicability to commercial online services and the
Internet of existing laws governing issues such as property ownership, libel
and personal privacy is uncertain and could expose the Company to substantial
liability. Any such new legislation or regulation or the application of
existing laws and regulations to the Internet could have a material adverse
effect on the Company's business, results of operations and financial
condition.
Tax authorities in a number of states are currently reviewing the
appropriate tax treatment of companies engaged in Internet commerce. New state
tax regulations may subject the Company to additional state sales and income
taxes. As the Company's service is available over the Internet anywhere in the
world, multiple jurisdictions may claim that the Company is required to
qualify to do business as a foreign corporation in each such jurisdiction. The
failure by the Company to qualify as a foreign corporation in a jurisdiction
where it is required to do so could subject the Company to taxes and penalties
for the failure to qualify. It is possible that state and foreign governments
might also attempt to regulate the Company's transmissions of content on the
Company's Web sites or prosecute the Company for violations of their laws.
There can be no assurance that violations of local laws will not be alleged or
charged by state or foreign governments, that the Company might not
unintentionally violate such law or that such laws will not be modified, or
new laws enacted, in the future. See "Risk Factors--Government Regulation and
Legal Uncertainties."
41
<PAGE>
EMPLOYEES
At March 31, 1998, the Company employed 120 persons, of which 36 were in
sales and marketing, 27 were in network operations, 22 were in contributor
relations, 21 were in research and development and 14 were in accounting,
finance and administration. In addition, the Company retains the services of
one independent representative in Hong Kong to solicit research and
information providers. The Company's future success will depend in large part
upon its ability to attract and retain highly qualified employees. Competition
for such personnel, in particular technology professionals, is intense, and
there can be no assurance that the Company will be able to retain its senior
management or other key employees or that it will be able to attract and
retain additional qualified personnel in the future. The Company's employees
are not represented by any collective bargaining organization, and the Company
considers its relations with its employees to be good. See "Risk Factors--
Dependence on Key Personnel."
FACILITIES
The Company's corporate headquarters are located in New York, New York. The
Company leases approximately 20,000 square feet, under a lease which expires
in December 2000. The Company also leases space for its sales and marketing
efforts in San Francisco, Washington, D.C. and London. The Company currently
is seeking additional facilities and believes that it will be able to obtain
additional space as needed on commercially reasonable terms.
LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
42
<PAGE>
MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
Directors, executive officers and other key employees of the Company, and
their ages as of March 31, 1998, are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Isaak Karaev(1)............. 51 Chairman, President and Chief Executive Officer
James M. Tousignant......... 37 Senior Vice President
Philip Callaghan............ 45 Chief Financial Officer
Gregg B. Amonette........... 45 Vice President, Sales and Marketing
John J. Mahoney............. 39 Vice President, Product Development
Mikhail Akselrod............ 43 Vice President, Operations
Malcolm Draper, Jr.......... 46 Vice President, RDG-Multex
William Ferguson............ 50 Managing Director, International Operations
Eduard Kitain............... 32 Vice President, Software Engineering
Philip Scheps............... 51 Vice President, Finance and Controller
Bruce E.H. Barlag........... 45 Director
Davis Gaynes(2)(3).......... 35 Director
I. Robert Greene(1)(2)...... 38 Director
Peter G. LaBonte............ 38 Director
Milton J. Pappas(1)(2)(3)... 69 Director
</TABLE>
- ---------------------
(1) Member of the Executive Committee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
Isaak Karaev co-founded the Company in April 1993 and has served as
President and Chief Executive Officer and a director of the Company since that
time. In addition, Mr. Karaev served as Chairman of the Board of Directors
from the Company's inception to October 1996 and has served as Chairman of the
Board of Directors since April 1998. Before founding the Company, Mr. Karaev
was the Senior Vice President for Advanced Systems Development in the
Brokerage Services Information Group of Automatic Data Processing, Inc.
("ADP"), a provider of front-office market data services and back-office
processing to the financial services industry, from 1989 to April 1993. Mr.
Karaev was named to the Board of Directors pursuant to an agreement which will
terminate upon the consummation of the offering.
James M. Tousignant co-founded the Company in April 1993 and has served as
the Company's Senior Vice President since that time. Before founding the
Company, Mr. Tousignant was Senior Director of Sales in the Brokerage Services
Information Group of ADP from 1989 to April 1993.
Philip Callaghan has served as the Company's Chief Financial Officer since
December 1996. From 1992 to November 1996, Mr. Callaghan was Executive Vice
President and Chief Financial Officer of Graff Pay-Per-View, Inc., a company
distributing programming to the cable and direct satellite industries in the
United States and Europe. He served as the Managing Director of Media Computer
Systems Limited, a software developer for the radio and television industries,
from 1989 to 1992. From 1987 to 1989, Mr. Callaghan was Financial Director of
MTV Europe.
Gregg B. Amonette has served as the Company's Vice President, Sales and
Marketing since August 1996. From January 1995 to July 1996, Mr. Amonette was
Vice President and General Manager of Micrognosis, Inc., a division of CSK
Corporation, a provider of bank and brokerage trading-room software and
technology. From 1984 to December 1994, Mr. Amonette served in various
capacities in the Brokerage Services Information Group of ADP, including most
recently as Vice President of Retail Sales.
43
<PAGE>
John J. Mahoney has served as the Company's Vice President, Product
Development since April 1993. Prior to joining the Company, Mr. Mahoney was
Vice President in the Brokerage Services Information Group of ADP from 1989 to
April 1993.
Mikhail Akselrod joined the Company in April 1993 and has served as the
Company's Vice President of Operations since April 1997. Prior to joining the
Company, Mr. Akselrod was an independent software consultant from 1991 to
March 1993 and previously was Chief Engineer at R.H. Lytle Co., an independent
systems integration consulting firm, from 1989 to 1991.
Malcolm Draper, Jr. has served as the Company's Vice President, RDG-Multex
Systems, Inc. since April 1998, and served as the Company's Vice President,
International Operations from April 1997 to April 1998 and as its Vice
President, Operations from May 1995 to April 1997. Prior to joining the
Company, Mr. Draper was Chief Financial and Administrative Officer of Paresco,
Inc., an asset management company, from March 1994 to April 1995. From 1991 to
February 1994, he was Manager of Software Development at Quies Corp., a
software company.
William Ferguson has served as the Company's Managing Director,
International Operations since February 1998. From September 1997 to January
1998, Mr. Ferguson was an independent consultant. From 1989 to September 1997,
Mr. Ferguson served as President of Thomson Technical Data Corporation, a
division of Thomson Financial Services, Inc. delivering real time fundamental
and technical analysis to bond, foreign exchange and derivative professionals.
Eduard Kitain has served as the Company's Vice President, Software
Engineering since January 1997 and has held various positions with the Company
since November 1993. From 1992 to October 1993, Mr. Kitain was a programmer
analyst for Cashflow Software, Inc., a software development company.
Philip Scheps has served as the Company's Vice President of Finance and
Controller since December 1993. Prior to joining the Company, Mr. Scheps
served as Controller of Harve Benard Ltd., a wholesale and retail apparel
company, from 1990 to November 1993.
Bruce E.H. Barlag has served as a director of the Company since July 1997.
Mr. Barlag founded and has served as President and Chief Executive Officer of
Crater Valley Enterprises, an Internet company, since April 1998. From October
1997 to April 1998, Mr. Barlag was a management consultant. Mr. Barlag was
Executive Vice President, Interactive Services, and member of the senior
management team at Gartner Group, Inc. from September 1994 to October 1997.
From 1985 to September 1994, Mr. Barlag was the President and Chief Executive
Officer of New Science Association, Inc. Mr. Barlag was named to the Board of
Directors pursuant to an agreement which will terminate upon the consummation
of the offering.
Davis Gaynes has served as a director of the Company since February 1997.
Since April 1995, Mr. Gaynes has been Executive Vice President for Reuters
America Holdings Inc., an affiliate of Reuters Holdings PLC ("Reuters"), a
news and information organization. Mr. Gaynes currently serves as Executive
Vice President of Sales and Marketing of Instinet Corporation, a wholly owned
subsidiary of Reuters, that provides electronic brokerage services to
investment professionals worldwide. He has held various positions at Instinet
Corporation since 1984. Reuters America Inc. is a significant stockholder of
the Company. Mr. Gaynes was named to the Board of Directors pursuant to an
agreement which will terminate upon the consummation of the offering.
I. Robert Greene has served as a director of the Company since July 1996.
Since August 1994, Mr. Greene has been a Principal with Chase Capital
Partners, a global private equity organization. From 1988 to July 1994, he was
an Associate Director and Principal of Prudential Equity Investors. Chase
Capital Partners is a significant stockholder of the Company. Mr. Greene was
named to the Board of Directors pursuant to an agreement which will terminate
upon the consummation of the offering.
44
<PAGE>
Peter G. LaBonte has served as a director of the Company since April 1998.
Mr. LaBonte is currently Vice President, International Marketing of Reuters
Limited, a position he has held since January 1997. From 1996 to 1997, he was
a Managing Director, Emerging Markets Services of Moody's Investors Services.
From 1995 to 1996, Mr. LaBonte served as Vice President, Fidelity Brokerage
Group of Fidelity Investments. From 1988 to 1995, he was Vice President,
Capital International of Morgan Stanley & Co. Reuters is a significant
stockholder of the Company. Mr. LaBonte was named to the Board of Directors
pursuant to an agreement which will terminate upon the consummation of the
offering.
Milton J. Pappas has served as a director of the Company from November 1993
to March 1994, and since July 1996. In addition, Mr. Pappas served as Chairman
of the Board of Directors from October 1996 to April 1998. Since 1983, Mr.
Pappas has served as Chairman of Euclid Partners Corporation, a management
company providing services to certain venture capital investment funds,
including Euclid Partners III, L.P. and Euclid Partners IV, L.P (collectively,
"Euclid Partners"). Mr. Pappas serves as a director of Netegrity, Inc., a
provider of Web security products. Euclid Partners is a significant
stockholder of the Company. Mr. Pappas was named to the Board of Directors
pursuant to an agreement which will terminate upon the consummation of the
offering.
COMPOSITION OF THE BOARD OF DIRECTORS
Effective upon the consummation of this offering, the Board of Directors
will be divided into three classes, each of whose members will serve for a
staggered three-year term. Upon the expiration of the term of a class of
directors, directors in such class will be elected for three-year terms at the
annual meeting of stockholders in the year in which such term expires.
BOARD COMMITTEES
The Audit Committee of the Board of Directors reviews, acts on and reports
to the Board of Directors with respect to various auditing and accounting
matters, including the selection of the Company's auditors, the scope of the
annual audits, fees to be paid to the auditors, the performance of the
Company's independent auditors and the accounting practices of the Company.
The members of the Audit Committee are Messrs. Gaynes and Pappas.
The Compensation Committee of the Board of Directors and determines the
salaries and incentive compensation of the officers of the Company and
provides recommendations for the salaries and incentive compensation of the
other employees and the representatives of the Company. The Compensation
Committee also administers the Company's various incentive compensation, stock
and benefit plans. The members of the Compensation Committee are Messrs.
Gaynes, Greene and Pappas.
The Executive Committee of the Board of Directors meets periodically with
management to advise upon and approve the details of the execution of strategy
decided at Board meetings, and to consider strategic developments that may
arise between the regularly scheduled Board meetings. The members of the
Executive Committee are Messrs. Greene, Karaev and Pappas.
DIRECTOR COMPENSATION
The Company does not currently compensate its directors for attending Board
of Directors or committee meetings, but reimburses directors for their
reasonable travel expenses incurred in connection with attending meetings of
the Board of Directors or committees of the Board of Directors. Bruce E.H.
Barlag is the only non-employee director who has received cash compensation
from the Company. In addition to the award of an option of 4,500 shares
granted in April 1998, the Company has an arrangement under which Mr. Barlag
is a consultant for the Company from time to time. To date, Mr. Barlag has
earned $2,000 as a result of this arrangement. The Company does not anticipate
incurring any significant future costs as a result of the arrangement.
45
<PAGE>
Under the Automatic Option Grant Program of the 1998 Stock Option Plan (as
defined below under "--1998 Stock Option Plan"), and subject to the last
sentence of this paragraph, each individual who is serving as a non-employee
member of the Board of Directors at the time the Registration Statement of
which this Prospectus forms a part is declared effective and who has not
previously been in the employ of the Company will receive at that time an
option grant for 8,000 shares of Common Stock with an exercise price equal to
the Price to Public set forth on the cover page of this Prospectus. Each
individual who first joins the Board of Directors after the effective date of
this Offering as a non-employee member of the Board of Directors will also
receive an option grant for 8,000 shares of Common Stock at the time of his or
her commencement of service on the Board of Directors, provided such
individual has not otherwise been in the prior employ of the Company. In
addition, at each Annual Stockholders Meeting, beginning with the 1999 Annual
Meeting, each individual who is to continue to serve as a non-employee member
of the Board of Directors will receive an option grant to purchase 2,500
shares of Common Stock, whether or not such individual has been in the prior
employ of the Company. However, any non-employee member of the Board of
Directors who, directly or indirectly, is a 5% or greater stockholder or is
affiliated with or a representative of a 5% or greater stockholder, shall not
be eligible to receive any option grants under the Automatic Option Grant
Program.
EXECUTIVE COMPENSATION
The following table sets forth all compensation earned during the fiscal
year ended December 31, 1997 by the Company's Chief Executive Officer and its
other four most highly compensated executive officers of the Company whose
salary and bonus exceeded $100,000 in 1997 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation(1) Awards
----------------- ---------------------
Securities Underlying
Name and Principal Position Salary Bonus Options
- --------------------------- -------- -------- ---------------------
<S> <C> <C> <C>
Isaak Karaev............................ $199,615 -- 316,667
President and Chief Executive Officer
James M. Tousignant..................... 124,885 $100,000 16,667
Senior Vice President
Philip Callaghan........................ 125,385 50,000 66,667(2)
Chief Financial Officer
Gregg B. Amonette....................... 127,212 50,000 66,667(3)
Vice President, Sales and Marketing
John J. Mahoney......................... 121,923 50,000 25,000(4)
Vice President, Product Development
</TABLE>
- ----------------
(1) The column for "Other Annual Compensation" has been omitted because there
is no compensation required to be reported in such column. The aggregate
amount of perquisites and other personal benefits provided to each Named
Executive Officer is less than 10% of the total annual salary and bonus of
such officer.
(2) Includes an option for 50,000 shares granted in December 1996 and amended
in April 1997 to reduce the exercise price; all other terms of the option
remained unchanged.
(3) Includes options for an aggregate of 50,000 shares granted in August 1996
and January 1997, and amended in April 1997 to reduce the exercise price;
all other terms of the option remained unchanged.
(4) Consists of an option for 25,000 shares granted in January 1997 and
amended in April 1997 to reduce the exercise price; all other terms of the
option remained unchanged.
46
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding options granted
to the Named Executive Officers during the fiscal year ended December 31,
1997. The Company has never granted any stock appreciation rights.
<TABLE>
<CAPTION>
Individual Grants(1)
-------------------------------------------------------
Potential Realizable Value
Number of Percent of Total at Assumed Annual Rates
Securities Options Of Stock Price Appreciation
Underlying Granted to For Option Term(3)
Options Employees Exercise Price Expiration ----------------------------
Name Granted In 1997(2) Per Share($) Date 5% 10%
- ---- ---------- ---------------- -------------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Isaak Karaev............ 100,000(4) 10.7% $0.83 04/16/02 $ 22,931 $ 50,672
216,667(5) 23.3 0.83 04/16/02 49,685 109,790
James M. Tousignant..... 16,667 1.8 0.75 12/16/07 7,861 19,922
Philip Callaghan........ 50,000(6) 5.4 0.75 12/01/06 20,675 50,923
16,667 1.8 0.75 12/16/07 7,861 19,922
Gregg B. Amonette....... 33,333(6) 3.6 0.75 07/31/06 13,783 33,948
16,667(6) 1.8 0.75 12/31/06 7,861 19,922
16,667 1.8 0.75 10/20/07 7,861 19,922
John J. Mahoney......... 25,000(6) 2.7 0.75 12/31/06 11,792 29,883
</TABLE>
- ---------------------
(1) Each option represents the right to purchase one share of Common Stock.
The options shown in this column are all incentive stock options granted
pursuant to the Company's 1993 Stock Incentive Plan. The options shown in
this table, except as otherwise indicated below, become exercisable at a
rate of 25% annually over four years from the date of grant. To the extent
not already exercisable, certain of these options may become exercisable
in the event of a merger in which the Company is not the surviving
corporation or upon the sale of substantially all of the Company's assets.
See "--1998 Stock Option Plan."
(2) In the year ended December 31, 1997, the Company granted options to
purchase an aggregate of 930,667 shares of Common Stock. The percentages
in this column exclude, for purposes of calculating the denominator, all
options granted prior to 1997 that were re-priced in April 1997.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The 5% and
10% assumed annual rates of compounded stock price appreciation are
mandated by rules of the Securities and Exchange Commission (the
"Commission") and do not represent the Company's estimate or projection of
the Company's future Common Stock prices. These amounts represent certain
assumed rates of appreciation in the value of the Company's Common Stock
from the fair market value on the date of grant. Actual gains, if any, on
stock option exercises are dependent on the future performance of the
Common Stock and overall stock market conditions. The amounts reflected in
the table may not necessarily be achieved.
(4) The option is fully exercisable.
(5) The option vests (i) with respect to 100,000 shares when total revenue in
any twelve month period exceeds $7.0 million and (ii) vests with respect
to 116,667 shares when total revenue in any twelve month period exceeds
$12.0 million.
(6) In April 1997, the Board of Directors amended all outstanding options with
exercise prices in excess of $0.75 per share to reduce the exercise price
thereof to $0.75 per share. The option was granted to Mr. Callaghan in
December 1996; the options were granted to Mr. Amonette in August 1996 and
January 1997, respectively; and the option was granted to Mr. Mahoney in
January 1997. All of such options were amended in April 1997 to reduce the
exercise price thereof to $0.75 per share.
47
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information concerning options to
purchase Common Stock exercised by the Named Executive Officers during the
year ended December 31, 1997 and the number and value of unexercised options
held by each of the Named Executive Officers at December 31, 1997.
<TABLE>
<CAPTION>
Number of Securities
Number of Subject to Unexercised Value of Unexercised
Shares Options at In-the-Money Options
Acquired December 31, 1997 at December 31, 1997(1)
on Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- --------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Isaak Karaev............ 25,000 $18,000 100,000 216,667 $ 0 $ 0
James M. Tousignant..... -- -- 8,333 25,000 6,000 6,000
Philip Callaghan........ -- -- 12,500 54,167 0 0
Gregg B. Amonette....... -- -- 8,333 58,334 0 0
John J. Mahoney......... -- -- 50,000 41,667 36,000 12,000
</TABLE>
- ---------------------
(1) There was no public trading market for the Common Stock as of December 31,
1997.
EMPLOYMENT AND NON-COMPETITION AGREEMENTS
None of the Company's executive officers has an employment agreement with
the Company. All executive officers have entered into agreements with the
Company which generally contain certain non-competition, non-disclosure and
non-solicitation restrictions and covenants, including a provision prohibiting
such officers from competing with the Company during their employment with the
Company and for a period of nine months thereafter.
1998 STOCK OPTION PLAN
The Company intends to adopt the 1998 Stock Option Plan (the "1998 Stock
Option Plan"), which is intended to serve as the successor equity incentive
program to the Company's existing 1993 Stock Incentive Plan (the "Predecessor
Plan"). The 1998 Stock Option Plan will become effective on , 1998 upon
adoption by the Board of Directors and ratification by its stockholders.
1,500,000 shares of Common Stock have initially been authorized for issuance
under the 1998 Stock Option Plan. This initial share reserve is comprised of
(i) the shares which remained available for issuance under the Predecessor
Plan on the effective date of the 1998 Stock Option Plan, including the shares
subject to outstanding options thereunder, plus (ii) an additional increase of
approximately 1,000,000 shares. In addition, the share reserve will
automatically be increased on the first trading day of January each calendar
year, beginning in January 2000, by a number of shares equal to three percent
(3%) of the total number of shares of Common Stock outstanding on the last
trading day of the immediately preceding calendar year, but no such annual
increase shall exceed 500,000 shares. However, in no event may any one
participant in the 1998 Stock Option Plan receive option grants or direct
stock issuances for more than 250,000 shares in the aggregate per calendar
year.
Outstanding options under the Predecessor Plan will be incorporated into the
1998 Stock Option Plan upon the effective date of this offering, and no
further option grants will be made under the Predecessor Plan. The
incorporated options will continue to be governed by their existing terms,
unless the Plan Administrator elects to extend one or more features of the
1998 Stock Option Plan to those options. However, except as otherwise noted
below, the outstanding options under the Predecessor Plan contain
substantially the same terms and conditions summarized below for the
Discretionary Option Grant Program in effect under the 1998 Stock Option Plan.
The 1998 Stock Option Plan is divided into four separate components: (i) the
Discretionary Option Grant Program under which eligible individuals in the
Company's employ or service (including officers, non-employee members of the
Board of Directors and consultants) may, at the discretion of the Plan
Administrator, be granted options to purchase shares of Common Stock at an
exercise price determined by
48
<PAGE>
the Plan Administrator, (ii) the Stock Issuance Program under which such
individuals may, in the Plan Administrator's discretion, be issued shares of
Common Stock directly, through the purchase of such shares at a price
determined by the Plan Administrator or as a bonus tied to the performance of
services, (iii) the Salary Investment Option Grant Program under which
executive officers and other highly compensated employees may elect to apply a
portion of their base salary to the acquisition of special below-market stock
option grants and (iv) the Automatic Option Grant Program under which option
grants will automatically be made at periodic intervals to eligible non-
employee Board members to purchase shares of Common Stock at an exercise price
equal to 100% of the fair market value of those shares on the grant date.
The Discretionary Option Grant Program and the Stock Issuance Program will
be administered by the Compensation Committee of the Board of Directors. The
Compensation Committee, as Plan Administrator, will have complete discretion
to determine which eligible individuals are to receive option grants or stock
issuances, the time or times when such option grants or stock issuances are to
be made, the number of shares subject to each such grant or issuance, the
status of any granted option as either an incentive stock option or a non-
statutory stock option under the Federal tax laws, the vesting schedule to be
in effect for the option grant or stock issuance and the maximum term for
which any granted option is to remain outstanding. The Compensation Committee
will also have the authority to select the executive officers and other highly
compensated employees who may participate in the Salary Investment Option
Grant Program in the event that program is activated for one or more calendar
years, but neither the Compensation Committee nor the Board of Directors will
exercise any administrative discretion with respect to option grants made
under the Salary Investment Option Grant Program or under the Automatic Option
Grant Program for the non-employee members of the Board of Directors. All
grants under those two latter programs will be made in compliance with the
express provisions of each such program.
The exercise price for the shares of Common Stock subject to option grants
made under the 1998 Stock Option Plan may be paid in cash or in shares of
Common Stock valued at fair market value on the exercise date. The option may
also be exercised through a same-day sale program without any cash outlay by
the optionee. In addition, the Plan Administrator may provide financial
assistance to one or more participants in the 1998 Stock Option Plan in
connection with their acquisition of shares, by allowing such individuals to
deliver a full-recourse, interest-bearing promissory note in payment of the
option exercise price and or direct issue price any associated withholding
taxes incurred in connection with such acquisition.
In the event of an acquisition of the Company, whether by merger or asset
sale or a sale by the stockholders of more than 50% of the total combined
voting power of the Company recommended by the Board of Directors, each
outstanding option under the Discretionary Option Grant Program which is not
to be assumed by the successor corporation or otherwise continued will
automatically accelerate in full, and all unvested shares under the
Discretionary Option Grant and Stock Issuance Programs will immediately vest,
except to the extent the Company's repurchase rights with respect to those
shares are to be assigned to the successor corporation or otherwise continued
in effect. The Plan Administrator will have the authority under the
Discretionary Option Grant Program to provide that the shares subject to
options granted under that program will automatically vest (i) upon an
acquisition of the Company, whether or not those options are assumed or
continued, (ii) a hostile change in control of the Company effected through a
successful tender offer for more than 50% of the Company's outstanding voting
stock or by proxy contest for the election of members of the Board of
Directors or (iii) in the event the individual's service is terminated,
whether involuntarily or through a resignation for good reason, within a
designated period (not to exceed eighteen (18) months) following an
acquisition in which those options are assumed or otherwise continued in
effect or a hostile change in control. The vesting of outstanding shares under
the Stock Issuance Program may be accelerated upon similar terms and
conditions. Options currently outstanding under the Predecessor Plan will be
adjusted in the event of a merger, consolidation or reorganization of the
Company as determined by the Plan Administrator; such options are not by their
terms subject to acceleration at the time of an acquisition or a change in
control or upon the termination of the optionee's service following an
acquisition in which those options are assumed or a change in control of the
Company.
49
<PAGE>
Stock appreciation rights are authorized for issuance under the
Discretionary Option Grant Program which provide the holders with the election
to surrender their outstanding options for an appreciation distribution from
the Company equal to the excess of (i) the fair market value of the vested
shares of Common Stock subject to the surrendered option over (ii) the
aggregate exercise price payable for such shares. Such appreciation
distribution may be made in cash or in shares of Common Stock. There are
currently no outstanding stock appreciation rights under the Predecessor Plan.
The Plan Administrator has the authority to effect the cancellation of
outstanding options under the Discretionary Option Grant Program (including
options incorporated from the Predecessor Plan) in return for the grant of new
options for the same or different number of option shares with an exercise
price per share based upon the fair market value of the Common Stock on the
new grant date.
In the event the Compensation Committee elects to activate the Salary
Investment Option Grant Program for one or more calendar years, each executive
officer and other highly compensated employee of the Company selected for
participation may elect, prior to the start of the calendar year, to reduce
his or her base salary for that calendar year by a specified dollar amount not
less than $10,000 nor more than $50,000. In return, the individual will
automatically be granted, on the first trading day in the calendar year for
which the salary reduction is to be in effect, a non-statutory option to
purchase that number of shares of Common Stock determined by dividing the
salary reduction amount by two-thirds of the fair market value per share of
Common Stock on the grant date. The option will be exercisable at a price per
share equal to one-third of the fair market value of the option shares on the
grant date. As a result, the total spread on the option shares at the time of
grant will be equal to the salary reduction amount. The option will become
exercisable in a series of twelve (12) equal monthly installments over the
calendar year for which the salary reduction is to be in effect and will be
subject to full and immediate vesting upon certain changes in the ownership or
control of the Company.
Under the Automatic Option Grant Program, and subject to the last sentence
of this paragraph, each individual who is serving as a non-employee member of
the Board of Directors at the time the Registration Statement of which this
Prospectus forms a part is declared effective and who has not previously been
in the employ of the Company will receive at that time an option grant for
8,000 shares of Common Stock with a exercise price equal to the Price to
Public set forth on the cover page of this Prospectus. Each individual who
first joins the Board of Directors after the effective date of this Offering
as a non-employee member of the Board of Directors will also receive an option
grant for 8,000 shares of Common Stock at the time of his or her commencement
of service on the Board of Directors, provided such individual has not
otherwise been in the prior employ of the Company. In addition, at each Annual
Stockholders Meeting, beginning with the 1999 Annual Meeting, each individual
who is to continue to serve as a non-employee member on the Board of Directors
will receive an option grant to purchase 2,500 shares of Common Stock, whether
or not such individual has been in the prior employ of the Company. However,
any non-employee member of the Board of Directors who, directly or indirectly,
is a 5% or greater stockholder or is affiliated with or a representative of a
5% or greater stockholder, shall not be eligible to receive any option grants
under the Automatic Option Grant Program.
Each automatic grant will have an exercise price equal to the fair market
value per share of Common Stock on the grant date and will have a maximum term
of 10 years, subject to earlier termination following the optionee's cessation
of service on the Board of Directors. Each automatic option will be
immediately exercisable; however, any shares purchased upon exercise of the
option will be subject to repurchase, at the option exercise price paid per
share, should the optionee's service as a non-employee member of the Board of
Directors cease prior to vesting in the shares. The 8,000-share grant will
vest in four equal and successive annual installments over the optionee's
period of service on the Board of Directors. Each additional 2,500-share grant
will vest upon the optionee's completion of one year of service on the Board
of Directors measured from the grant date. However, each outstanding option
will immediately vest upon (i) certain changes in the ownership or control of
the Company or (ii) the death or disability of the optionee while serving as a
member of the Board of Directors.
Limited stock appreciation rights will automatically be included as part of
each grant made under the Automatic Option Grant and Salary Investment Option
Grant Programs and may be granted to one or more officers of the Company as
part of their option grants under the Discretionary Option Grant Program.
Options
50
<PAGE>
with such a limited stock appreciation right may be surrendered to the Company
upon the successful completion of a hostile tender offer for more than 50% of
the Company's outstanding voting stock. In return for the surrendered option,
the optionee will be entitled to a cash distribution from the Company in an
amount per surrendered option share equal to the excess of (i) the highest
price per share of Common Stock paid in connection with the tender offer over
(ii) the exercise price payable for such share.
The Board of Directors may amend or modify the 1998 Stock Option Plan at any
time, subject to any required stockholder approval. The 1998 Stock Option Plan
will terminate on the earliest of (i) ten years after the date that the Board
of Directors adopts the 1998 Stock Option Plan, (ii) the date on which all
shares available for issuance under the 1998 Stock Option Plan have been
issued as fully-vested shares or (iii) the termination of all outstanding
options in connection with certain changes in control or ownership of the
Company.
EMPLOYEE STOCK PURCHASE PLAN
The Company intends to adopt the Employee Stock Purchase Plan (the "Employee
Stock Purchase Plan"). The Employee Stock Purchase Plan will become effective
on , 1998 upon adoption by the Board of Directors and ratification by its
stockholders. The Employee Stock Purchase Plan is designed to allow eligible
employees of the Company and participating subsidiaries to purchase shares of
Common Stock, at semi-annual intervals, through their periodic payroll
deductions under the Employee Stock Purchase Plan, and a reserve of 500,000
shares of Common Stock has been established for this purpose.
The Employee Stock Purchase Plan will be implemented in a series of
successive offering periods, each with a maximum duration of 24 months.
However, the initial offering period will begin on the day the Underwriting
Agreement is executed in connection with this offering and will end on the
last business day in July 2000. The next offering period will commence on the
first business day in August 2000, and subsequent offering periods will
commence as designated by the Plan Administrator.
Individuals who are eligible employees on the start date of any offering
period may enter the Employee Stock Purchase Plan on that start date or on any
subsequent semi-annual entry date (February 1 or August 1 each year).
Individuals who become eligible employees after the start date of the offering
period may join the Employee Stock Purchase Plan on any subsequent semi-annual
entry date within that period.
Payroll deductions may not exceed 10% of the participant's total cash
compensation for each semi-annual period of participation, and the accumulated
payroll deductions will be applied to the purchase of shares on the
participant's behalf on each semi-annual purchase date (the last business day
in January and July each year), at a purchase price per share not less than
eighty-five percent (85%) of the lower of (i) the fair market value of the
Common Stock on the participant's entry date into the offering period or (ii)
the fair market value on the semi-annual purchase date. In no event, however,
may any participant purchase more than 1,000 shares, nor may all participants
in the aggregate purchase more than 125,000 shares on any one semi-annual
purchase date. Should the fair market value of the Common Stock on any semi-
annual purchase date be less than the fair market value of the Common Stock on
the first day of the offering period, then the current offering period will
automatically end and a new offering period will begin, based on the lower
fair market value.
The Board of Directors may amend or modify the Employee Stock Purchase Plan
following any semi-annual purchase date. The Employee Stock Purchase Plan will
terminate on the last business day in July 2008, unless sooner terminated by
the Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee consists of Messrs. Gaynes, Greene and
Pappas, none of whom has been an officer or employee of the Company at any
time since the Company's inception. No executive officer of the Company serves
as a member of the board of directors or compensation committee of any entity
that has one or more executive officers serving as a member of the Company's
Board of Directors or Compensation Committee. Prior to the formation of the
Compensation Committee, the Board of Directors as a whole made decisions
relating to compensation of the Company's executive officers.
51
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Under an agreement dated December 18, 1997, Multex and Reuters, a
stockholder of the Company, agreed to transition users of Reuters Broker
Research from the then existing client server based delivery platform to an
intranet platform known as the Reuters Web. Multex granted a license to
Reuters for 1998 to receive, store, use, sell, market and distribute the
Multex research database to Reuters subscribers in return for a fixed license
fee. In addition, Reuters agreed to continue to pay the fees stipulated under
the June 1, 1995 agreement for users who continued to access the database via
the client server based delivery platform during 1998. The parties are in
negotiations as to the terms on which the services will be provided in 1999.
In November 1993 and March 1994, respectively, the Company sold 25,000
shares of Series A Redeemable Preferred Stock to Euclid Partners III, L.P.,
Isaak Karaev and certain other investors for an aggregate offering amount of
$2,500,000. In November 1994, the Company sold 36,666 shares of Series B
Redeemable Preferred Stock to Euclid Partners III, L.P., 77 Capital Partners,
L.P., Venture Fund I, L.P. and certain other investors for an aggregate
offering amount of $5,500,000. In 1996, the Company sold 100,000 shares of
Series C Redeemable Preferred Stock in various tranches to Chase Venture
Capital Associates, L.P., Euclid Partners III and IV, L.P., Reuters America,
Inc., Softbank Ventures, Inc., 77 Capital Partners, L.P., Venture Fund I, L.P.
and certain other investors for an aggregate offering amount of $15,000,000.
In July 1997, the Company sold 55,556 shares of Series D Redeemable Preferred
Stock to Chase Venture Capital Associates, L.P., Euclid Partners IV, L.P.,
Reuters America, Inc. and certain other investors for an aggregate offering
amount of $10,000,000. Upon the consummation of this offering, all of these
outstanding shares of Redeemable Preferred Stock will be automatically
converted into shares of Common Stock.
Certain of the Underwriters are subscribers of the Company's services. See
"Underwriting."
52
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of April 30, 1998 (after giving
effect to the Preferred Stock Conversion, and as adjusted to reflect the sale
of the shares of Common Stock offered hereby) by (i) each person (or group of
affiliated persons) who is known by the Company to beneficially own 5% or more
of the outstanding shares of Common Stock, (ii) each director and Named
Executive Officer of the Company, (iii) all directors and executive officers
of the Company as a group, and (iv) by each Over-Allotment Selling
Stockholder. Unless otherwise indicated, the address of each beneficial owner
listed below is c/o Multex Systems, Inc., 33 Maiden Lane, 5th Floor, New York,
New York 10038.
<TABLE>
<CAPTION>
PERCENT
BENEFICIALLY
OWNED(1)
NUMBER -----------------
OF BEFORE AFTER
BENEFICIAL OWNER SHARES(1) OFFERING OFFERING
- ---------------- --------- -------- --------
<S> <C> <C> <C>
EXECUTIVE OFFICERS AND DIRECTORS:
Isaak Karaev (3)................................... 788,445 8.5%
James M. Tousignant................................ 145,833 1.6
Philip Callaghan................................... 12,500 *
Gregg B. Amonette.................................. 12,500 *
John J. Mahoney (4)................................ 106,250 1.2
Bruce E. H. Barlag................................. -- --
Davis Gaynes (5)................................... 1,296,296 14.2
I. Robert Greene (6)............................... 1,414,745 15.5
Peter LaBonte (7).................................. 1,296,296 14.2
Milton J. Pappas (8)............................... 1,226,852 13.5
All directors and executive officers as a group (10
persons) (9)...................................... 6,299,717 67.6
OTHER 5% STOCKHOLDERS:
Chase Venture Capital Associates, L.P. (10)........ 1,414,745 15.5
Euclid Partners III, L.P. (11)..................... 708,333 7.8
Euclid Partners IV, L.P. (12)...................... 518,519 5.7
Multex Voting Trust (13)........................... 1,870,417 20.5
Reuters America, Inc. (14)......................... 1,296,296 14.2
77 Capital Partners, L.P. (15)..................... 666,667 7.3
Softbank Ventures, Inc. (16)....................... 722,222 7.9
Venture Fund I, L.P. (17).......................... 611,100 6.7
</TABLE>
- ---------------------
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Commission and generally includes voting or investment power with respect
to securities. Except as indicated by footnote, the Company believes,
based on information furnished by such persons, that the persons named in
the table above have sole voting and investment power with respect to all
shares of Common Stock shown as beneficially owned by them. Percentage of
beneficial ownership is based on 9,111,157 shares of Common Stock
outstanding as of April 30, 1998, and shares of Common Stock
outstanding after the completion of this offering. In computing the
number of shares of Common Stock subject to options
53
<PAGE>
held by that person that are exercisable within 60 days of April 30, 1998,
such shares are deemed outstanding. Such shares, however, are not deemed
outstanding for the purpose of computing the percentage ownership of any
other person.
(2) Assumes no exercise of the underwriters over-allotment option. If the
over-allotment option is exercised in full, the following stockholders
will sell the following number of additional shares: [to follow].
(3) Includes 200,000 shares of Common Stock issuable upon the exercise of
stock options which are exercisable within 60 days of April 30, 1998.
Does not include the shares of Common Stock held by others through the
Multex Voting Trust, of which Mr. Karaev is the trustee. See Note 12
below.
(4) Includes 6,250 shares of Common Stock issuable upon the exercise of stock
options which are exercisable within 60 days of April 30, 1998.
(5) Consists of 1,296,296 shares of Common Stock held by Reuters America
Inc. Mr. Gaynes serves as Executive Vice President of Reuters America
Holdings, an affiliate of Reuters America Inc., and disclaims beneficial
ownership of such shares except to the extent of his pecuniary interest,
if any. The address of Reuters America Inc. is 1700 Broadway, 40th
Floor, New York, New York 10019.
(6) Consists of 1,414,745 shares of Common Stock held by Chase Venture
Capital Associates, L.P., of which Chase Capital Partners is a General
Partner. Mr. Greene is a Principal of Chase Capital Partners. In such
capacity, Mr. Greene may be deemed to be the beneficial owner of such
shares, although he disclaims beneficial ownership except to the extent
of his pecuniary interest, if any. The address of Chase Venture Capital
Associates, L.P. is 380 Madison Avenue, 12th Floor, New York, New York
10017.
(7) Consists of 1,296,296 shares of Common Stock held by Reuters America
Inc., of which Mr. LaBonte serves as a Vice President. In such capacity,
Mr. LaBonte may be deemed to be the beneficial owner of such shares,
although he disclaims beneficial ownership except to the extent of his
pecuniary interest, if any. The address of Reuters America Inc. is 1700
Broadway, 40th Floor, New York, New York 10019.
(8) Consists of (i) 708,333 shares of Common Stock held by Euclid Partners
III, L.P., of which Mr. Pappas is a General Partner and (ii) 518,519
shares of Common Stock held by Euclid Partners IV, L.P., of which Mr.
Pappas is a General Partner. In such capacities, Mr. Pappas may be deemed
to be the beneficial owner of such shares, although he disclaims
beneficial ownership except to the extent of his pecuniary interest, if
any. The address of the entities associated with Euclid Partners
Corporation is 45 Rockefeller Plaza, Suite 907, New York, New York 10111.
(9) Includes 206,250 shares of Common Stock issuable upon exercise of stock
options. See Notes 3 through 8.
(10) Consists of 1,414,745 shares of Common Stock held by Chase Venture
Capital Associates, L.P. The address for Chase Venture Capital
Associates, L.P. is 380 Madison Avenue, 12th Floor, New York, New York
10017.
(11) Consists of 708,333 shares of Common Stock held by Euclid Partners III,
L.P. The address of Euclid Partners III, L.P. is 45 Rockefeller Plaza,
Suite 907, New York, New York 10111.
(12) Consists of 518,519 shares of Common Stock held by Euclid Partners IV,
L.P. The address of Euclid Partners IV, L.P. is 45 Rockefeller Plaza,
Suite 907, New York, New York 10111.
(13) The Multex Voting Trust, of which Mr. Karaev is the trustee, was created
pursuant to a Shareholders' Agreement and Voting Trust (the "Voting Trust
Agreement"), dated as of October 31, 1993, and amended as of May 1, 1996,
by and among the Company, Mr. Karaev and each of the common stockholders
of the Company. The Voting Trust Agreement will terminate upon the
consummation of this offering and the shares of Common Stock held in
trust will be distributed to Mr. Karaev and those stockholders in
accordance with their respective ownership of such shares. Mr. Karaev
disclaims beneficial ownership of such shares except to the extent of his
pecuniary interest.
(14) Consists of 1,296,296 shares of Common Stock held by Reuters America Inc.
The address for Reuters America Inc. is 1700 Broadway, 40th Floor, New
York, New York 10019.
(15) Consists of 666,667 shares of Common Stock held by 77 Capital Partners,
L.P. The address for 77 Capital Partners, L.P. is c/o Atrium Capital
Corp., 3000 Sandhill Road, Bldg. 2, Suite 240, Menlo Park, California
94025.
(16) Consists of 722,222 shares of Common Stock held by Softbank Ventures,
Inc. The address for Softbank Ventures, Inc. is 10 Langley Road, Newton
Centre, Massachusetts 02159.
(17) Consists of 611,100 shares of Common Stock held by Venture Fund I, L.P.
The address for Venture Fund I, L.P. is 295 North Maple Avenue, Room 3361
C1, Basking Ridge, New Jersey 07920.
54
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following description of the securities of the Company and certain
provisions of the Company's Certificate of Incorporation (the "Certificate")
and the Company's Bylaws (the "Bylaws") are summaries thereof and are
qualified by reference to the Certificate and the Bylaws, copies of which have
been filed with the Commission as exhibits to the Company's Registration
Statement, of which this Prospectus forms a part.
The authorized capital stock of the Company consists of 50,000,000 shares of
Common Stock, par value $.01 per share, and 5,000,000 shares of Preferred
Stock, par value $.01 per share.
COMMON STOCK
As of April 30, 1998, there were 9,111,157 shares of Common Stock
outstanding and held of record by stockholders, after giving effect to the
Preferred Stock Conversion. Based upon the number of shares outstanding as of
that date and giving effect to the issuance of the shares of Common Stock
offered by the Company hereby, there will be shares of Common Stock
outstanding upon the closing of the offering.
Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of Common Stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared by the Board of Directors out of
funds legally available therefor, subject to any preferential dividend rights
of any outstanding Preferred Stock. Upon the liquidation, dissolution or
winding up of the Company, the holders of Common Stock are entitled to receive
ratably the net assets of the Company available after the payment of all debts
and other liabilities and subject to the prior rights of any outstanding
Preferred Stock. Holders of the Common Stock have no preemptive, subscription,
redemption or conversion rights. The outstanding shares of Common Stock are,
and the shares offered by the Company in the offering will be, when issued in
consideration for payment thereof, fully paid and nonassessable. The rights,
preferences and privileges of holders of Common Stock are subject to, and may
be adversely affected by, the rights of the holders of shares of any series of
Preferred Stock which the Company may designate and issue in the future. Upon
the closing of the offering, there will be no shares of Preferred Stock
outstanding.
PREFERRED STOCK
As of April 30, 1998, there were 217,222 shares of Redeemable Preferred
Stock outstanding (not giving effect to the Reverse Stock Split). All
outstanding shares of Redeemable Preferred Stock will be converted into an
aggregate of 7,240,741 shares of Common Stock upon the consummation of the
offering and such shares of Redeemable Preferred Stock will no longer be
authorized, issued or outstanding.
Upon the consummation of the offering, the Board of Directors will be
authorized, without further stockholder approval, to issue from time to time
up to an aggregate of 5,000,000 shares of preferred stock in one or more
series and to fix or alter the designations, preferences, rights and any
qualifications, limitations or restrictions of the shares of each such series
thereof, including the dividend rights, dividend rates, conversion rights,
voting rights, terms of redemption (including sinking fund provisions),
redemption price or prices, liquidation preferences and the number of shares
constituting any series or designations of such series. The Company has no
present plans to issue any shares of preferred stock. See "--Anti-Takeover
Effects of Certain Provisions of Delaware Law and the Company's Certificate of
Incorporation and Bylaws."
OPTIONS
As of March 31, 1998, options to purchase a total of 1,399,335 shares
("Option Shares") of Common Stock were outstanding, approximately 413,000 of
which are subject to lock-up agreements entered into with the Underwriters.
Beginning 90 days after the date of this Prospectus, approximately Option
Shares which are not subject to lock-up agreements will be eligible for sale
in reliance on Rule 701 promulgated
55
<PAGE>
under the Securities Act. The total number of shares of Common Stock that may
be subject to the granting of options under the 1998 Stock Option Plan shall
be equal to . See "Management--1998 Stock Option Plan" and "Shares Eligible
for Future Sale."
REGISTRATION RIGHTS
Pursuant to the terms of the Registration Rights Agreement, after the
consummation of the offering the holders of 8,074,074 shares of Common Stock
will be entitled to certain demand registration rights with respect to the
registration of such shares under the Securities Act. The holders of 33% or
more of such shares are entitled to demand that the Company register their
shares under the Securities Act, subject to certain limitations. The Company
is not required to effect more than two such registrations pursuant to such
demand registration rights. In addition, pursuant to the terms of the
Stockholders Agreement, after the consummation of the offering the holders of
8,074,074 shares of Common Stock will be entitled to certain piggyback
registration rights with respect to the registration of such shares of Common
Stock under the Securities Act. In the event that the Company proposes to
register any shares of Common Stock under the Securities Act, either for its
own account or for the account of other security holders, the holders shares
having piggyback rights are entitled to receive notice of such registration
and are entitled to include their shares therein, subject to certain
limitations. Further, at any time after the Company becomes eligible to file a
registration statement on Form S-3 the holders may require the Company to file
one or more registration statements under the Securities Act on Form S-3 with
respect to their shares of Common Stock. These registration rights are subject
to certain conditions and limitations, among them the right of the
underwriters of an offering to limit the number of shares of Common Stock held
by security holders with registration rights to be included in such
registration. The Company is generally required to bear all of the expenses of
all such registrations, except underwriting discounts and commissions.
Registration of any of the shares of Common Stock held by security holders
with registration rights would result in such shares becoming freely tradable
without restriction under the Securities Act immediately upon effectiveness of
such registration statement.
The holders of the registration rights described above have waived their
rights to register any shares in the Registration Statement of which this
Prospectus forms a part.
ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF DELAWARE LAW AND THE COMPANY'S
CERTIFICATE OF INCORPORATION AND BYLAWS
Following the consummation of the offering, the Company will be subject to
the provisions of Section 203 of the Delaware General Corporation Law (as
amended from time to time, the "DGCL"). Subject to certain exceptions, Section
203 prohibits a publicly-held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an
interested stockholder, unless the interested stockholder attained such status
with the approval of the board of directors or unless the business combination
is approved in a prescribed manner. A "business combination" includes mergers,
asset sales and other transactions resulting in a financial benefit to the
interested stockholder. Subject to certain exceptions, an "interested
stockholder" is a person who, together with affiliates and associates, owns,
or within three years did own, fifteen percent (15%) or more of the
corporation's voting stock. This statute could prohibit or delay the
accomplishment of mergers or other takeover or change in control attempts with
respect to the Company and, accordingly, may discourage attempts to acquire
the Company.
In addition, certain provisions of the Certificate and Bylaws, which
provisions will be in effect upon the consummation of the offering and are
summarized in the following paragraphs, may be deemed to have an anti-takeover
effect and 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
stockholders.
Classified Board of Directors. The Company's Board of Directors will be
divided into three classes of directors serving staggered three-year terms. As
a result, approximately one-third of the Board of Directors will be elected
each year. These provisions, when coupled with the provision of the
Certificate authorizing
56
<PAGE>
the Board of Directors to fill vacant directorships or increase the size of
the Board of Directors, may deter a stockholder from removing incumbent
directors and simultaneously gaining control of the Board of Directors by
filling the vacancies created by such removal with its own nominees.
Stockholder Action; Special Meeting of Stockholders. The Certificate
provides that stockholders may not take action by written consent, but only at
duly called annual or special meetings of stockholders. The Certificate
further provides that special meetings of stockholders of the Company may be
called only by the Chairman of the Board of Directors or a majority of the
Board of Directors.
Advance Notice Requirements for Stockholder Proposals and Director
Nominations. The Bylaws provide that stockholders seeking to bring business
before an annual meeting of stockholders, or to nominate candidates for
election as directors at an annual meeting of stockholders, must provide
timely notice thereof in writing. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Company, not less than 120 days nor more than 150 days prior to the first
anniversary of the date of the Company's notice of annual meeting provided
with respect to the previous year's annual meeting of stockholders; provided,
that if no annual meeting of stockholders was held in the previous year or the
date of the annual meeting of stockholders has been changed to be more than 30
calendar day earlier than or 60 calendar days after such anniversary, notice
by the stockholder, to be timely, must be so received not more than 90 days
nor later than the later of (i) 60 days prior to the annual meeting of
stockholders or (ii) the close of business on the 10th day following the date
on which notice of the date of the meeting is given to stockholders or made
public, whichever first occurs. The Bylaws also specify certain requirements
as to the form and content of a stockholder's notice. These provisions may
preclude stockholders from bringing matters before an annual meeting of
stockholders or from making nominations for directors at an annual meeting of
stockholders.
Authorized But Unissued Shares. The authorized but unissued shares of Common
Stock and Preferred Stock are available for future issuance without further
stockholder approval. These additional shares may be utilized for a variety of
corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions and employee benefit plans. The existence of
authorized but unissued and unreserved Common Stock and Preferred Stock could
render more difficult or discourage an attempt to obtain control of the
Company by means of a proxy contest, tender offer, merger or otherwise.
The DGCL provides generally that the affirmative vote of a majority of the
shares entitled to vote on any matter is required to amend a corporation's
certificate of incorporation or bylaws, unless a corporation's certificate of
incorporation or bylaws, as the case may be, requires a greater percentage, or
unless the bylaw provision being amended was originally adopted by the Board
of Directors, in which case such amendment requires only the affirmative vote
of a majority of the members of the Board of Directors.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Certificate provides that, except to the extent prohibited by DGCL, the
Company's directors shall not be personally liable to the Company or its
stockholders for monetary damages for any breach of fiduciary duty as
directors of the Company. Under the DGCL, the directors have a fiduciary duty
to the Company which is not eliminated by this provision of the Certificate
and, in appropriate circumstances, equitable remedies such as injunctive or
other forms of nonmonetary relief will remain available. In addition, each
director will continue to be subject to liability under the DGCL for breach of
the director's duty of loyalty to the Company, for acts or omissions which are
found by a court of competent jurisdiction to be not in good faith or which
involves intentional misconduct, or knowing violations of law, for actions
leading to improper personal benefit to the director, and for payment of
dividends or approval of stock repurchases or redemptions that are prohibited
by DGCL. This provision also does not affect the directors' responsibilities
under any other laws, such as the Federal securities laws or state or Federal
environmental laws. The Company has obtained liability insurance for its
officers and directors.
57
<PAGE>
Section 145 of the DGCL empowers a corporation to indemnify its directors
and officers and to purchase insurance with respect to liability arising out
of their capacity or status as directors and officers, provided that this
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) arising under
Section 174 of the DGCL, or (iv) for any transaction from which the director
derived an improper personal benefit. The DGCL provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any
other rights to which the directors and officers may be entitled under the
corporation's bylaws, any agreement, a vote of stockholders or otherwise. The
Certificate eliminates the personal liability of directors to the fullest
extent permitted by Section 102(b)(7) of the DGCL and provides that the
Company shall fully 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)
by reason of the fact that such person is or was a director or officer of the
Company, or is or was serving at the request of the Company as a director or
officer of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent as to which indemnification will be
required or permitted under the Certificate. The Company is not aware of any
threatened litigation or proceeding that may result in a claim for such
indemnification.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is American Stock
Transfer and Trust Company, New York, New York.
58
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Prior to the offering, there has not been any public market for the Common
Stock of the Company, and no prediction can be made as to the effect, if any,
that market sales of shares of Common Stock or the availability of shares for
sale will have on the market price of the Common Stock prevailing from time to
time. Nevertheless, sales of substantial amounts of Common Stock in the public
market could adversely affect the market price of the Common Stock and could
impair the Company's future ability to raise capital through the sale of its
equity securities.
Upon the consummation of the offering, the Company will have an aggregate of
shares of Common Stock outstanding, assuming no exercise of the
Underwriters' over-allotment option and no exercise of outstanding options. Of
these shares, the shares sold in the offering will be freely tradable,
except that any shares acquired by "affiliates" of the Company, as that term
is defined in Rule 144 promulgated under the Securities Act, may only be sold
in compliance with the limitations described below. The remaining shares
of outstanding Common Stock, which will be deemed "restricted securities" as
defined under Rule 144 of the Securities Act, may be sold in the public market
only if registered or if they qualify for an exemption from registration under
Rules 144, 144(k) or 701 promulgated under the Securities Act. Subject to the
lock-up agreements described below and the provisions of Rules 144, 144(k) and
701, additional shares will be available for sale in the public market
(subject in the case of shares held by affiliates to compliance with certain
volume restrictions) as follows: (i) shares will be available for
immediate sale in the public market on the date of this Prospectus, (ii)
shares will be eligible for sale 90 days after the date of this Prospectus,
and (iii) shares will be eligible for sale upon the expiration of lock-up
agreements 180 days after the date of this Prospectus.
In general, under Rule 144, as currently in effect, a person (or persons
whose shares are required to be aggregated), including an affiliate, who has
beneficially owned shares for at least one year is entitled to sell, within
any three-month period commencing 90 days after the date of this Prospectus, a
number of shares that does not exceed the greater of (i) 1% of the then
outstanding shares of Common Stock (approximately shares immediately after
the offering) or (ii) the average weekly trading volume in the Common Stock
during the four calendar weeks preceding the date on which notice of such sale
is filed, subject to certain restrictions. In addition, a person who is not
deemed to have been an affiliate of the Company 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 would be entitled to sell such shares under Rule 144(k)
without regard to the requirements described above. To the extent that shares
were acquired from an affiliate of the Company, such affiliates' holding
period for the purpose of effecting a sale under Rule 144 commences on the
date of transfer from the affiliate.
Rule 701 promulgated under the Securities Act provides that shares of Common
Stock acquired pursuant to written plans such as the Predecessor Plan and the
1998 Stock Option Plan may be resold by persons other than affiliates,
beginning 90 days after the date of this Prospectus, subject only to the
manner of sale provisions of Rule 144, and by affiliates, beginning 90 days
after the date of this Prospectus, subject to all provisions of Rule 144
except its one-year minimum holding period.
The Company intends to file a Form S-8 registration statement under the
Securities Act shortly after the date of this Prospectus to register all
shares of Common Stock issuable under the 1998 Stock Option Plan. Such
registration statement will automatically become effective upon filing.
Accordingly, shares covered by that registration statement will thereupon be
eligible for sale in the public markets, unless such options are subject to
vesting restrictions or the contractual restrictions described above. See
"Management--Director Compensation" and "--1998 Stock Option Plan."
All directors and officers and certain stockholders of the Company (holding
an aggregate of shares of Common Stock) have agreed that they will not,
without the prior written consent of the Hambrecht
59
<PAGE>
& Quist LLC, sell or otherwise dispose of any shares of Common Stock or
options to acquire shares of Common Stock during the 180-day period following
the date of this Prospectus. See "Underwriting."
The Company has agreed not to sell or otherwise dispose of any shares of
Common Stock during the 180-day period following the date of the Prospectus,
except the Company may issue, and grant options to purchase, shares of Common
Stock under the 1998 Stock Option Plan. In addition, the Company may issue
shares of Common Stock in connection with any acquisition of another company
if the terms of such issuance provide that such Common Stock shall not be
resold prior to the expiration of the 180-day period referenced in the
preceding sentence. See "Risk Factors--Shares Eligible for Future Sale."
60
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, through their Representatives, Hambrecht & Quist
LLC, BancAmerica Robertson Stephens, Smith Barney Inc. and Dain Rauscher
Wessels, a division of Dain Rauscher Incorporated ("Dain Rauscher Wessels"),
have severally agreed to purchase from the Company the following respective
number of shares of Common Stock:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
---- ---------
<S> <C>
Hambrecht & Quist LLC............................................
BancAmerica Robertson Stephens...................................
Smith Barney Inc. ...............................................
Dain Rauscher Wessels............................................
---
Total..........................................................
===
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent, including the absence of any
material adverse change in the Company's business and the receipt of certain
certificates, opinions and letters from the Company, its counsel and
independent auditors. The nature of the Underwriters' obligations is such that
they are committed to purchase all shares of Common Stock offered hereby if
any of such shares are purchased.
The Underwriters propose to offer the shares of Common Stock directly to the
public at the initial public offering price set forth on the cover page of
this Prospectus and to certain dealers at such price less a concession not in
excess of $ per share. The Underwriters may allow and such dealers may
reallow a concession not in excess of $ per share to certain other dealers.
After the initial public offering of the shares, the offering price and other
selling terms may be changed by the Representatives of the Underwriters. The
Representatives have advised the Company that the Underwriters do not intend
to confirm discretionary sales in excess of 5% of the shares of Common Stock
offered hereby.
The Company and the Over-Allotment Selling Stockholders have severally
granted to the Underwriters an option, exercisable no later than 30 days after
the date of this Prospectus, to purchase up to additional shares of Common
Stock at the initial public offering price, less the underwriting discount,
set forth on the cover page of this Prospectus. To the extent that the
Underwriters exercise this option, each of the Underwriters will have a firm
commitment to purchase approximately the same percentage thereof which the
number of shares of Common Stock to be purchased by it shown in the above
table bears to the total number of shares of Common Stock offered hereby. The
Company and the Over-Allotment Selling Stockholders will be severally
obligated, pursuant to the option, to sell shares to the Underwriters to the
extent the option is exercised. The Underwriters may exercise such option only
to cover overallotments made in connection with the sale of shares of Common
Stock offered hereby.
The offering of the shares is made for delivery when, as and if accepted by
the Underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the offering without notice. The Underwriters reserve the
right to reject an order for the purchase of shares in whole or in part.
The Company and the Over-Allotment Selling Stockholders have severally
agreed to indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act, and to contribute to payments the
Underwriters may be required to make in respect thereof.
61
<PAGE>
The Over-Allotment Selling Stockholders, and certain other stockholders of
the Company, including executive officers and directors, who will own in the
aggregate shares of Common Stock after this offering, have agreed that
they will not, without the prior written consent of Hambrecht & Quist LLC,
offer, sell, or otherwise dispose of any shares of Common Stock, options or
warrants to acquire shares of Common Stock or securities exchangeable for or
convertible into shares of Common Stock owned by them during the 180-day
period following the date of this Prospectus. The Company has agreed that it
will not, without the prior written consent of Hambrecht & Quist LLC, offer,
sell or otherwise dispose of any shares of Common Stock, options or warrants
to acquire shares of Common Stock or securities exchangeable for or
convertible into shares of Common Stock during the 180-day period following
the date of this Prospectus, except that the Company may issue shares upon the
exercise of options granted prior to the date hereof, and may grant additional
options under its stock option plans, provided that, without the prior written
consent of Hambrecht & Quist LLC, such additional options shall not be
exercisable during such period.
Prior to this offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock will be
determined by negotiation among the Company and the Representatives. Among the
factors considered in determining the initial public offering price will be
prevailing market and economic conditions, revenue and earnings of the
Company, market valuations of other companies engaged in activities similar to
the Company, estimates of the business potential and prospects of the Company,
the present state of the Company's business operations, the Company's
management and other factors deemed relevant.
Certain persons participating in this offering may overallot or effect
transactions which stabilize, maintain or otherwise affect the market price of
the Common Stock of the Company at levels above those which might otherwise
prevail in the open market, including by entering stabilizing bids, effecting
syndicate covering transactions or imposing penalty bids. A stabilizing bid
means the placing of any bid or effecting of any purchase, for the purpose of
pegging, fixing or maintaining the price of the Common Stock of the Company. A
syndicate covering transaction means the placing of any bid on behalf of the
underwriting syndicate or the effecting of any purchase to reduce a short
position created in connection with the offering. A penalty bid means an
arrangement that permits the Underwriters to reclaim a selling concession from
a syndicate member in connection with the offering when the Common Stock of
the Company sold by the syndicate member is purchased in syndicate covering
transactions. Such transactions may be effected on the Nasdaq National Market,
in the over-the-counter market, or otherwise. Such stabilizing, if commenced,
may be discontinued at any time.
The Underwriters have reserved up to 5% of the shares of Common Stock
offered hereby for sale at the initial public offering price to certain
employees, officers and directors of the Company and other persons designated
by the Company. The number of shares available for sale to the general public
will be reduced to the extent such persons purchase such reserved shares. Any
reserved shares not so purchased on the effectiveness of the offering will be
offered by the Underwriters to the general public on the same basis as the
other shares offered hereby.
Certain of the Underwriters, including BancAmerica Robertson Stephens,
Salomon Smith Barney and Dain Rauscher Wessels, have entered into service
agreements with the Company. The terms of such agreements were negotiated by
the parties in arm's-length transactions. Such agreements were entered into
prior to the Company's selection of their Representatives. Other Underwriters,
including certain of the Representatives, may enter into similar agreements
with the Company from time to time in the future.
62
<PAGE>
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Brobeck, Phleger & Harrison LLP, New York, New York. Certain legal
matters in connection with the offering will be passed upon for the
Underwriters by Hale and Dorr LLP, Boston, Massachusetts.
EXPERTS
The consolidated financial statements of the Company as of December 31, 1996
and 1997 and for each of the years in the three-year period ended December 31,
1997 included in this Prospectus and the related consolidated financial
statement schedule included elsewhere in this Registration Statement have been
audited by Ernst & Young LLP, independent auditors, as stated in their reports
appearing herein and elsewhere in this Registration Statement, and have been
so included in reliance upon the reports of such firm given on the authority
of such firm as experts in auditing and accounting.
63
<PAGE>
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the offer and sale of
Common Stock pursuant to the Prospectus. This Prospectus, filed as part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement or the exhibits thereto in accordance with the rules
and regulations of the Commission, and reference is hereby made to such
omitted information. Statements made in this Prospectus concerning the
contents of any contract, agreement or other document filed as an exhibit to
the Registration Statement are summaries of the terms of such contracts,
agreements or documents and are not necessarily complete. Reference is made to
each such exhibit for a more complete description of the matters involved, and
such statements shall be deemed qualified by such reference. The Registration
Statement and the Exhibits thereto filed with the Commission may be inspected,
without charge, and copies may be obtained at prescribed rates, at the public
reference facility maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549 and at the regional offices of
the Commission located at Seven World Trade Center, 13th Floor, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. The Registration Statement and other information filed by the Company
with the Commission also are available at the Web site maintained by the
Commission on the World Wide Web at http://www.sec.gov. For further
information pertaining to the Company and the Common Stock offered by this
Prospectus, reference is hereby made to the Registration Statement.
The Company intends to furnish to its stockholders annual reports containing
consolidated financial statements audited by an independent accounting firm
and make available to its stockholders quarterly reports for the first three
quarters of each fiscal year containing unaudited interim financial
information.
64
<PAGE>
MULTEX SYSTEMS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Auditors............................................ F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997 and March 31,
1998 (Unaudited)......................................................... F-3
Consolidated Statements of Operations for the years ended December 31,
1995, 1996 and 1997 and the three months ended March 31, 1997 and 1998
(Unaudited).............................................................. F-4
Consolidated Statements of Stockholders' Deficit for the years ended
December 31, 1995, 1996 and 1997 and the three months ended March 31,
1998 (Unaudited)......................................................... F-5
Consolidated Statements of Cash Flows for the years ended December 31,
1995, 1996 and 1997 and the three months ended March 31, 1997 and 1998
(Unaudited).............................................................. F-6
Notes to Consolidated Financial Statements................................ F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of
Multex Systems, Inc.
We have audited the accompanying consolidated balance sheets of Multex
Systems, Inc. (the "Company") as of December 31, 1996 and 1997, and the
related consolidated statements of operations, stockholders' deficit and cash
flows for each of the three years in the period ended December 31, 1997. 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Multex Systems, Inc. as of December 31, 1996 and 1997, and the consolidated
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1997 in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
New York, New York
March 4, 1998, except for
Note 13, as to which
the date is June ,
1998
- -------------------------------------------------------------------------------
The foregoing report is in the form that will be signed upon the completion
of the restatement of capital accounts described in Note 13 to the financial
statements.
ERNST & YOUNG LLP
New York, New York
May 29, 1998
F-2
<PAGE>
MULTEX SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31 MARCH 31, MARCH 31,
-------------------------- ------------ -----------
1996 1997 1998 1998
------------ ------------ ------------ -----------
(UNAUDITED) (UNAUDITED)
(NOTE 13)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents........... $ 900,598 $ 2,532,983 $ 3,912,358 $ 3,912,358
Marketable securities.. 7,829,635 7,663,585 4,931,777 4,931,777
Accounts receivable,
less allowance of
$130,000, $240,000
and $244,000 in 1996,
1997 and 1998,
respectively.......... 923,397 1,813,570 2,800,365 2,800,365
Other current assets... 165,524 259,606 557,234 557,234
------------ ------------ ------------ -----------
Total current assets... 9,819,154 12,269,744 12,201,734 12,201,734
Property and equipment,
net.................... 2,372,101 2,161,315 2,281,525 2,281,525
Other................... 356,404 302,341 130,051 130,051
------------ ------------ ------------ -----------
$ 12,547,659 $ 14,733,400 $ 14,613,310 $14,613,310
============ ============ ============ ===========
LIABILITIES AND
STOCKHOLDERS' (DEFICIT)
EQUITY
Current liabilities:
Accounts payable....... $ 435,362 $ 344,901 $ 516,884 $ 516,884
Accrued expenses....... 897,027 1,091,324 1,278,971 1,278,971
Deferred revenues...... 585,062 1,446,699 2,124,629 2,124,629
Current portion of
long-term debt........ 653,116 1,053,188 625,000 625,000
Other current
liabilities........... -- 312,783 -- --
------------ ------------ ------------ -----------
Total current
liabilities........... 2,570,567 4,248,895 4,545,484 4,545,484
Long-term debt, less
current portion........ 731,227 -- 572,917 572,917
Deferred revenue........ 500,000 -- -- --
Other................... 281,559 -- 58,619 58,619
Commitments (Note 11)
Redeemable preferred
stock authorized
2,000,000 shares:
Series A redeemable
preferred stock; $.01
par value, $2,500,000
aggregate liquidation
preference:
Issued and
outstanding--25,000
shares in 1996, 1997
and 1998............. 3,042,910 3,251,303 3,302,688 --
Series B redeemable
preferred stock; $.01
par value, $5,500,000
aggregate liquidation
preference:
Issued and
outstanding--36,666
shares in 1996, 1997
and 1998............. 6,406,948 6,850,679 6,960,093 --
Series C redeemable
preferred stock; $.01
par value,
$15,000,000 aggregate
liquidation
preference:
Issued and
outstanding--100,000
shares in 1996, 1997
and 1998............. 15,615,801 16,840,299 17,142,229 --
Series D redeemable
preferred stock; $.01
par value,
$10,000,000 aggregate
liquidation
preference:
Issued and
outstanding--55,556
shares in 1997 and
1998................. -- 10,291,743 10,491,454 --
Stockholders' (deficit)
equity:
Preferred stock--$.01
par value:
Authorized--5,000,000
shares; none issued
and outstanding in
1996, 1997 and 1998.. -- -- -- --
Common stock--$.01 par
value:
Authorized--
50,000,000 shares;
issued and
outstanding--
1,379,583 shares in
1996, 1,630,000
shares in 1997 and
1,698,333 shares in
1998................. 13,795 16,299 16,982 234,204
Additional paid-in
capital............... (2,257,851) (3,510,078) (3,337,168) 34,342,074
Accumulated deficit.... (14,357,297) (22,394,473) (24,038,199) (24,038,199)
Deferred compensation.. -- (847,143) (1,087,127) (1,087,127)
Translation
adjustment............ -- (14,124) (14,662) (14,662)
------------ ------------ ------------ -----------
Total stockholders'
(deficit) equity...... (16,601,353) (26,749,519) (28,460,174) 9,436,290
------------ ------------ ------------ -----------
Total liabilities and
stockholders'
(deficit) equity.... $ 12,547,659 $ 14,733,400 $ 14,613,310 $14,613,310
============ ============ ============ ===========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
MULTEX SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31 MARCH 31
--------------------------------------- ------------------------
1995 1996 1997 1997 1998
----------- ------------ ------------ ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues................ $ 1,004,536 $ 2,646,527 $ 6,013,766 $ 950,122 $ 2,714,468
Cost of revenues........ 403,466 809,380 1,231,692 242,121 694,301
----------- ------------ ------------ ----------- -----------
Gross profit............ 601,070 1,837,147 4,782,074 708,001 2,020,167
Operating expenses:
Sales and marketing... 1,892,327 2,339,110 3,506,935 652,411 1,163,388
Research and
development.......... 1,519,643 1,414,908 1,600,893 369,956 440,328
General and
administrative....... 2,709,499 4,552,936 7,836,639 1,931,926 1,989,122
----------- ------------ ------------ ----------- -----------
Total operating
expenses............... 6,121,469 8,306,954 12,944,467 2,954,293 3,592,838
----------- ------------ ------------ ----------- -----------
Loss from operations.... (5,520,399) (6,469,807) (8,162,393) (2,246,292) (1,572,671)
Other income (expense):
Gain on sale of
equipment............ -- -- -- -- 124,796
Interest expense...... (111,633) (250,175) (309,769) (73,732) (310,554)
Interest and
investment income.... 138,317 310,177 434,986 97,417 114,703
----------- ------------ ------------ ----------- -----------
Net loss................ (5,493,715) (6,409,805) (8,037,176) (2,222,607) (1,643,726)
Redeemable preferred
stock dividends........ 639,992 1,402,788 2,181,472 453,697 650,957
----------- ------------ ------------ ----------- -----------
Net loss available to
common stockholders'... $(6,133,707) $( 7,812,593) $(10,218,648) $(2,676,304) $(2,294,683)
----------- ------------ ------------ ----------- -----------
Basic and diluted loss
per common share....... $ (4.69) $ (5.80) $ (7.03) $ (1.94) $ (1.41)
=========== ============ ============ =========== ===========
Number of shares used in
computing
basic and diluted loss
per share.............. 1,307,427 1,347,944 1,452,839 1,383,046 1,633,050
=========== ============ ============ =========== ===========
Pro forma basic and
diluted loss per share. -- -- $ (0.92) -- $ (0.19)
============ ===========
Number of shares used in
computing pro forma
basic and diluted loss
per share.............. -- -- 8,693,580 -- 8,873,791
============ ===========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
MULTEX SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER
----------------- PAID-IN ACCUMULATED DEFERRED COMPREHENSIVE
SHARES AMOUNT CAPITAL DEFICIT COMPENSATION LOSS TOTAL
--------- ------- ----------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1994................... 1,305,833 $13,058 $ (216,622) $ (2,453,777) $ -- $ -- $ (2,657,341)
Net loss............... -- -- -- (5,493,715) -- -- (5,493,715)
Redeemable preferred
stock dividend........ -- -- (639,992) -- -- -- (639,992)
Exercise of options.... 3,333 33 67 -- -- -- 100
--------- ------- ----------- ------------ ----------- -------- ------------
Balance, December 31,
1995................... 1,309,166 13,091 (856,547) (7,947,492) -- -- (8,790,948)
Net loss............... -- -- -- (6,409,805) -- -- (6,409,805)
Redeemable preferred
stock dividend........ -- -- (1,402,788) -- -- -- (1,402,788)
Exercise of options.... 70,417 704 1,484 -- -- -- 2,188
--------- ------- ----------- ------------ ----------- -------- ------------
Balance, December 31,
1996................... 1,379,583 13,795 (2,257,851) (14,357,297) -- -- (16,601,353)
Net loss............... -- -- -- (8,037,176) -- -- (8,037,176)
Redeemable preferred
stock dividend........ -- -- (2,181,472) -- -- -- (2,181,472)
Stock issued for
services.............. 23,333 233 10,267 -- -- -- 10,500
Exercise of options.... 227,084 2,271 46,728 -- -- -- 48,999
Amortization of
deferred compensation. -- -- -- -- 25,107 -- 25,107
Deferred compensation
related to stock
options............... -- -- 872,250 -- (872,250) -- --
Translation adjustment. -- -- -- -- -- (14,124) (14,124)
--------- ------- ----------- ------------ ----------- -------- ------------
Balance, December 31,
1997................... 1,630,000 16,299 (3,510,078) (22,394,473) (847,143) (14,124) (26,749,519)
Exercise of options
(unaudited)........... 18,333 183 367 -- -- -- 550
Net loss (unaudited)... -- -- -- (1,643,726) -- -- (1,643,726)
Redeemable preferred
stock dividend
(unaudited)........... -- -- (650,957) -- -- -- (650,957)
Amortization of
deferred compensation
(unaudited)........... -- -- -- -- 64,016 -- 64,016
Deferred compensation
related to stock
options (unaudited)... -- -- 304,000 -- (304,000) -- --
Sale of stock and
issuance of options in
connection with
acquisition of certain
assets of RDG-Multex,
Inc. (unaudited)...... 50,000 500 519,500 -- -- -- 520,000
Translation adjustment
(unaudited)........... -- -- -- -- -- (538) (538)
--------- ------- ----------- ------------ ----------- -------- ------------
Balance at March 31,
1998 (unaudited)....... 1,698,333 $16,982 $(3,337,168) $(24,038,199) $(1,087,127) $(14,662) $(28,460,174)
========= ======= =========== ============ =========== ======== ============
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
MULTEX SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31 MARCH 31
------------------------------------- ------------------------
1995 1996 1997 1997 1998
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss................ $(5,493,715) $(6,409,805) $(8,037,176) $(2,222,607) $(1,643,726)
Adjustments to reconcile
net loss to net cash
used in operating
activities:
Amortization of
deferred
compensation......... -- -- 25,107 -- 64,016
Gain on sale of
equipment............ -- -- -- -- (124,796)
Depreciation and
amortization......... 617,431 1,096,754 1,368,318 365,052 338,323
Amortization of
issuance costs....... 12,133 29,384 40,988 9,032 11,483
Bad debt expense...... -- 130,000 168,130 -- 34,500
Stock issued for
services............. -- -- 10,500 -- --
Changes in operating
assets and
liabilities:
Accounts receivable. (898) (798,099) (1,058,303) (249,998) (1,021,295)
Other current
assets............. 10,897 (64,225) (94,082) (5,307) 2,372
Other assets........ (264,045) (56,254) 54,063 (12,912) 172,290
Accounts payable.... 186,157 (843,560) (136,797) 15,704 (7,761)
Accrued expenses.... 59,687 608,251 194,297 (161,807) 187,647
Deferred revenue.... 286,250 798,812 361,637 126,333 677,930
Other liabilities... -- -- -- -- 58,619
----------- ----------- ----------- ----------- -----------
Net cash used in
operating activities... (4,586,103) (5,508,742) (7,103,318) (2,136,510) (1,250,398)
INVESTING ACTIVITIES
Marketable securities... -- (7,829,635) 166,050 1,906,318 2,731,808
Proceeds from sale of
equipment.............. -- -- -- -- 200,953
Purchase of property and
equipment.............. (904,643) (1,372,224) (1,111,196) (188,749) (134,946)
----------- ----------- ----------- ----------- -----------
Net cash (used in)
provided by investing
activities............. (904,643) (9,201,859) (945,146) 1,717,569 2,797,815
FINANCING ACTIVITIES
Proceeds from issuances
of stock............... 100 15,002,188 10,048,999 74 550
Preferred stock issuance
costs.................. -- (164,245) (54,095) -- --
Proceeds from long-term
debt................... 619,334 1,231,525 474,667 174,959 1,250,000
Repayments of long-term
debt................... (241,807) (564,299) (805,822) (189,505) (1,105,271)
Proceeds (repayments) of
short-term debt........ 327,000 (327,000) -- -- --
Other liabilities....... 66,390 177,837 31,224 26,244 (312,783)
----------- ----------- ----------- ----------- -----------
Net cash provided (used
in) by financing
activities............. 771,017 15,356,006 9,694,973 11,772 (167,504)
Effect of exchange rate
changes on cash........ -- -- (14,124) (3,526) (538)
----------- ----------- ----------- ----------- -----------
Increase (decrease) in
cash and cash
equivalents............ (4,719,729) 645,405 1,632,385 (410,695) 1,379,375
Cash and cash
equivalents, beginning
of period.............. 4,974,922 255,193 900,598 900,598 2,532,983
----------- ----------- ----------- ----------- -----------
Cash and cash
equivalents, end of
period................. $ 255,193 $ 900,598 $ 2,532,983 $ 489,903 $ 3,912,358
=========== =========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURES
OF CASH FLOW
INFORMATION
Noncash investing and
financing activity:
Accrued purchases of
fixed assets......... $ 681,940 $ 210,046 $ 46,336 $ 67,369 $ 179,744
=========== =========== =========== =========== ===========
Sale of stock and
issuance of options
in connection with
acquisition of
certain assets of
RDG-Multex, Inc...... $ -- $ -- $ -- $ -- $ 520,000
=========== =========== =========== =========== ===========
Stock issued for
services............. $ -- $ -- $ 10,500 $ -- $ --
=========== =========== =========== =========== ===========
Interest paid........... $ 78,974 $ 158,277 $ 159,705 $ 40,379 $ 277,980
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
MULTEX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 AND THE THREE MONTHS ENDED
MARCH 31, 1997 AND 1998 (INFORMATION AS OF MARCH 31, 1998 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Multex Systems, Inc. (the "Company") is a leading provider of online
investment research and information services designed to meet the needs of
institutional investors, investment banks, brokerage firms, corporations and
individual investors.
The Company was founded in 1993 as the result of the merger of Multex
Systems, Inc., a New York corporation, with and into Multex Publisher, Inc., a
Delaware corporation, which subsequently changed its name to Multex Systems,
Inc. During December 1996, the Company commenced the operations of Multex
Systems International Inc., a wholly-owned subsidiary of the Company, and
opened an office in London.
ACQUISITION
In March 1998, a subsidiary of the Company, RDG-Multex, Inc., acquired
certain of the assets of Research Data Group, Inc. in exchange for which it
issued to the seller 49% of the common stock of such subsidiary. The Company
issued to a principal of the seller 50,000 shares of the Company's common
stock at a purchase price of $6.00 per share and a one year option to acquire
83,333 shares of the Company's common stock at an exercise price of $7.50 per
share. The Company has estimated the fair market value of the 50,000 shares to
be approximately $395,000 and has valued the option at approximately $128,000
on the date of grant using the Black-Scholes option pricing model. The
acquisition has been accounted for by the purchase method of accounting and,
accordingly, the $220,000 purchase price has been allocated to the software
acquired.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Multex Systems, Inc. and its wholly-owned and majority-owned subsidiaries. All
intercompany account balances and transactions have been eliminated.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of 90
days or less when purchased to be cash equivalents.
CONCENTRATION OF CREDIT RISK
At December 31, 1997 and March 31, 1998, substantially all cash and cash
equivalents were held in two banks.
MARKETABLE SECURITIES
Marketable securities are classified as available-for-sale, and consist of
United States treasury bills with maturities of 360 days or less when
purchased. Marketable securities are carried at fair value, which approximates
cost.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, and depreciation is computed
using the straight-line method over the estimated useful life of the asset
which ranges from two to five years.
F-7
<PAGE>
MULTEX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 AND THE THREE MONTHS ENDED
MARCH 31, 1997 AND 1998 (INFORMATION AS OF MARCH 31, 1998 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ADVERTISING
The Company expenses the costs of advertising as incurred. Advertising
expense for the years ended December 31, 1995, 1996 and 1997 was approximately
$166,000, $422,000 and $732,000, respectively ($160,000 and $19,000 for the
three months ended March 31, 1997 and 1998, respectively).
REVENUE RECOGNITION
Revenues from subscriptions are recognized in equal installments over the
term of the subscriptions. Revenues from the Multex Research-On-Demand service
are recognized upon sale.
DEFERRED REVENUE
Deferred revenue represents the unamortized portion of annual subscriptions
received in advance, and at December 31, 1996 included fees received from
customers in advance of performance of services.
EARNINGS (LOSS) PER SHARE
In 1997, the Financial Accounting Standards Board (the "FASB") issued
Statement No. 128, Earnings per Share, which replaced the calculation of
primary and fully diluted earnings per share with basic and diluted earnings
per share. Unlike primary earnings per share, basic earnings per share
excludes any dilutive effects of options, warrants and convertible securities.
Diluted earnings per share is very similar to the previously reported fully
diluted earnings per share. All earnings per share amounts for all periods
have been presented to conform to the Statement No. 128 requirements.
ACCOUNTING FOR STOCK-BASED COMPENSATION
In October 1995, the FASB issued Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"). SFAS No.
123 prescribes accounting and reporting standards for all stock-based
compensation plans, including employee stock options, restricted stock,
employee stock purchase plans and stock appreciation rights. SFAS No. 123
requires compensation expense to be recorded (i) using the new fair value
method or (ii) using existing accounting rules prescribed by Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB 25") and related interpretations with pro forma disclosure of what net
income and earnings per share would have been had the Company adopted the new
fair value method. The Company accounts for its stock-based compensation plans
in accordance with the provisions of APB 25.
COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted FASB Statement No. 130, Reporting
Comprehensive Income. Statement No. 130 establishes new rules for the
reporting and display of comprehensive income and its components; however, the
adoption of this statement had no impact on the Company's net income or
stockholders' equity. Statement No. 130 requires unrealized gains or losses on
the Company's available-for-sale securities and foreign currency translation
adjustments, which prior to adoption were reported separately in stockholders'
equity, to be included in other comprehensive income.
Total comprehensive loss amounted to approximately $2,673,000 and $2,294,000
for the three months ended March 31, 1997 and 1998, respectively.
F-8
<PAGE>
MULTEX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 AND THE THREE MONTHS ENDED
MARCH 31, 1997 AND 1998 (INFORMATION AS OF MARCH 31, 1998 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SEGMENT INFORMATION
In June 1997, the FASB issued Statements of Financial Accounting Standard
No. 131, "Disclosure About Segments of an Enterprise and Related Information".
This Statement is effective for fiscal years beginning after December 15,
1997. This statement does not have measurements effects on the financial
statements; however, it may require additional disclosure.
UNAUDITED INFORMATION
The unaudited financial statements at March 31, 1998 and for the three
months ended March 31, 1997 and 1998 include all adjustments, consisting only
of normal recurring adjustments, which, in the opinion of management, are
necessary for the fair presentation of such financial results. The results for
the three months ended March 31, 1998 are not necessarily indicative of
results that may be expected for the entire year or for any future period.
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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. STOCKHOLDERS' EQUITY
COMMON STOCK (SEE NOTE 13)
During 1997, the Company increased its authorized common stock from
9,333,333 shares to 12,666,667.
COMMON STOCK RESERVED FOR ISSUANCE
At December 31, 1997, the Company has reserved approximately 8,852,000
shares (9,240,000 shares at March 31, 1998) of its common stock for issuance
in connection with shares issuable under the Company's stock option plan and
the conversion of its redeemable preferred stock.
3. REDEEMABLE PREFERRED STOCK
The Company has recorded issuance costs of redeemable preferred stock as
discounts at issuance and is accreting the discount over the life of the
redeemable preferred stock. The Company accrues all cumulative dividends on
redeemable preferred stock.
During 1996, the Company authorized 103,335 shares of $.01 par value Series
C convertible preferred stock ("Series C Stock") and issued 100,000 shares of
the Series C Stock for $15,000,000. In connection with the issuance of the
Series C Stock, the Company incurred issuance costs of approximately $164,000.
F-9
<PAGE>
MULTEX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 AND THE THREE MONTHS ENDED
MARCH 31, 1997 AND 1998 (INFORMATION AS OF MARCH 31, 1998 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
3. REDEEMABLE PREFERRED STOCK (CONTINUED)
During 1997, the Company authorized 83,334 shares of $.01 par value Series D
convertible preferred stock ("Series D Stock") and issued 55,556 shares of the
Series D Stock for $10,000,000. In connection with the issuance of the Series
D Stock, the Company incurred issuance costs of approximately $54,000.
The holders of Series C Stock and Series D Stock are entitled to a
liquidation preference over the Series A and Series B Stock. The Series C
Stock and Series D stock share ratably on a pari passu basis in the event of a
liquidation and the Series A Stock and Series B Stock share ratably on a pari
passu basis in the event of a liquidation. In the event of a liquidation
event, after (i) all holders of redeemable preferred stock have been paid the
preferential amounts to which they are entitled and (ii) the holders of common
stock have been paid $0.75 for each such share, the remaining net assets are
to be distributed to the holders of common stock and the Series C Stock on an
as converted basis.
The holders of redeemable preferred stock are entitled to vote upon any
matter as to which the holders of common stock are entitled to vote.
The holders of shares of redeemable preferred stock have the right to
convert such shares into the number of shares of common stock (adjusted for
stock splits) as is obtained by multiplying the number of redeemable preferred
shares to be converted by the liquidation preference ($100 for Series A, $150
for Series B and C, $180 for Series D) and dividing the result by $1.00 for
Series A, $1.50 for Series B and C, $1.80 for Series D or by the conversion
price, as defined, as last adjusted and in effect.
In the event the Company completes an underwritten public offering of its
common stock (a) at a per share price to the public of not less than $9.00 and
(b) in which the gross proceeds paid by the public are at least $15,000,000,
then all outstanding redeemable preferred shares shall automatically be
converted into shares of common stock in the manner described in the preceding
paragraph.
Upon the consummation of the initial public offering, all outstanding shares
of redeemable preferred stock will be automatically converted into shares of
common stock. In the event the offering is not consummated, the Company will
be required to redeem all outstanding shares of redeemable preferred stock on
December 31, 2002. In the event of the consolidation or merger of the Company
(other than a merger in which the Company is the surviving corporation and
which will not result in more than 50% of the capital stock of the Company
outstanding immediately after the effective date of such merger being owned of
record or beneficially by persons other than the holders of such capital stock
immediately prior to such merger), and in the case of a sale of all or
substantially all of the properties and assets of the Company as an entirety
to any other person, any holder can elect to have any or all of their shares
of redeemable preferred stock redeemed. The redemption price for each share of
redeemable preferred stock shall be the sum of the liquidation preference plus
cumulative unpaid dividends at the rate of 8% per annum on the liquidation
preference. No redeemable preferred stock dividends have been declared or paid
as of December 31, 1997. At December 31, 1995, 1996, and 1997 the total
cumulative dividends in arrears is approximately $883,000, $2,286,000 and
$4,467,000, respectively ($5,118,000 at March 31, 1998).
The Company is not authorized to pay or declare any dividends on outstanding
common shares unless dividends on all outstanding shares of convertible
preferred stock for all past dividend periods have been paid.
F-10
<PAGE>
MULTEX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 AND THE THREE MONTHS ENDED
MARCH 31, 1997 AND 1998 (INFORMATION AS OF MARCH 31, 1998 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
4. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings
per share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31 MARCH 31
-------------------------------------- ------------------------
1995 1996 1997 1997 1998
----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Numerator:
Net loss.............. $(5,493,715) $(6,409,805) $ (8,037,176) $(2,222,607) $(1,643,726)
Redeemable preferred
stock dividends........ 639,992 1,402,788 2,181,472 453,697 650,957
Numerator for basic and
diluted loss per
share--net loss
available for common
stockholders........... $(6,133,707) $(7,812,593) $(10,218,648) $(2,676,304) $(2,294,683)
=========== =========== ============ =========== ===========
Denominator:
Denominator for basic
and dilutive loss per
share--weighted
average shares....... 1,307,427 1,347,944 1,452,839 1,383,046 1,633,050
=========== =========== ============ =========== ===========
Basic and diluted loss
per share.............. $ (4.69) $ (5.80) $ (7.03) $ (1.94) $ (1.41)
=========== =========== ============ =========== ===========
</TABLE>
The following securities have been excluded from the dilutive per share
computation as they are antidilutive:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31 MARCH 31
------------------------- -------------------
1995 1996 1997 1997 1998
------- ------- --------- -------------------
<S> <C> <C> <C> <C> <C>
Redeemable preferred stock--
Series A........................ 25,000 25,000 25,000 25,000 25,000
Redeemable preferred stock--
Series B........................ 36,666 36,666 36,666 36,666 36,666
Redeemable preferred stock--
Series C........................ -- 100,000 100,000 100,000 100,000
Redeemable preferred stock--
Series D........................ -- -- 55,556 -- 55,556
Stock options.................... 620,667 851,250 1,369,334 953,000 1,399,335
</TABLE>
The following table sets forth the computation of pro forma basic and
diluted loss per share, upon conversion of the redeemable preferred shares to
shares of common stock:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED
1997 MARCH 31, 1998
------------ --------------
<S> <C> <C>
Numerator:
Net loss available to common stockholders....... $(10,218,648) $(2,294,683)
Redeemable preferred stock dividends............ 2,181,472 650,957
------------ -----------
Numerator for pro forma loss available to common
stockholders................................... $ (8,037,176) $(1,643,726)
============ ===========
Denominator:
Weighted average number of common shares........ 1,452,839 1,633,050
Assumed conversion of preferred shares to common
shares (if converted method)................... 7,240,741 7,240,741
------------ -----------
Denominator for pro forma basic and diluted loss
per share...................................... 8,693,580 8,873,791
============ ===========
Pro forma basic and diluted loss per share........ $ (0.92) $ (0.19)
============ ===========
</TABLE>
F-11
<PAGE>
MULTEX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 AND THE THREE MONTHS ENDED
MARCH 31, 1997 AND 1998 (INFORMATION AS OF MARCH 31, 1998 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
5. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31 MARCH 31,
--------------------- -----------
1996 1997 1998
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Computer and telecommunications equipment
and related software.................... $3,829,735 $4,932,499 $5,113,154
Furniture and fixtures................... 212,084 266,852 291,868
Leasehold improvements................... 237,393 237,393 237,393
---------- ---------- ----------
4,279,212 5,436,744 5,642,415
Less accumulated depreciation and
amortization............................ 1,907,111 3,275,429 3,360,890
---------- ---------- ----------
$2,372,101 $2,161,315 $2,281,525
========== ========== ==========
</TABLE>
6. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31 MARCH 31,
------------------- -----------
1996 1997 1998
-------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Payroll and related costs.................... $103,534 $ 170,976 $ 318,133
Accrued vacation............................. -- 125,000 125,000
Accrued bonuses.............................. 35,000 130,000 100,000
Royalties.................................... 258,204 424,971 538,088
Other........................................ 500,289 240,377 197,750
-------- ---------- ----------
$897,027 $1,091,324 $1,278,971
======== ========== ==========
</TABLE>
7. SHORT-TERM DEBT
Short-term debt was payable to three stockholders. The notes bore interest at
8% per annum and were fully repaid during 1996.
8. LONG-TERM DEBT
The Company had available lines of credit provided by two lenders totaling
$3,900,000. At December 31, 1997, total notes of approximately $2,699,000 were
issued under the lines of credit. The notes were payable in monthly
installments of principal and interest of approximately $75,000 and bore
interest ranging from 10% to 12% per annum. The balance of the notes of
approximately $1,053,000 was fully repaid subsequent to December 31, 1997.
The Company was obligated to pay additional financing costs equal to a
minimum of 10% of original amounts advanced under the lines of credit. At
December 31, 1996 and 1997, the Company recorded approximately $282,000 and
$313,000, respectively, in other liabilities related to such obligation, which
was fully paid subsequent to December 31, 1997.
F-12
<PAGE>
MULTEX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 AND THE THREE MONTHS ENDED
MARCH 31, 1997 AND 1998 (INFORMATION AS OF MARCH 31, 1998 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
8. LONG-TERM DEBT (CONTINUED)
In January 1998, the Company entered into agreements with respect to a
$1,250,000 term loan and a $1,000,000 revolving line of credit with a bank,
whereby it may borrow up to 75% of eligible accounts receivable, as defined
therein. Substantially all of the assets of the Company are pledged as
collateral for the above obligations. The term loan and the revolving line of
credit bear interest at the prime rate plus 2%, as defined therein, and the
prime rate plus 1%, as defined therein, respectively. The term loan is payable
in twenty four monthly installments of approximately $52,000. At March 31,
1998, no amounts were outstanding under the revolving line of credit.
In addition, the above obligations also provide for, among other things, the
maintenance of certain covenants, as defined, including certain liquidity
ratios and a leverage ratio.
9. INCOME TAXES
Under FASB Statement No. 109, "Accounting for Income Taxes," the liability
method is used in accounting for income taxes. Under this method, deferred
income tax assets and liabilities result from temporary differences between
the income tax basis of assets and liabilities and their reported amounts in
the financial statements that will result in taxable income and deductions in
future years.
At December 31, 1997, the Company had net operating loss carryforwards of
approximately $18,600,000 and research and development credits of
approximately $500,000 for income tax purposes that expire in 2008 through
2012. The utilization of approximately $15,600,000 and $400,000 of such net
operating loss carryforwards and research and development credits,
respectively, are subject to an annual limitations of approximately
$1,900,000, pursuant to Section 382 of the Internal Revenue Code.
The Company has deferred tax assets of approximately $5,925,000 and
$9,157,000 at December 31, 1996 and 1997, respectively. At December 31, 1996
and 1997, a valuation allowance of $5,925,000 and $9,157,000, respectively,
was provided due to the uncertainty of the realization of the tax assets. The
valuation allowance was increased by $2,475,000 and $3,232,000 for the years
ended December 31, 1996 and 1997, respectively.
At December 31, 1996 and 1997, the deferred tax assets primarily relate to
net operating loss and research and development credit carryforwards,
financial statement depreciation in excess of tax depreciation and income
deferred for financial statement purposes.
The difference between the provision for income taxes and the statutory rate
is due principally to the valuation allowance against deferred tax assets.
10. STOCK OPTIONS
1993 STOCK INCENTIVE PLAN
The Company had reserved 1,933,333 shares of the Company's Common Stock to
be issued under its 1993 Stock Incentive Plan (the "Plan"). In February 1998,
the number of shares reserved for issuance under the Plan was increased to
2,350,000.
During the year ended December 31, 1997, the difference between the
estimated fair market value of the Company's common stock and the options'
exercise price on the date of grant was determined to be
F-13
<PAGE>
MULTEX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 AND THE THREE MONTHS ENDED
MARCH 31, 1997 AND 1998 (INFORMATION AS OF MARCH 31, 1998 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
10. STOCK OPTIONS (CONTINUED)
approximately $872,000 ($304,000 for the three months ended March 31, 1998).
This deferred compensation is being amortized for financial reporting purposes
over the vesting period of the options and the amount
recognized as expense during the year ended December 31, 1997 amounted to
approximately $25,000 ($64,000 for the three months ended March 31, 1998).
Pro forma information regarding net loss and net loss per share is required
by SFAS 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that statement. The fair
value of the options was estimated at date of grant using a Black-Scholes
option pricing model with the following assumptions:
<TABLE>
<CAPTION>
ASSUMPTIONS 1995 1996 1997
----------- ------- ------- -------
<S> <C> <C> <C>
Volatility factor of the expected market price
of the Company's common stock.................. 0.558 0.558 0.558
Average risk-free interest rate................. 6.5% 6.5% 6.1%
Dividend yield.................................. 0% 0% 0%
Average life.................................... 4 years 4 years 3 years
</TABLE>
The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a
reliable single measure of the fair value of its stock options.
The Company's pro forma information is as follows:
<TABLE>
<CAPTION>
1995 1996 1997
----------- ----------- ------------
<S> <C> <C> <C>
Pro forma net loss available to
common stockholders............... $(6,133,897) $(7,812,122) $(10,230,064)
Pro forma basic and diluted loss
per share......................... $ (4.69) $ (5.80) $ (7.04)
</TABLE>
F-14
<PAGE>
MULTEX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 AND THE THREE MONTHS ENDED
MARCH 31, 1997 AND 1998 (INFORMATION AS OF MARCH 31, 1998 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
10. STOCK OPTIONS (CONTINUED)
The following transactions occurred with respect to the Plan:
<TABLE>
<CAPTION>
WEIGHTED-
AVERAGE
1993 STOCK EXERCISE
INCENTIVE PLAN PRICE
-------------- ---------
<S> <C> <C>
Outstanding December 31, 1994....................... 410,833 $ 0.03
Granted during the year............................. 239,000 0.03
Cancelled........................................... (25,833) (0.03)
Exercised during the year........................... (3,333) (0.03)
---------
Outstanding December 31, 1995....................... 620,667 0.03
Granted during the year............................. 346,000 1.29
Cancelled........................................... (45,000) (0.06)
Exercised during the year........................... (70,417) (0.03)
---------
Outstanding December 31, 1996....................... 851,250 0.54
Granted during the year............................. 930,667 0.75
Cancelled........................................... (185,500) (0.75)
Exercised during the year........................... (227,083) (0.21)
---------
Outstanding December 31, 1997....................... 1,369,334 0.57
Granted during the period........................... 50,667 (0.75)
Cancelled during the period......................... (2,333) (0.75)
Exercised during the period......................... (18,333) (0.03)
---------
Outstanding March 31, 1998.......................... 1,399,335 0.60
=========
</TABLE>
Exercise prices for options outstanding as of December 31, 1997 and March
31, 1998 ranged from $0.03 to $0.75 per share. In April 1997, the Board of
Directors authorized a $0.75 reduction in the exercise price per share for all
outstanding options issued with an exercise price of $1.50, with all other
terms remaining unchanged. The weighted average fair value of options granted
during 1995, 1996 and 1997 was $0.01, $0.16, and $0.97, respectively. The
weighted average remaining contractual life of those options outstanding as of
December 31, 1997 is 8.7 years and 8.5 years at March 31, 1998.
The number of shares of common stock issuable upon exercise of outstanding
stock options that were fully exercisable as of December 31, 1996, 1997 and
March 31, 1998 were 233,604, 387,543 and 412,876, respectively. The weighted
average exercise price of exercisable options as of December 31, 1997 and
March 31, 1998 is $0.39 and $0.42, respectively.
The options outstanding under the Plan generally vest in four equal annual
installments commencing on the day after the first anniversary of the grant
and expire ten years after the date of grant.
OTHER STOCK OPTIONS
During December 1996, the Company granted to one of its major customers an
option to purchase 555,555 shares of the Company's common stock at $6.00 per
share. Such options were valued at $0 on the date of grant using the Black-
Scholes option pricing method. The option expired unexercised in June 1997.
F-15
<PAGE>
MULTEX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 AND THE THREE MONTHS ENDED
MARCH 31, 1997 AND 1998 (INFORMATION AS OF MARCH 31, 1998 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
11. COMMITMENTS
OPERATING LEASES
The Company is obligated to make payments under noncancellable operating
leases for office space expiring in 2002. The approximate future minimum
annual rental payments under these operating leases are as follows:
<TABLE>
<S> <C>
1998.............................................................. $ 390,000
1999.............................................................. 390,000
2000.............................................................. 390,000
2001.............................................................. 60,000
2002.............................................................. 30,000
----------
$1,260,000
==========
</TABLE>
Total rental expense for the years ended December 31, 1995, 1996 and 1997
was approximately $160,000, $306,000 and $425,000, respectively ($94,000 and
$109,000 for the three months ended March 31, 1997 and 1998).
12. MAJOR CUSTOMERS
One customer accounted for approximately 31% and 21% of revenues for the
years ended December 31, 1996 and 1997, respectively (12% for the three months
ended March 31, 1998). The same customer accounted for approximately 36% and
31% of accounts receivable at December 31, 1996 and 1997, respectively (14% at
March 31, 1998).
Another customer accounted for approximately 15%, 14% and 16% of revenues
for the years ended December 31, 1995, 1996 and 1997, respectively. The same
customer accounted for approximately 15% of accounts receivable at December
31, 1996 (17% at March 31, 1998).
A third customer accounted for approximately 16% and 11% of revenues for the
years ended December 31, 1996 and 1997, respectively (10% for the three months
ended March 31, 1998).
A fourth customer accounted for approximately 42% of revenues for the year
ended December 31, 1995.
A holder of preferred stock accounted for approximately 13%, 14% and 20% of
revenues for the years ended December 31, 1995, 1996 and 1997, respectively
(17% for the three months ended March 31, 1998). This stockholder accounted
for approximately 26% and 19% of accounts receivable at December 31, 1996 and
1997, respectively (19% at March 31, 1998).
13. SUBSEQUENT EVENTS AND PRO FORMA ADJUSTMENTS
STOCK SPLIT
In May 1998, the Board of Directors authorized the Company to file a
registration statement with the Securities and Exchange Commission for an
initial public offering of shares of its common stock. In connection with the
consummation of the initial public offering, the Company effected a 1-for-3
reverse stock split and a change in the number of authorized shares of its
common stock to 50,000,000 shares of $0.01 par value per share.
F-16
<PAGE>
MULTEX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 AND THE THREE MONTHS ENDED
MARCH 31, 1997 AND 1998 (INFORMATION AS OF MARCH 31, 1998 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
13. SUBSEQUENT EVENTS AND PRO FORMA ADJUSTMENTS--(CONTINUED)
PREFERRED STOCK
In connection with the consummation of the initial public offering, the
Company has authorized the issuance of 5,000,000 shares of preferred stock,
par value $0.01 per share.
PRO FORMA FINANCIAL INFORMATION
Upon the completion of an initial public offering at a per share price to
the public of not less than $9.00 and in which the gross proceeds paid by the
public are at least $15,000,000, all outstanding redeemable preferred shares
will automatically be converted into shares of common stock in the manner
described in Note 3. The pro forma balance sheet at March 31, 1998 gives
effect to such conversion as if it occurred on that date. The pro forma loss
for the year ended December 31, 1997 and the three months ended March 31, 1998
give effect to the conversion of such shares as if it occurred on the
beginning of their respective periods.
All common and preferred share information included in the accompanying
financial statements has been adjusted to reflect the one-for-three reverse
stock split and the increases in authorized shares described above.
F-17
<PAGE>
[INSIDE BACK COVER]
[COLOR ARTWORK TO BE PROVIDED]
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PRO-
SPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING STOCKHOLDER
OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES AN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UN-
LAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMA-
TION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
-----------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary...................................................... 3
Risk Factors............................................................ 5
Use of Proceeds......................................................... 17
Dividend Policy......................................................... 17
Capitalization.......................................................... 18
Dilution................................................................ 19
Selected Consolidated Financial Data.................................... 20
Management's Discussion and Analysis of Financial Condition and Results
of Operations.......................................................... 21
Business................................................................ 29
Management.............................................................. 43
Certain Relationships and Related Party Transactions.................... 52
Principal Stockholders.................................................. 53
Description of Capital Stock............................................ 55
Shares Eligible for Future Sale......................................... 59
Underwriting............................................................ 61
Legal Matters........................................................... 63
Experts................................................................. 63
Additional Information.................................................. 64
Index to Consolidated Financial Statements.............................. F-1
</TABLE>
--------------
UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS REQUIREMENT IS
IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHARES
[LOGO]
COMMON STOCK
--------------
PROSPECTUS
--------------
HAMBRECHT & QUIST
BANCAMERICA ROBERTSON STEPHENS
SALOMON SMITH BARNEY
DAIN RAUSCHER WESSELS
A DIVISION OF DAIN RAUSCHER INCORPORATED
, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses, other than underwriting commissions, expected to be incurred
by the Company in connection with the issuance and distribution of the
securities being registered under this Registration Statement are estimated to
be as follows:
<TABLE>
<S> <C>
SEC registration fee.............................................. $15,267
NASD filing fee................................................... 5,675
Nasdaq National Market listing fee................................ 50,000
Printing and engraving............................................ *
Legal fees and expenses........................................... *
Accounting fees and expenses...................................... *
Blue sky fees and expenses (including legal fees)................. *
Transfer agent fees............................................... *
Miscellaneous..................................................... *
-------
Total......................................................... $ *
=======
</TABLE>
---------------------
*To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Certificate provides that, except to the extent prohibited by DGCL, the
Registrant's directors shall not be personally liable to the Registrant or its
stockholders for monetary damages for any breach of fiduciary duty as
directors of the Registrant. Under the DGCL, the directors have a fiduciary
duty to the Registrant which is not eliminated by this provision of the
Certificate and, in appropriate circumstances, equitable remedies such as
injunctive or other forms of nonmonetary relief will remain available. In
addition, each director will continue to be subject to liability under the
DGCL for breach of the director's duty of loyalty to the Registrant, for acts
or omissions which are found by a court of competent jurisdiction to be not in
good faith or involving intentional misconduct, for knowing violations of law,
for actions leading to improper personal benefit to the director, and for
payment of dividends or approval of stock repurchases or redemptions that are
prohibited by DGCL. This provision also does not affect the directors'
responsibilities under any other laws, such as the Federal securities laws or
state or Federal environmental laws. The Registrant has obtained liability
insurance for its officers and directors.
Section 145 of the DGCL empowers a corporation to indemnify its directors
and officers and to purchase insurance with respect to liability arising out
of their capacity or status as directors and officers, provided that this
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) arising under
Section 174 of the DGCL, or (iv) for any transaction from which the director
derived an improper personal benefit. The DGCL provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any
other rights to which the directors and officers may be entitled under the
corporation's bylaws, any agreement, a vote of stockholders or otherwise. The
Certificate eliminates the personal liability of directors to the fullest
extent permitted by Section 102(b)(7) of the DGCL and provides that the
Registrant shall fully 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)
by reason of the fact that such person is or was a director or officer of the
Registrant, or is or was serving at the request of the Registrant as a
director or officer of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise,
II-1
<PAGE>
against expenses (including attorney's fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent as to which indemnification will be
required or permitted under the Certificate. The Registrant is not aware of
any threatened litigation or proceeding that may result in a claim for such
indemnification.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The Registrant has sold and issued the following securities during the past
three fiscal years:
In November 1993 and March 1994, respectively, the Registrant sold 25,000
shares of Series A Convertible Preferred Stock to Euclid Partners III, L.P.,
Isaak Karaev and certain other investors for an aggregate offering amount of
$2,500,000. In November 1994, the Registrant sold 36,666 shares of Series B
Convertible Preferred Stock to Euclid Partners III, L.P., 77 Capital Partners,
L.P., Venture Fund I, L.P. and certain other investors for an aggregate
offering amount of $5,499,900. In 1996, the Registrant sold 100,000 shares of
Series C Convertible Preferred Stock in various tranches to Chase Venture
Capital Associates, L.P., Euclid Partners III and IV, L.P. Reuters America,
Inc., Softbank Ventures, Inc. 77 Capital Partners, L.P., Venture Fund, I, L.P.
and certain other investors for an aggregate offering amount of $15,000,000.
In July 1997, the Registrant sold 55,556 shares of Series D Convertible
Preferred Stock to Chase Venture Capital Associates, L.P., Euclid Partners IV,
L.P., Reuters America, Inc. and certain other investors for an aggregate
offering amount of $15,000,000. The shares of Series A Convertible Preferred
Stock, Series B Convertible Preferred Stock, Series C Convertible Preferred
Stock and Series D Convertible Preferred Stock were sold in reliance upon an
exemption from registration under the Securities Act of 1933 pursuant to
Section 4(2) thereof.
The Registrant from time to time has granted stock options to employees. The
following table sets forth certain information regarding such grants:
<TABLE>
<CAPTION>
NUMBER OF EXERCISE
OPTIONS PRICE
--------- --------
<S> <C> <C>
January 1, 1995 to December 31, 1995..................... 239,000 $0.03
January 1, 1996 to December 31, 1996..................... 346,000 0.75
January 1, 1997 to December 31, 1997..................... 930,667 0.75
January 1, 1998 to March 31, 1998........................ 50,667 0.75
</TABLE>
The above securities were offered and sold by the Registrant in reliance
upon exemptions from registration pursuant to either (i) Section 4(2) of the
Securities Act, as transactions not involving any public offering, or (ii)
Rule 701 under the Securities Act. No underwriters were involved in connection
with the sales of securities referred to in this Item 15.
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS.
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Amended and Restated Certificate of Incorporation.
3.2* Form of Amended and Restated Certificate of Incorporation to be in
effect upon the closing of the initial public offering.
3.3 By-laws.
3.4* Form of Amended and Restated By-laws to be in effect upon the closing
of the initial public offering.
4.1* Specimen Common Stock certificate.
4.2 See Exhibits 3.1, 3.2, 3.3 and 3.4 for provisions of the Certificate
of Incorporation and By-laws of the Registrant defining the rights of
holders of Common Stock of the Registrant.
5.1* Opinion of Brobeck, Phleger & Harrison LLP.
10.1 Sublease, dated August 23, 1995, between International Business
Machines Corporation and the Registrant.
10.2+ Interactive Services Agreement, dated as of March 20, 1998, by and
between America Online, Inc. and the Registrant.
10.3+ Distribution and Joint Sourcing Agreement, dated as of June 4, 1996,
by and between Bloomberg, L.P. and the Registrant.
10.4+ Software and Reciprocal Data License Agreement, dated as of June 1,
1995, by and between Reuters Limited and the Registrant.
10.5* 1998 Stock Option Plan.
10.6* Employee Stock Purchase Plan.
10.7(a) Third Amended and Restated Registration Rights Agreement, dated as of
July 24, 1997.
10.7(b) Supplement to Third Amended and Restated Registration Rights
Agreement, dated as of August 14, 1997.
11.1 Statement re: Computation of Per Share Earnings.
21.1 Subsidiaries of the Registrant.
23.1* Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP.
24.1 Powers of Attorney (included in the Signature Page).
27.1 Financial Data Schedule for the year ended December 31, 1997.
27.2 Financial Data Schedule for the three months ended March 31, 1998.
</TABLE>
- ---------------------
* To be supplied by amendment.
+ Confidential treatment to be requested for certain portions of this Exhibit
pursuant to Rule 406 promulgated under the Securities Act.
(B) FINANCIAL STATEMENT SCHEDULES.
None.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriter
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriter to
permit prompt delivery to each purchaser.
II-3
<PAGE>
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the Delaware General Corporation Law, the Certificate of
Incorporation of the Registrant, the Underwriting Agreement, 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 hereunder, the Registrant
will, unless in the opinion of counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question 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:
(1) That for purposes of determining any liability under the Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of Prospectus filed by the Registrant pursuant to Rule 424 (b) (1) or (4),
or 497 (h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) That for the purpose of determining any liability under the Act, 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-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 this 29th day of May, 1998.
Multex Systems, Inc.
/s/ Isaak Karaev
By____________________________________
Name: Isaak Karaev
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and/or officers of Multex Systems, Inc. (the
"Company"), hereby severally constitute and appoint Isaak Karaev, President
and Chief Executive Officer and Philip Callaghan, Chief Financial Officer, and
each of them individually, with full powers of substitution and
resubstitution, our true and lawful attorneys, with full powers to them and
each of them to sign for us, in our names and in the capacities indicated
below, the Registration Statement on Form S-1 filed with the Securities and
Exchange Commission, and any and all amendments to said Registration Statement
(including post-effective amendments), and any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, in
connection with the registration under the Securities Act of 1933, as amended,
of equity securities of the Company, and to file or cause to be filed the
same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys, and
each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in connection therewith, as fully
to all intents and purposes as each of them might or could do in person, and
hereby ratifying and confirming all that said attorneys, and each of them, or
their substitute or substitutes, shall do or cause to be done by virtue of
this Power of Attorney.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on May 29, 1998:
SIGNATURE TITLE(S)
/s/ Isaak Karaev President, Chief Executive Officer
- ------------------------------------ and Chairman of the Board of
ISAAK KARAEV Directors (principal executive
officer)
/s/ Philip Callaghan Chief Financial Officer (principal
- ------------------------------------ financial officer)
PHILIP CALLAGHAN
/s/ Philip Scheps Vice President, Finance and
- ------------------------------------ Controller (principal accounting
PHILIP SCHEPS officer)
/s/ Bruce E.H. Barlag Director
- ------------------------------------
BRUCE E.H. BARLAG
/s/ Davis Gaynes Director
- ------------------------------------
DAVIS GAYNES
/s/ I. Robert Greene Director
- ------------------------------------
I. ROBERT GREENE
/s/ Peter LaBonte Director
- ------------------------------------
PETER LABONTE
/s/ Milton J. Pappas Director
- ------------------------------------
MILTON J. PAPPAS
II-5
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of
Multex Systems, Inc.
We have audited the consolidated financial statements of Multex Systems,
Inc. as of December 31, 1997 and 1996, and for each of the three years in the
period ended December 31, 1997, and have issued our report thereon dated March
4, 1998 except for Note 13 as to which the date is June , 1998 (included
elsewhere in this Registration Statement). Our audits also included the
financial statement schedule listed in Item 16(b) of this Registration
Statement. This schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
Ernst & Young LLP
New York, New York
March 4, 1998
----------------
The foregoing report is in the form that will be signed upon the completion
of the restatement of capital accounts described in Note 13 to the financial
statements.
Ernst & Young LLP
New York, New York
May 29, 1998
S-1
<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
MULTEX SYSTEMS, INC AND SUBSIDIARIES
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
- ------------------------------------------------------------------------------------------------
ADDITIONS
BALANCE AT ---------------------------------
BEGINNING OF CHARGED TO COSTS CHARGED TO OTHER BALANCE AT
DESCRIPTION PERIOD AND EXPENSES ACCOUNTS DEDUCTIONS END OF PERIOD
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Ended December 31,
1997:
Deducted from asset
account
Allowance for doubtful
accounts.............. $130,000 $168,130 $58,130 $240,000
Year Ended December 31,
1996:
Deducted from asset
account
Allowance for doubtful
accounts.............. $ 0 $130,000 $ 0 $130,000
Year Ended December 31,
1995:
Deducted from asset
account
Allowance for doubtful
accounts.............. $ 0 $ 0 $ 0 $ 0
</TABLE>
S-2
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Amended and Restated Certificate of Incorporation.
3.2* Form of Amended and Restated Certificate of Incorporation to be in
effect upon the closing of the initial public offering.
3.3 By-laws.
3.4* Form of Amended and Restated By-laws to be in effect upon the closing
of the initial public offering.
4.1* Specimen Common Stock certificate.
4.2 See Exhibits 3.1, 3.2, 3.3 and 3.4 for provisions of the Certificate
of Incorporation and By-laws of the Registrant defining the rights of
holders of Common Stock of the Registrant.
5.1* Opinion of Brobeck, Phleger & Harrison LLP.
10.1 Sublease, dated August 23, 1995, between International Business
Machines Corporation and the Registrant.
10.2+ Interactive Services Agreement, dated as of March 20, 1998, by and
between America Online, Inc. and the Registrant.
10.3+ Distribution and Joint Sourcing Agreement, dated as of June 4, 1996,
by and between Bloomberg, L.P. and the Registrant.
10.4+ Software and Reciprocal Data License Agreement, dated as of June 1,
1995, by and between Reuters Limited and the Registrant.
10.5* 1998 Stock Option Plan.
10.6* Employee Stock Purchase Plan.
10.7(a) Third Amended and Restated Registration Rights Agreement, dated as of
July 24, 1997.
10.7(b) Supplement to Third Amended and Restated Registration Rights
Agreement, dated as of August 14, 1997.
11.1 Statement re: Computation of Per Share Earnings.
21.1 Subsidiaries of the Registrant.
23.1* Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP.
24.1 Powers of Attorney (included in the Signature Page).
27.1 Financial Data Schedule for the year ended December 31, 1997.
27.2 Financial Data Schedule for the three months ended March 31, 1998.
</TABLE>
- ---------------------
* To be supplied by amendment.
+ Confidential treatment to be requested for certain portions of this Exhibit
pursuant to Rule 406 promulgated under the Securities Act.
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
MULTEX SYSTEMS, INC.
It is hereby certified that:
1. a. The name of the corporation (hereinafter called the
"corporation") is Multex Systems, Inc.
b. The name under which the corporation was originally
incorporated is Multex Publisher, Inc.; and the date of filing the original
certificate of incorporation of the corporation with the Secretary of State of
the State of Delaware is April 23, 1993.
2. The certificate of incorporation is hereby amended by, among other
things, increasing the number of authorized shares of capital stock and by
designating a series of Series D Convertible Preferred Stock.
3. The provisions of the certificate of incorporation of the
corporation as heretofore amended and/or supplemented, and as herein amended are
hereby restated and integrated into the single instrument which is hereinafter
set forth, and which is entitled Amended and Restated Certificate of
Incorporation of Multex Systems, Inc., without any further amendment other than
the amendments herein certified and without any discrepancy between the
provisions of the certificate of incorporation as heretofore amended and
supplemented and the provisions of the said single instrument hereinafter set
forth.
<PAGE>
4. The amendments and the restatement of the certificate of
incorporation hereby certified have been duly adopted by the board of directors
and stockholders in accordance with the provisions of Sections 228, 242, and 245
of the General Corporation Law of the State of Delaware and the certificate of
incorporation of the corporation.
5. The certificate of incorporation of the corporation, as amended
and restated herein, shall at the effective time of this Amended and Restated
Certificate of Incorporation, read as follows:
"Amended and Restated Certificate of Incorporation
of
Multex Systems, Inc.
ARTICLE FIRST: The name of the corporation is Multex Systems, Inc.
(the "corporation").
ARTICLE SECOND: The address of the registered office of the
corporation in the State of Delaware is 1013 Centre Road, Wilmington, Delaware
19805. The name of the corporation's registered agent at such address is: The
Prentice-Hall Corporation System, Inc.
ARTICLE 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 Delaware.
ARTICLE FOURTH:
(a) The total number of shares of capital stock which the corporation
is authorized to issue is 40,000,000 shares, of which:
(i) 38,000,000 shares shall be designated as Common Stock, and
shall have a par value of $.01 per share; and
2
<PAGE>
(ii) 2,000,000 shares shall be designated as Preferred Stock,
and shall have a par value of $.01 per share.
(b) Subject to the limitations set forth herein, the Board of
Directors is expressly authorized at any time, and from time to time, to provide
for the issuance of shares of Preferred Stock of one or more series, with such
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, as shall be
stated and expressed in the resolution or resolutions providing for the issue
thereof adopted by the Board of Directors, and as are now stated and expressed
in this Certificate of Incorporation, or any amendment thereto, including (but
without limiting the generality of the foregoing) the following:
(i) the number of shares constituting such series and the
distinctive designation of such series;
(ii) the dividend rate of such series, the conditions and
dates upon which such dividends shall be payable, the preference or relation
which such dividends shall bear to the dividends payable on any other class or
classes or of any other series of capital stock, and whether such dividends
shall be cumulative or noncumulative;
(iii) whether the shares of such series shall be subject to
redemption by the corporation, and, if made subject to such redemption, the
times, prices and other terms and conditions of such redemption;
(iv) the terms and amount of any sinking fund provided for the
purchase or redemption of the shares of such series;
(v) whether the shares of such series shall be convertible
into or exchangeable for shares of any other class or classes of capital stock
of the corporation, and, if provision be made for conversion or exchange, the
times, prices, rates, adjustments, and other terms and conditions of such
conversion or exchange;
(vi) whether such series shall have voting rights, in addition
to the voting rights provided by law, and if so, the terms of such voting
rights;
(vii) the restrictions, if any, on the issue or reissue of any
additional Preferred Stock;
(viii) the rights of the shares of such series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
corporation, and the relative rights of priority, if any, of payment of shares
of such series.
3
<PAGE>
(c) CONVERTIBLE PREFERRED STOCK
1 Designation of Series; Rank. The following are the currently
---------------------------
designated series of Preferred Stock: (I) the series of convertible
preferred stock consisting of 25,000 shares of Series A Convertible
Preferred Stock (the "Series A Shares"), (II) the series of 36,666 shares
of Series B Convertible Preferred Stock (the "Series B Shares"), (III)
the series of convertible preferred stock consisting of 103,335 shares of
Series C Convertible Preferred Stock (the "Series C Shares"), and (IV)
the series of Convertible Preferred Stock consisting of 83,334 shares of
Series D Convertible Preferred Stock (the "Series D Shares"). The Series
A Shares, Series B Shares, Series C Shares and Series D Shares are
referred to collectively herein as the "Series Shares." The Series D
Shares and the Series C Shares shall be senior in rank to the Series A
Shares, the Series B Shares, the Common Stock and all other shares of
capital stock of the corporation as to dividend payments and as to
distributions upon a Liquidation Event (as defined herein). The Series D
Shares shall rank pari passu with the Series C Shares as to dividend
---- -----
payments and as to distributions upon a Liquidation Event, except as set
forth in subparagraph 4D. The Series B Shares shall rank pari passu with
---- -----
the Series A Shares, as to dividend payments, and as to distributions
upon a Liquidation Event.
2 Dividends. The holders of the Series A Shares, Series B Shares,
---------
Series C Shares and Series D Shares shall be entitled to receive, when
and as declared by the Board of Directors, out of funds legally available
for such purpose, cash dividends, respectively at the rate of $8, $12,
$12 and $14.40 per share (in each case, appropriately adjusted for any
stock splits, combinations, stock dividends, recapitalization and like
occurrences) per annum, and no more. In the event such dividends are
declared, the dividend payment date with respect thereto shall be the
immediately succeeding January 15. Dividends on the Series A Shares,
Series B Shares, Series C Shares and Series D Shares shall be cumulative
and have accrued and shall accrue from the date of issue of the Series A
Shares, Series B Shares, Series C Shares and Series D Shares,
respectively.
In no event, so long as any Series D Shares and Series C Shares shall
remain outstanding, shall any dividend whatsoever be declared or paid
upon, nor shall any distribution be made upon, any Common Stock, the
Series A Shares, the Series B Shares or any other class or series of
capital stock ranking junior to the Series D Shares and Series C Shares
as to the payment of dividends or the distribution of assets upon a
Liquidation Event (collectively, the "Junior Stock"), other than a
dividend or distribution payable in shares of Common Stock, unless in
each instance dividends on all outstanding Series C Shares and Series D
Shares for all past dividend periods shall have been paid and the full
dividend on all outstanding shares of Series C Shares and Series D Shares
for the then current annual dividend period shall have been paid
4
<PAGE>
or declared and sufficient funds for the payment thereof set apart, and
any arrearage in the redemption of the Series C Shares and Series D
Shares shall have been made good. The Series D Shares and Series C Shares
shall be senior in rank to the Series A Shares, the Series B Shares,
Common Stock and all Junior Stock of the corporation as to dividend
payments. If, in connection with the payment of dividends hereunder, the
corporation shall distribute to the holders of Series D Shares and Series
C Shares an amount which is less than the then accrued dividends on
Series D Shares and Series C Shares, such amount shall be allocated
pari passu among the holders of Series D Shares and Series C Shares in
---- -----
proportion to the amount each such holder would have received if all
accrued dividends on the Series D Shares and Series C Shares were paid.
In no event, so long as any Series A Shares or Series B Shares
shall remain outstanding, shall any dividend whatsoever be declared or
paid upon, nor shall any distribution be made upon, any Common Stock or
any other class or series of capital stock ranking junior to the Series A
Shares or Series B Shares as to the payment of dividends or the
distribution of assets upon a Liquidation Event ("AB Junior Stock"),
other than a dividend or distribution payable in shares of Common Stock,
unless in each instance dividends on all outstanding Series A Shares and
Series B Shares for all past dividend periods shall have been paid and
the full dividend on all outstanding shares of Series A Shares and Series
B Shares for the then current annual dividend period shall have been paid
or declared and sufficient funds for the payment thereof set apart, and
any arrearage in the redemption of the Series A Shares and Series B
Shares shall have been made good. If, in connection with the payment of
dividends hereunder, the Corporation shall distribute to the holders of
Series B Shares and Series A Shares an amount which is less than the then
accrued dividends on Series B Shares and Series A Shares, such amount
shall be allocated pari passu among the holders of Series B Shares and
---- -----
Series A Shares in proportion to the amount each such holder would have
received if all accrued dividends on the Series B Shares and Series A
Shares were paid.
3 Redemption. The Series Shares shall be not be redeemable except
----------
as follows:
3A Mandatory Redemption. The corporation shall redeem on December
--------------------
31, 2002 (in the manner and with the effect provided in subparagraphs 3B
through 3D below) all Series Shares which shall then be outstanding. In
case of (I) the consolidation or merger of the corporation with or into
any other corporation (other than a merger in which this corporation is
the surviving corporation and which will not result in more than 50% of
the capital stock of this corporation outstanding immediately after the
effective date of such merger being owned of record or beneficially by
persons other than the holders of such capital stock immediately prior
5
<PAGE>
to such merger in the same proportions in which such shares were held
immediately prior to such merger), or (II) the sale of all or
substantially all of the properties and assets of the corporation in one
transaction or a series of transactions to any other person or persons,
the corporation shall, not later than 20 days prior to the effective date
of any such consolidation, merger, sale of properties and assets, give
notice thereof to the holder or holders of Series Shares and, in the
event that within 15 days after receipt of such notice, any holder or
holders of Series Shares may elect, by written notice to the corporation,
to have any or all of its or their Series Shares redeemed, the
corporation shall redeem the same (in the manner and with the effect
provided in subparagraphs 3B through 3D below) not later than the day
prior to the effective date of such consolidation, merger, sale of
properties and assets. In the event of a Change of Control (as defined
below), the corporation shall, not later than twenty (20) days prior to
the effective date of any such Change of Control (or, if the corporation
learns of such Change of Control without sufficient time to give such 20
day notice, upon the corporation's discovery of such Change of Control or
that a Change of Control is imminent), give notice thereof to the holder
or holders of Series C Shares and Series D Shares and, in the event that
within 15 days after receipt of such notice, any holder or holders of
Series C Shares or Series D Shares shall elect, by written notice to the
corporation, to have any or all of its or their Series C Shares or Series
D Shares, as the case may be, redeemed, the corporation shall redeem the
same (in the manner and with the effect provided in subparagraphs 3B
through 3D below) not later than the day prior to the effective date of
such Change of Control (or, if the corporation learns of such a Change of
Control after the occurrence thereof, as soon after the corporation's
discovery of such Change of Control as is practicable). For purposes
hereof, a "Change of Control" shall be deemed to have occurred on the day
any person (together with its affiliates) other than Euclid Partners III,
L.P., Euclid Partners IV, L.P., 77 Capital Partners, L.P., ADP Financial
Information Services, Inc., AT&T Venture Company, L.P., Massachusetts
Mutual Life Insurance Company, Alce Partners, L.P., Reuters America Inc.,
SOFTBANK Ventures, Inc., The fl@tiron Fund, LLC, Chase Venture Capital
Associates, L.P., Financial Guaranty Insurance Company, Isaak Karaev and
Morton Zeidman, and their successors by operation of law and affiliates,
shall acquire beneficial ownership of a majority of the outstanding
Common Stock of the corporation on a fully-diluted basis. "Affiliate", as
applied to any person, means any other person directly or indirectly
controlling, controlled by or under common control with, that person.
"Control" (including the terms "controlling," "controlled by" and "under
common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies
of the person, whether through the ownership of voting securities, by
contract, or otherwise. Each date on which the corporation shall be
required to redeem Series Shares as provided in this subparagraph 3A
shall be referred to as a "Redemption Date".
6
<PAGE>
3B Redemption Price. The Series Shares to be redeemed on a
----------------
Redemption Date shall be redeemed by paying for each share the sum of (I)
$100 in the case of the Series A Shares, $150 in the case of the Series B
Shares, $150 in the case of the Series C Shares and $180 in the case of
the Series D Shares (in each case, appropriately adjusted for any stock
splits, combinations, stock dividends, recapitalizations and like
occurrences with respect to any such series shares), plus (II) an amount
equal to dividends accrued and unpaid thereon up to such redemption date,
the sum of (I) and (II) being herein sometimes referred to as the
"Redemption Price". In the case of a redemption pursuant to the first
sentence of subparagraph 3A above, not less than 60 days before such
Redemption Date, and in the case of a redemption pursuant to any other
provision of this certificate of incorporation, as soon as is reasonably
practicable, written notice shall be given by mail, postage prepaid to
the holders of record of the Series Shares to be redeemed, such notice to
be addressed to each such stockholder at his post office address as shown
by the records of the corporation, specifying the number of shares to be
redeemed, the paragraph or paragraphs herein pursuant to which such
redemption shall be made, the Redemption Price and the place and date of
such redemption, which date shall not be a day on which banks in the City
of New York are required or authorized to close. If such notice of
redemption shall have been duly given and if on or before such Redemption
Date the funds necessary for redemption shall have been set aside so as
to be and continue to be available therefor, then, notwithstanding that
any certificate for shares of Series Shares to be redeemed shall not have
been surrendered for cancellation, after the close of business on such
Redemption Date, the shares so called for redemption shall no longer be
deemed outstanding, the dividends thereon shall cease to accrue, and all
rights with respect to such shares shall forthwith after the close of
business on the Redemption Date, cease, except only the right of the
holders thereof to receive, upon presentation of the certificate
representing shares so called for redemption, the Redemption Price
therefor, without interest thereon.
3C Redeemed or Otherwise Acquired Shares to Be Retired. Any shares
------------------------------------------- -------
of the Series Shares redeemed pursuant to this paragraph 3 or otherwise
acquired by the corporation in any manner whatsoever shall be permanently
retired and shall not under any circumstances be reissued; and the
corporation may from time to time take such appropriate corporate action
as may be necessary to reduce the number of authorized shares of Series
Shares accordingly.
3D Shares to be Redeemed; Pari Passu Ranking of Series D and Series
----------------------------------------------------------------
C Shares. All Series D Shares and Series C Shares shall rank pari passu
-------- ---- -----
with one another in priority and right of payment other than as set forth
in Paragraph 4D.
In case of the redemption, for any reason, of only a part of the
outstanding shares of the Series D Shares or the Series C Shares on a
Redemption Date, all shares of Series D Shares or Series C Shares to be
redeemed shall be selected pro rata, and there shall
--- ----
7
<PAGE>
be so redeemed from each registered holder in whole shares, as nearly as
practicable to the nearest share, that proportion of all the shares to be
redeemed which the number of shares held of record by such holder bears
to the total number of Series D Shares or Series C Shares at the time
outstanding. Any Series D Shares or Series C Shares not redeemed on the
date required to be redeemed shall be redeemed as soon thereafter as
possible and in the manner in which shares are otherwise redeemed on a
Redemption Date. No shares of Junior Stock may be redeemed or purchased,
nor shall any moneys be paid to or made available for a sinking fund for
the purchase or redemption of any Junior Stock if there are any Series D
Shares or Series C Shares outstanding.
3E Pari Passu Ranking of Series A and Series B Shares. All Series A
--------------------------------------------------
Shares and Series B Shares shall rank pari passu with one another in
---- -----
priority and right of payment. In the event that the corporation shall
be unable to redeem all shares which shall be required to be redeemed
pursuant to subparagraph 3A, the amount of cash available for payment of
the redemption price shall be allocated between redemption of Series A
Shares and Series B Shares required to be redeemed on such date, subject
to the last sentence of subparagraph 3D.
4 Liquidation.
-----------
4A Series D and Series C Liquidation Payment. Upon the liquidation,
-----------------------------------------
dissolution or winding up of the corporation, whether voluntary or
involuntary (a "Liquidation Event"), the holders of Series D Shares and
Series C Shares, before any distribution or payment is made upon any
Junior Stock, shall be entitled to be paid for each such share the sum of
(i) $180 in the case of the Series D Shares and $150 in the case of the
Series C Shares (appropriately adjusted for any stock splits,
combinations, stock dividends, recapitalizations and like occurrences),
plus (ii) an amount equal to dividends accrued and unpaid thereon up to
the Liquidation Date (as defined herein). If, upon a Liquidation Event,
the assets to be distributed among the holders of the Series D Shares and
Series C Shares shall be insufficient to permit payment to such holders
of the entire preferential amount to which they are entitled pursuant to
this subparagraph 4A, then the entire assets of the corporation to be so
distributed shall be distributed ratably on a pari passu basis among the
---- -----
holders of the Series D Shares and Series C Shares.
4B Series A and Series B Liquidation Payments. Upon a Liquidation
------------------------------------------
Event, after the holders of the Series D Shares and the Series C Shares
shall have been paid in full the amounts to which they shall be entitled,
the holders of the Series A Shares shall be entitled to be paid (on a
pari-passu basis with the holders of the outstanding Series B Shares) for
each such share, the sum of (i) $100 (appropriately adjusted for any
stock splits, combinations, stock dividends, recapitalizations and like
8
<PAGE>
occurrences), plus (ii) an amount equal to dividends accrued and unpaid
thereon up to the Liquidation Date, and the holders of Series B Shares
shall be entitled to receive (on a pari-passu basis with the holders of
the outstanding Series A Shares) for each share the sum of (iii) $150
(appropriately adjusted for any stock splits, combinations, stock
dividends, recapitalizations and like occurrences), plus (iv) an amount
equal to dividends accrued and unpaid thereon up to the Liquidation Date.
If, upon a Liquidation Event, the assets to be distributed among the
holders of the Series A Shares and Series B Shares shall be insufficient
to permit payment to such holders of the entire preferential amounts to
which they are entitled, then the entire remaining assets of the
corporation to be so distributed shall be distributed ratably on a pari-
passu basis among the holders of the Series A Shares and Series B Shares.
4C Common Stock Liquidation Payment. Upon a Liquidation Event,
--------------------------------
after the holders of the Series Shares shall have been paid in full
amounts to which they shall be entitled, the holders of Common Stock
shall be entitled to receive an amount per share equal to $0.25
(appropriately adjusted for any stock splits, combinations, stock
dividends, recapitalizations and like occurrences). If, upon a
Liquidation Event, the assets to be distributed among the holders of the
Common Stock shall be insufficient to permit payment to such holders of
the preferential amount to which they are entitled, then the entire
remaining assets of the corporation to be so distributed shall be
distributed ratably among the holders of the Common Stock.
4D Additional Payments. Upon a Liquidation Event, after the holders
-------------------
of the Series Shares and Common Stock shall have been paid in full the
preferential amounts to which they shall be entitled, the remaining net
assets of the corporation available for distribution to its shareholders
shall be distributed to the holders of Common Stock and Series C Shares
(with each Series C Share being deemed, for such purpose, to be equal to
the number of shares of Common Stock (including fractions of a share)
into which such Series C Share is convertible immediately prior to the
close of business on the business day fixed for such distribution), pro
---
rata based on respective stockholdings.
----
4E Notice of Liquidation Events. Written notice of such Liquidation
----------------------------
Event, stating a payment date, the amount of the liquidation payments and
the place where said liquidation payments shall be payable, shall be
given by mail, postage prepaid, not less than 30 days prior to the
payment date stated therein, to the holders of record of the Series
Shares and Common Stock, such notice to be addressed to each such holder
at his address as shown by the records of the corporation. For the
purposes of the Series Shares, the consolidation or merger of the
corporation into or with any other entity or entities (other than a
merger in which this corporation is the surviving corporation and which
will not result in more than 50% of the capital stock of this corporation
outstanding immediately after the effective date of such merger being
9
<PAGE>
owned of record or beneficially by persons other than the holders of such
capital stock immediately prior to such merger in the same proportions in
which such shares were held immediately prior to such merger) or a sale
or transfer by the corporation of all or substantially all its assets in
one or a series of transactions or a Change of Control of the corporation
shall be deemed to be a Liquidation Event within the meaning of the
provisions of this paragraph 4. The term "Liquidation Date" means the
date of a Liquidation Event.
5 Conversion.
----------
5A Right to Convert. Subject to the terms and conditions of this
----------------
paragraph 5, the holder of any of Series Shares shall have the right, at
its option at any time, to convert any such shares of Series Shares
(except that upon a Liquidation Event the right of conversion shall
terminate at the close of business on the last full business day next
preceding the date fixed for payment of the amount distributable on the
Series Shares), into such number of fully paid and nonassessable whole
shares of Common Stock as is obtained by multiplying the number of shares
of the Series Shares so to be converted by $180 in the case of each of
the Series D Shares, $150 in the case of each of the Series B Shares and
Series C Shares and $100 in the case of the Series A Shares and dividing
the result by the conversion price of $1.80 per share in the case of the
Series D Shares, $1.50 per share in the case of each of the Series B
Shares and the Series C Shares and $1.00 per share in the case of the
Series A Shares, or by the conversion price for such Series Shares as
last adjusted and in effect at the date any Series Shares are surrendered
for conversion (such price, or such price as last adjusted, being
referred to herein as the "Conversion Price"). The rights of conversion
contained in this subparagraph 5A shall be exercised by the holder of
Series Shares by giving written notice that such holder elects to convert
a stated number of Series Shares into Common Stock and by surrender of a
certificate or certificates for the shares so to be converted to the
corporation at its principal office (or such other office or agency of
the corporation as the corporation may designate by notice in writing to
the holder or holders of the Series Shares) at any time during its usual
business hours on the date set forth in such notice, together with a
statement of the name or names (with address) in which the certificate or
certificates for shares of Common Stock shall be issued.
5B Issuance of Certificates; Time Conversion Effected. Promptly
--------------------------------------------------
after the receipt of the written notice referred to in subparagraph 5A
and surrender of the certificate or certificates for the Series Shares to
be converted, the corporation shall issue and deliver, or cause to be
issued and delivered, to the holder, registered in such name or names as
such holder may direct, a certificate or certificates for the number of
whole shares of Common Stock issuable upon the conversion of such Series
Shares. To the extent permitted by law, such conversion shall be deemed
to have
10
<PAGE>
been effected, and the Conversion Price shall be determined, as of the
close of business on the date on which such written notice shall have
been received by the corporation and the certificate or certificates for
such share or shares shall have been surrendered as aforesaid, and at
such time the rights of the holder of such Series Shares shall cease, and
the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record
of the shares represented thereby.
5C Fractional Shares; Dividends; Partial Conversion. No fractional
------------------------------------------------
shares may be issued upon conversion of the Series Shares into Common
Stock and no payment or adjustment shall be made upon any conversion on
account of any cash dividends on the Common Stock issued upon such
conversion. At the time of each conversion, the corporation shall pay in
cash an amount equal to all dividends, if any, declared and unpaid on the
shares surrendered for conversion to the date upon which such conversion
is deemed to take place as provided in subparagraph 5B. In case the
number of Series Shares represented by the certificate or certificates
surrendered pursuant to subparagraph 5A exceeds the number of shares
converted, the corporation shall, upon such conversion, execute and
deliver to the holder thereof, at the expense of the corporation, a new
certificate or certificates for the number of shares of Series Shares
represented by the certificate or certificates surrendered which are not
to be converted. If any fractional interest in a share of Common Stock
would, except for the provisions of the first sentence of this
subparagraph 5C, be deliverable upon any such conversion, the
corporation, in lieu of delivering the fractional share thereof, shall
pay to the holder surrendering the Series Shares for conversion an amount
in cash equal to the current market price of such fractional interest as
determined in good faith by the Board of Directors of the corporation.
5D Adjustment of Price Upon Issuance of Common Stock. Except as
-------------------------------------------------
provided in subparagraph 5F hereof, if and whenever the corporation shall
issue or sell, or is in accordance with subparagraphs 5D(1) through 5D(7)
deemed to have issued or sold, any shares of its Common Stock for a
consideration per share less than the Conversion Price in effect
immediately prior to the time of such issue or sale, then, forthwith upon
such issue or sale, the Conversion Price shall be determined by dividing
(x) an amount equal to the sum of (A) the number of shares of Common
Stock outstanding immediately prior to such issue or sale (including as
outstanding all shares of Common Stock issuable upon conversion of
outstanding Preferred Stock) multiplied by the then existing Conversion
Price, and (B) the consideration, if any, received by the corporation
upon such issue or sale, by (y) the total number of shares of Common
Stock outstanding immediately after such issue or sale (including as
outstanding all shares of Common Stock issuable upon conversion of
outstanding Preferred Stock).
11
<PAGE>
For purposes of this subparagraph 5D, the following subparagraphs
5D(1) to 5D(7) shall also be applicable:
5D(1) Issuance of Rights or Options. In case at any time the
-----------------------------
corporation shall in any manner grant, sell or otherwise issue (whether
directly or by assumption in a merger or otherwise) any rights to
subscribe for or to purchase, or any options for the purchase of, Common
Stock or any stock or securities convertible into or exchangeable for
Common Stock (such rights or options being herein called "Options" and
such convertible or exchangeable stock or securities being herein called
"Convertible Securities") whether or not such Options or the right to
convert or exchange any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable
upon the exercise of such Options or upon conversion or exchange of such
Convertible Securities (determined by dividing (i) the total amount, if
any, received or receivable by the corporation as consideration for the
granting of such Options, plus the minimum aggregate amount of additional
consideration payable to the corporation upon the exercise of all such
Options, plus, in the case of such Options which relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if
any, payable upon the issue or sale of such Convertible Securities and
upon the conversion or exchange thereof, by (ii) the total maximum number
of shares of Common Stock issuable upon the exercise of such Options or
upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options) shall be less than the
Conversion Price in effect immediately prior to the time of the granting
of such Options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion or exchange
of the total maximum amount of such Convertible Securities issuable upon
the exercise of such Options shall be deemed to have been issued for such
price per share as of the date of granting of such Options and thereafter
shall be deemed to be outstanding. Except as otherwise provided in
subparagraph 5D(3), no further adjustment of the Conversion Price shall
be made upon the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such Options or upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Securities.
5D(2) Issuance of Convertible Securities. In case the corporation
----------------------------------
shall in any manner grant, sell or otherwise issue (whether directly or
by assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert thereunder
are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion or exchange
(determined by dividing (I) the total amount received or receivable by
the corporation as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the corporation upon
12
<PAGE>
the conversion or exchange thereof, by (II) the total maximum number of
shares of Common Stock issuable upon the conversion or exchange of all
such Convertible Securities) shall be less than the Conversion Price in
effect immediately prior to the time of such issue or sale, then the
total maximum number of shares of Common Stock issuable upon conversion
or exchange of all such Convertible Securities shall be deemed to have
been issued for such price per share as of the date of the issue or sale
of such Convertible Securities and thereafter shall be deemed to be
outstanding, provided that (x) except as otherwise provided in
subparagraph 5D(3) below, no further adjustment of the Conversion Price
shall be made upon the actual issue of such Common Stock upon conversion
or exchange of such Convertible Securities, and (y) if any such issue or
sale of such Convertible Securities is made upon exercise of any Option
to purchase any such Convertible Securities for which adjustments of the
Conversion Price have been or are to be made pursuant to other provisions
of this subparagraph 5D, no further adjustment of the Conversion Price
shall be made by reason of such issue or sale.
5D(3) Change in Option Price or Conversion Rate. If (i) the purchase
-----------------------------------------
price provided for in any Option referred to in subparagraph 5D(1), (ii)
the additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in subparagraph 5D(1)
or 5D(2) or (iii) the rate at which any Convertible Securities referred
to in subparagraph 5D(1) or 5D(2) are convertible into or exchangeable
for Common Stock shall change at any time (in each case other than under
or by reason of provisions designed to protect against dilution), then
the Conversion Price in effect at the time of such event shall, as
required, forthwith be readjusted to such Conversion Price which would
have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at the
time initially granted, issued or sold; and on the expiration of any such
Option or the termination of any such right to convert or exchange such
Convertible Securities, the Conversion Price then in effect hereunder
shall, as required, forthwith be increased to the Conversion Price which
would have been in effect at the time of such expiration or termination
had such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination, never been issued,
and the Common Stock issuable thereunder shall no longer be deemed to be
outstanding. If the purchase price provided for in any such Option
referred to in subparagraph 5D(1) or the rate at which any Convertible
Securities referred to in subparagraph 5D(1) or 5D(2) are convertible
into or exchangeable for Common Stock shall be reduced at any time under
or by reason of provisions with respect thereto designed to protect
against dilution, then, in case of the delivery of Common Stock upon the
exercise of any such Option or upon conversion or exchange of any such
Convertible Securities, the Conversion Price then in effect hereunder
shall, as required, forthwith be adjusted to such respective amount as
would have been
13
<PAGE>
obtained had such Option or Convertible Securities never been issued as
to such Common Stock and had adjustments been made upon the issuance of
the shares of Common Stock delivered as aforesaid, but only if as a
result of such adjustment the Conversion Price then in effect hereunder
is thereby reduced.
5D(4) Stock Dividends. In case the corporation shall declare a
---------------
dividend or make any other distribution upon any stock of the corporation
payable in Common Stock, Options or Convertible Securities, the
Conversion Price shall be reduced as if the corporation had subdivided
its outstanding shares of Common Stock into a greater number of shares,
as provided in subparagraph 5E hereof.
5D(5) Consideration for Stock. In case any shares of Common Stock,
-----------------------
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received
by the corporation therefor, without deduction therefrom of any expenses
incurred or any underwriting commissions or concessions paid or allowed
by the corporation in connection therewith. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for a
consideration other than cash, the amount of the consideration other than
cash received by the corporation shall be deemed to be the fair value of
such consideration as determined in good faith by the Board of Directors
of the corporation, without deduction therefrom of any expenses incurred
or any underwriting commissions or concessions paid or allowed by the
corporation in connection therewith. In case any Options shall be issued
in connection with the issue and sale of other securities of the
corporation, together comprising one integral transaction in which no
specific consideration is allocated to such Options by the corporation,
such Options shall be deemed to have been issued without consideration,
and the Conversion Price shall be reduced as if the corporation had
subdivided its outstanding shares of Common Stock into a greater number
of shares, as provided in subparagraph 5E hereof.
5D(6) Record Date. In case the corporation shall take a record of
-----------
the holders of its Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock, Options
or Convertible Securities, or (ii) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of Common Stock
deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may be, provided that
such shares of Common Stock shall in fact have been issued or sold.
5D(7) Treasury Shares. The number of shares of Common Stock
---------------
outstanding at any given time shall not include shares owned or held by
or for the account of the
14
<PAGE>
corporation, and the disposition of any such shares shall be considered
an issue or sale of Common Stock for the purposes of this subparagraph
5D.
5E Subdivision or Combination of Stock. In case the corporation
-----------------------------------
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares, the Conversion Price in effect immediately
prior to such subdivision shall be proportionately reduced, and
conversely, in case the outstanding shares of Common Stock of the
corporation shall be combined into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased.
5F Certain Issues of Common Stock Excepted. Anything herein to the
---------------------------------------
contrary notwithstanding, the corporation shall not be required to make
any adjustment of the Conversion Price upon the occurrence of any of the
following events: (I) the issuance of Common Stock upon conversion of
outstanding Series Shares; (II) the issuance of up to 4,209,000 shares of
Common Stock upon the exercise of certain options granted by the
corporation prior to the date hereof to employees, officers and directors
of the corporation; (III) the issuance of options to purchase up to
1,591,000 shares of Common Stock to be reserved for issuance to
employees, officers and directors of the corporation under stock
incentive plans that have been approved and adopted by the corporation,
or the issuance of the shares issuable upon the exercise thereof; and
(IV) up to 1,483,750 shares of Common Stock, but only to the extent such
shares (x) have been acquired by the corporation from shareholders of the
corporation pursuant to that certain Shareholders Agreement and Voting
Trust dated as of October 31, 1993, and (y) are issued to employees of
the corporation.
5G Reorganization, Reclassification, Consolidation, Merger or Sale.
---------------------------------------------------------------
If any capital reorganization or reclassification of the capital stock of
the corporation or any consolidation or merger of the corporation with
another corporation, or the sale of all or substantially all of its
assets to another corporation shall be effected in such a way (including,
without limitation, by way of consolidation or merger) that holders of
Common Stock shall be entitled to receive stock, securities or assets
with respect to or in exchange for Common Stock, then, as a condition of
such reorganization, reclassification, consolidation, merger or sale,
lawful and adequate provisions (in form reasonably satisfactory to the
holders of at least a majority of the then outstanding Series A Shares
and Series B Shares together as a single class and at least a majority of
the then outstanding Series D Shares and Series C Shares together as a
single class) shall be made whereby each holder of a share or shares of
Series Shares shall thereafter have the right to receive, upon the basis
and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock of the corporation immediately theretofore
receivable upon the conversion of such shares
15
<PAGE>
or shares of the Series Shares, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for a
number of outstanding shares of such Common Stock equal to the number of
shares of such stock immediately theretofore so receivable had such
reorganization, reclassification, consolidation, merger or sale not taken
place, and in any such case appropriate provision shall be made with
respect to the rights and interests of such holder to the end that the
provisions hereof (including, without limitation, provisions for
adjustment of the Conversion Price) shall thereafter be applicable, as
nearly practicable, in relation to any shares of stock, securities or
assets thereafter deliverable upon the exercise of such conversion rights
(including, if necessary to effect the adjustments contemplated herein,
an immediate adjustment, by reason of such reorganization,
reclassification, consolidation, merger or sale, of the Conversion Price
to the value for the Common Stock reflected by the terms of such
reorganization, reclassification, consolidation, merger or sale if the
value so reflected is less than the Conversion Price in effect
immediately prior to such reorganization, reclassification,
consolidation, merger or sale). In the event of a merger or consolidation
of the corporation as a result of which a greater or lesser number of
shares of common stock of the surviving corporation is issuable to
holders of Common Stock of the corporation outstanding immediately prior
to such merger or consolidation, the Conversion Price in effect
immediately prior to such merger or consolidation shall be adjusted in
the same manner as though there were a subdivision or combination of the
outstanding shares of Common Stock of the corporation. The corporation
will not effect any such consolidation or merger, or any sale of all or
substantially all of its assets and properties, unless prior to the
consummation thereof the successor corporation (if other than the
corporation) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume by written instrument (in
form reasonably satisfactory to the holders of at least a majority of the
then outstanding Series A Shares and Series B Shares together as a single
class and at least a majority of the then outstanding Series D Shares and
Series C Shares together as a single class), executed and mailed or
delivered to each holder of Series Shares at the last address of such
holder appearing on the books of the corporation, the obligation to
deliver to such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
receive.
5H Automatic Conversion. In the event that, at any time while any
--------------------
of the Series Shares shall be outstanding, the corporation shall complete
an underwritten public offering involving the sale by the corporation of
shares of Common Stock (i) at a per share price to the public of not less
than $5.00 (appropriately adjusted for any stock splits, combinations,
stock dividends, recapitalizations and like occurrences) and (ii) in
which the gross proceeds paid by the public are at least $15,000,000,
then all outstanding Series Shares shall, automatically and without
further action on the part of the holders of the Series Shares, be
converted into shares
16
<PAGE>
of Common Stock in accordance with the terms of this paragraph 5 with the
same effect as if the certificates evidencing such shares had been
surrendered for conversion, such conversion to be effective
simultaneously with the closing of such public offering, provided,
--------
however, that certificates evidencing the shares of Common Stock issuable
-------
upon such conversion shall not be issued except on surrender of the
certificates for the shares of the Series Shares so converted.
5I Notice of Adjustment. Upon any adjustment of the Conversion
--------------------
Price, then and in each such case the corporation shall give written
notice thereof, by first class mail, postage prepaid, addressed to each
holder of shares of Series Shares at the address of such holder as shown
on the books of the corporation, which notice shall state the Conversion
Price resulting from such adjustment, setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is
based.
5J Other Notices. In case at any time:
-------------
(1) the corporation shall declare any dividend upon its Common Stock
payable in cash or stock or make any other distribution to the
holders of its Common Stock;
(2) the corporation shall offer for subscription pro rata to the
--------
holders of its Common Stock any additional shares of stock of any
class or other rights;
(3) there shall be any capital reorganization or reclassification of
the capital stock of the corporation, or a consolidation or merger of
the corporation with, or a sale of all or substantially all its
assets to, another corporation;
(4) there shall be a Liquidation Event; or
(5) the corporation shall take any action or there shall be any event
which would result in an automatic conversion of the Series Shares
pursuant to subparagraph 5H,
then, in any one or more of said cases, the corporation shall give, by
first class mail, postage prepaid, addressed to each holder of any Series
Shares at the address of such holder as shown on the books of the
corporation, (I) at least 20 days' prior written notice of the date on
which the books of the corporation shall close or a record shall be taken
for such dividend, distribution or subscription rights or for determining
rights to vote in respect of any such reorganization, reclassification,
consolidation, merger, sale or Liquidation Event, (II) in the case of any
such reorganization, reclassification, consolidation, merger, sale or
Liquidation Event, at least 20 days' prior written notice of the date
when the same shall take place, and (III) in the case
17
<PAGE>
of any event which would result in an automatic conversion of the Series
Shares pursuant to subparagraph 5H, at least 20 days' prior written
notice of the date on which the same is expected to be completed. Such
notice in accordance with the foregoing clause (I) shall also specify, in
the case of any such dividend, distribution or subscription rights, the
date on which the holders of Common Stock shall be entitled thereto, and
such notice in accordance with the foregoing clause (II) shall also
specify the date on which the holders of Common Stock shall be entitled
to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation,
merger, sale or Liquidation Event, as the case may be.
5K Stock to be Reserved. The corporation will at all times reserve
--------------------
and keep available out of its authorized Common Stock or its treasury
shares, solely for the purpose of issue upon the conversion of the Series
Shares as herein provided, such number of shares of Common Stock as shall
then be issuable upon the conversion of all outstanding shares of Series
Shares. The corporation covenants that all shares of Common Stock which
shall be so issued shall be duly and validly issued and fully paid and
nonassessable and free from all taxes, liens and charges with respect to
the issue thereof and, without limiting the generality of the foregoing,
the corporation covenants that it will from time to time take all such
action as may be requisite to assure that the par value per share of the
Common Stock is at all times equal to or less than the effective
Conversion Price. The corporation will take all such action as may be
necessary to assure that all such shares of Common Stock may be so issued
without violation of any applicable law or regulation, or of any
requirements of any national securities exchange upon which the Common
Stock of the corporation may be listed. The corporation will not take
any action which results in any adjustment of the Conversion Price if the
total number of shares of Common Stock issued and issuable after such
action upon conversion of the Series Shares would exceed the total number
of shares of Common Stock then authorized by the corporation's
Certificate of Incorporation.
5L No Reissuance of Series Shares. Shares of Series Shares which
------------------------------
are converted into shares of Common Stock as provided herein shall not be
reissued.
5M Issue Tax. The issuance of certificates for shares of Common
---------
Stock upon conversion of the Series Shares shall be made without charge
to the holders thereof for any issuance tax in respect thereof, provided
that the corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery
of any certificate in a name other than that of the holder of the Series
Shares which is being converted.
18
<PAGE>
5N Closing of Books. The corporation will at no time close its
----------------
transfer books against the transfer of any Series Shares or of any shares
of Common Stock issued or issuable upon the conversion of any shares of
Series Shares in any manner which interferes with the timely conversion
of such Series Shares.
5O Definition of Common Stock. As used in this paragraph 5, the
--------------------------
term "Common Stock" shall mean and include the corporation's authorized
Common Stock, $.01 par value, as constituted on the date hereof, and
shall also include any capital stock of any class of the corporation
hereafter authorized which shall not be limited to a fixed sum or
percentage of par value in respect of the rights of the holders thereof
to participate in dividends or in the distribution of assets upon a
Liquidation Event, provided, however, that the shares of Common Stock
-------- -------
receivable upon conversion of the Series Shares of the corporation, or in
case of any reorganization or reclassification of the outstanding shares
thereof, the stock, securities or assets provided for in subparagraph 5G,
shall include only shares designated as Common Stock of the corporation
on the date hereof.
6 Voting. Except as otherwise required by law or this Certificate
------
of Incorporation, the holders of Series Shares and the holders of Common
Stock shall be entitled to notice of any stockholders meeting in
accordance with the By-laws of the corporation and the holders of Series
Shares shall be entitled to vote upon any matter as to which the holders
of Common Stock are entitled to vote, as follows: (i) the holders of
Series Shares shall have one vote for each full share of Common Stock
into which their respective shares of Series Shares are convertible on
the record date for the vote and (ii) the holders of Common Stock shall
have one vote per share of Common Stock.
7 Restrictions. At any time when Series Shares are outstanding,
------------
except where the vote or written consent of the holders of a greater
number of shares of the corporation is required by law or by this
Certificate of Incorporation, and in addition to any other vote required
by law:
7A Without the prior written consent of the holders of at least 66-
2/3% of the outstanding shares of Series D Shares and Series C Shares,
voting as a single class, given in person or by proxy, either in writing
or at a special meeting called for that purpose:
(1) The corporation will not (I) create or authorize the creation
of, or issue or sell any additional class or series of shares unless the
same ranks junior to the Series D Shares and the Series C Shares as to
the payment of dividends, distribution of assets upon a Liquidation
Event, redemptions or other distributions, (II) increase the authorized
amount of the Series D Shares and the Series C Shares, or the authorized
19
<PAGE>
amount of any additional class or series of shares unless the same ranks
junior to the Series D Shares and the Series C Shares as to the payment
of dividends or distribution of assets upon a Liquidation Event,
redemptions or other distributions, or (III) create or authorize any
obligation or security convertible into Series D Shares or Series C
Shares or into shares of any other class or series unless the same ranks
junior to the Series D Shares and the Series C Shares as to the payment
of dividends or distribution of assets upon a Liquidation Event,
redemptions or other distributions, whether any such creation or
authorization or increase shall be by means of amendment of the
Certificate of Incorporation, merger, consolidation or otherwise;
(2) The corporation will not amend, alter or repeal the
corporation's Certificate of Incorporation or By-laws in any manner, take
any action or otherwise file any directors' resolutions pursuant to
Section 151(g) of the General Corporation Law of the State of Delaware
containing any provision, in either case, which adversely affects the
respective preferences, qualifications, special or relative rights or
privileges of the Series D Shares or the Series C Shares or which in any
manner adversely affects the Series D Shares or the Series C Shares, or
the holders thereof;
(3) The corporation will not reclassify the Series D Shares or the
Series C Shares, into shares of any other series or class or reclassify
any class of Junior Stock into shares of any class or series of capital
stock ranking, either as to payment of dividends, distribution on a
Liquidation Event or entitled to redemptions or other distributions,
senior or on a parity with the Series D Shares and the Series C Shares.
(4) The corporation will not, and will not permit any subsidiary to,
either directly or indirectly, incur, create, assume or guarantee any
indebtedness for borrowed money if, after giving effect thereto, the
ratio of total indebtedness to net worth of the corporation and its
subsidiaries (determined on a consolidated basis in accordance with
generally accepted accounting principles) would be greater than 1 to 1;
(5) The corporation will not issue or sell any options, warrants or
other rights to acquire any shares of capital stock of the corporation
other than those referred to in subparagraph 5F above; and
(6) The corporation will not consolidate or merge with or into any
other corporation (other than a merger in which the corporation is the
surviving corporation and which will not result in more than 50% of the
capital stock of the corporation being owned of record or beneficially by
persons other than the holders of such capital stock immediately prior to
such merger in the same proportion in which such shares were held
immediately prior to such merger), sell or otherwise dispose of all
20
<PAGE>
or substantially all of the properties and assets of the corporation in
one or more transactions to any other person or persons or consent to a
Change of Control.
7B Without the prior written consent of the holders of a majority of
the outstanding shares of Series A Shares and Series B Shares, voting
together as a single class, given in person or by proxy, either in
writing or at a special meeting called for that purpose:
(1) The corporation will not (I) create or authorize the creation
of, or issue or sell any additional class or series of shares unless the
same ranks junior to the Series A Shares and Series B Shares as to the
payment of dividends, distribution of assets upon a Liquidation Event,
redemptions or other distributions, (II) increase the authorized amount
of the Series A Shares or Series B Shares or the authorized amount of any
additional class or series of shares unless the same ranks junior to the
Series A Shares and Series B Shares as to the payment of dividends or
distribution of assets upon a Liquidation Event, redemptions or other
distributions, or (III) create or authorize any obligation or security
convertible into Series A Shares or Series B Shares or into shares of any
other class or series unless the same ranks junior to the Series A Shares
and Series B Shares as to the payment of dividends or distribution of
assets upon a Liquidation Event, redemptions or other distributions,
whether any such creation or authorization or increase shall be by means
of amendment of the Certificate of Incorporation, merger, consolidation
or otherwise;
(2) The corporation will not amend, alter or repeal the
corporation's Certificate of Incorporation or By-laws in any manner, take
any action or otherwise file any directors' resolutions pursuant to
Section 151(g) of the General Corporation Law of the State of Delaware
containing any provision, in either case, which adversely affects the
respective preferences, qualifications, special or relative rights or
privileges of the Series A Shares or the Series B Shares or which in any
manner adversely affects the Series A Shares or Series B Shares or the
holders thereof;
(3) The corporation will not reclassify the Series A Shares or the
Series B Shares into shares of any other series or class or reclassify
any class of AB Junior Stock into shares of any class or series of
capital stock ranking, either as to payment of dividends, distribution on
a Liquidation Event or entitled to redemptions or other distributions,
senior or on a parity with the Series A Shares or Series B Shares.
(4) The corporation will not, and will not permit any subsidiary to,
either directly or indirectly, incur, create or assume any indebtedness
for borrowed money if, after giving effect thereto, the ratio of total
indebtedness to net worth of the corporation and its subsidiaries
(determined on a consolidated basis in accordance with generally accepted
accounting principles) would be greater than 1 to 1;
21
<PAGE>
(5) The corporation will not issue or sell any options, warrants or
other rights to acquire any shares of capital stock of the corporation
other than those referred to in subparagraph 5F above; and
(6) The corporation will not consolidate or merge with or into any
other corporation (other than a merger in which the corporation is the
surviving corporation and which will not result in more than 50% of the
capital stock of the corporation being owned of record or beneficially by
persons other than the holders of such capital stock immediately prior to
such merger in the same proportion in which such shares were held
immediately prior to such merger), sell or otherwise dispose of all or
substantially all of the properties and assets of the corporation in one
or more transactions to any other person or persons or consent to a
Change of Control.
ARTICLE FIFTH: (a) Election of directors need not be by ballot
except and to the extent provided in the by-laws of the corporation.
(b) The Board of Directors of the corporation shall consist of eight
(8) members. Two (2) members of the Board of Directors shall be elected by a
majority vote of the outstanding shares of the Common Stock of the corporation
and six (6) members of the Board of Directors shall be elected by a majority
vote of the outstanding Series Shares of the corporation.
ARTICLE SIXTH: In furtherance and not in limitation of the powers
conferred upon the Board of Directors by law, the Board of Directors shall have
power to make, adopt, alter, amend or repeal from time to time the by-laws of
the corporation, subject to the right of the stockholders entitled to vote with
respect thereto to alter and repeal the by-laws made by the Board of Directors.
ARTICLE SEVENTH: Whenever a compromise or arrangement is proposed
between this corporation and its creditors or any class of them and/or between
this 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 this corporation or of any creditor or stockholders thereof or on
the application of any receiver or receivers appointed for this corporation
under the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this 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 of this corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
corporation as a consequence of such compromise
22
<PAGE>
or arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders of this corporation, as the case may be,
and also on this corporation.
ARTICLE EIGHTH: A director of the corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (a) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (b) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) under Section 174 of the Delaware General
Corporation Law, or (d) for any transaction from which the director derived an
improper personal benefit. If the Delaware General Corporation Law is amended
after the effective date of this Certificate of Incorporation to further
eliminate or limit, or to authorize further elimination or limitation of, the
personal liability of directors for breach of fiduciary duty as a director, then
the personal liability of a director to the corporation or its stockholders
shall be automatically eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law as so amended. Any repeal or modification
of the foregoing provisions of this Article by the stockholders of the
corporation shall not adversely affect any right or protection of a director of
the corporation existing at the time of such repeal or modification."
IN WITNESS WHEREOF, Multex Systems, Inc. has caused this Amended and
Restated Certificate of Incorporation to be signed by the President and attested
by the Secretary this 24th day of July, 1997.
/s/ Isaak Karaev
----------------------------------
Isaak Karaev, President
/s/ Morton I. Zeidman
----------------------------------
Morton I. Zeidman, Secretary
23
<PAGE>
EXHIBIT 3.3
BY-LAWS
OF
MULTEX PUBLISHER, INC.*
ARTICLE I
---------
Stockholders
------------
Section 1.1. Place of Meeting of Stockholders. The meetings of the
stockholders of the corporation shall be held at such place or places, either
within or without the State of Delaware, as may be designated by resolution of
the Board of Directors from time to time.
Section 1.2. Annual Meetings. An annual meeting of stockholders shall be
held for the election of directors at such date and time as may be designated by
resolution of the Board of Directors from time to time. Any other proper
business may be transacted at the annual meeting.
Section 1.3. Special Meetings. Special meetings of stockholders for any
purpose or purposes may be called at any time by the President, the Board of
Directors, or by a committee of the Board of Directors which has been duly
designated by the Board of Directors and whose powers and authority, as
expressly provided in a resolution of the Board of Directors, include the power
to call such meetings, but such special meetings may not be called by any other
person or persons.
Section 1.4. Notice of Meetings. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise provided by law, the certificate of incorporation or
these by-laws, the written notice of any meeting shall be given not less than
ten nor more than sixty days before the date of the meeting to each stockholder
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
given when deposited in the mail, postage prepaid, directed to the stockholder
at his address as it appears on the records of the corporation.
Section 1.5. Adjournments. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at
___________________________________
* Name changed to Multex Systems, Inc. in October 1993.
1
<PAGE>
the same or some other place, and notice need not be given of any such adjourned
meeting if the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting, the corporation may transact any
business which might have been transacted at the original meeting. If the
adjournment is for more than thirty 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.
Section 1.6. Quorum. Except as otherwise provided by law, the certificate
of incorporation or these by-laws, at each meeting of stockholders the presence
in person or by proxy of the holders of shares of stock having a majority of the
votes which could be cast by the holders of all outstanding shares of stock
entitled to vote at the meeting shall be necessary and sufficient to constitute
a quorum. In the absence of a quorum, the stockholders so present may, by
majority vote, adjourn the meeting from time to time in the manner provided in
Section 1.5 of these by-laws until a quorum shall attend. Shares of its own
stock belonging to the corporation or, to another corporation, if a majority of
the shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the corporation, shall neither
be entitled to vote nor be counted for quorum purposes; provided, however, that
the foregoing shall not limit the right of the corporation to vote stock,
including but not limited to its own stock, held by it in a fiduciary capacity.
Section 1.7. Organization. Meetings of stockholders shall be presided
over by the Chairman of the Board, if any, or in his absence by the Vice
Chairman of the Board, if any, or in his absence by the President, or in his
absence by a Vice President, or in the absence of the foregoing persons by a
chairman designated by the Board of Directors, or in the absence of such
designation by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 1.8. Voting; Proxies. Except as otherwise provided by the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of stock held by
him which has voting power upon the matter in question. Each stockholder
entitled to vote at a meeting of stockholders may authorize another person or
persons to act for him by proxy, but no such proxy shall be voted or acted upon
after three years from its date, unless the proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it is irrevocable
and if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power.
2
<PAGE>
A stockholder may revoke any proxy which is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or another duly executed proxy bearing a later date with the Secretary of
the corporation. At all meetings of stockholders for the election of directors a
plurality of the votes cast shall be sufficient to elect. All other elections
and questions shall, unless otherwise provided by law, the certificate of
incorporation or these by-laws, be decided by the vote of the holders of shares
of stock having a majority of the votes which could be cast by the holders of
all shares of stock entitled to vote thereon which are present in person or
represented by proxy at the meeting.
Section 1.9. Fixing Date for Determination of Stockholders of Record. In
order that the corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors and which record date: (1) in the case of determination of
stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, shall unless otherwise required by law, not be more than ten days
before the date of such meeting; (2) in the case of determination of
stockholders entitled to express consent to corporate action in writing without
a meeting, shall not be more than ten days from the date upon which the
resolution fixing the record date is adopted by the Board of Directors; and (3)
in the case of any other action, shall not be more to such other action. If no
record date is fixed: (1) the record date for determining stockholders. (1) the
record date for determining stockholders entitled to notice of or to vote at a
meeting or stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the next day preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; (2) the record date
for determining stockholders entitled to express consent to corporate action in
writing without a meeting when no prior action of the Board of Directors is
required by law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
corporation in accordance with applicable law, or, if prior action by the Board
of Directors is required by law, shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such prior action; and
(3) the record date for
3
<PAGE>
determining stockholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto. A determination of stockholders of-record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 1.10. List of Stockholders Entitled to Vote. The Secretary shall
prepare and make, at least ten 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 ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, 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. Upon the willful
neglect or refusal of the directors to produce such a list at any meeting for
the election of directors, they shall be ineligible for election to any office
at such meeting. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list of stockholders or
the books of the corporation, or to vote in person or by proxy at any meeting of
stockholders.
Section 1.11. Action By Consent of Stockholders. Unless otherwise
restricted by the certificate of incorporation, any action required or permitted
to be taken at any annual or special meeting of the stockholders may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
ARTICLE II
----------
Board of Directors
------------------
4
<PAGE>
Section 2.1. Number; Tenure; Qualifications. The Board of Directors shall
consist of one or more members, the number thereof to be determined from time to
time by resolution of the Board of Directors. Each director shall hold office
until his successor has been elected and qualified or his earlier death,
resignation or removal. Directors need not be stockholders.
Section 2.2. Resignation; Removal; Vacancies. Any director may resign at
any time upon written notice to the corporation. Any newly created directorship
or any vacancy occurring in the Board of Directors for any cause may be filled
by a majority of the remaining members of the Board of Directors, although such
majority is less than a quorum, or by a plurality of the votes cast at a meeting
of stockholders, and each director so elected shall hold office until the
expiration of the term of office of the director whom he has replaced or until
his successor is elected and qualified.
Section 2.3. Place and Time of Meetings of the Board. A regular meeting
of each newly elected Board of Directors shall be held immediately following the
annual meeting of stockholders and at the place of such meeting, or as soon as
practicable thereafter at such place as shall have been previously fixed for
that purpose by resolution of the Board. Other regular meetings of the Board of
Directors may be held at such times and places as the Board of Directors may
from time to time determine or as may be specified in the notice of the meeting.
Special meetings of the Board of Directors shall be held whenever called by
order of the Board, by the President or by any of the directors, and at such
place or places as may be fixed by the Board of Directors or specified in the
notice of the meeting.
Section 2.4. Notice of Meetings of the Board of Directors. Notice of
regularly scheduled meetings of the Board of Directors need not be given. Notice
of the time and place of every special meeting of the Board of Directors shall
be given to each director by oral, telegraphic, telecopy or written notice at
least twenty-four hours before such meeting. Except as otherwise provided by law
or by these by-laws, any notice of meeting need not specify the purpose of the
meeting. Notice of an adjourned meeting need not be given other than by
announcement at the meeting at which the adjournment is taken.
Section 2.5. Telephonic Meetings Permitted. Any or all members of the
Board of Directors or any committee thereof, may participate in a meeting of the
Board of Directors or a committee by means of conference telephone or similar
communications equipment allowing all persons participating in the meeting to
5
<PAGE>
hear each other. Participation by such means shall constitute presence in person
at such meeting.
Section 2.6. Quorum; Vote Required for action. At all meetings of the
Board of Directors a majority of the total number of directors shall constitute
a quorum for the transaction of business. Except in cases in which the
certificate of incorporation or these by-laws otherwise provide, the vote of a
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
Section 2.7. Organization. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board, if any, or in his absence by the
Vice Chairman of the Board, if any, or in his absence by the President, or in
their absence by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 2.8. Action by the Board of Directors and Committees Without a
Meeting. Unless otherwise restricted by the certificate of incorporation or
these by-laws, any action required or permitted to be taken at any meeting of
the Board of Directors, or of any committee thereof, may be taken without a
meeting if all members of the Board of Directors or such committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board of Directors or such committee.
ARTICLE III
-----------
Committees
----------
Section 3.1. Committees. The Board of Directors may, by resolution passed
by a majority of the whole Board of Directors, designate one or more committees,
each committee to consist of one or more of the directors of the corporation.
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 the committee. In the absence or disqualification of a member of the
committee, 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 place of any such absent or disqualified member. Any such committee,
to the extent permitted by law and to the extent provided in the resolution of
the Board of Directors, shall have and may exercise all the powers
6
<PAGE>
and authority of the Board of Directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it.
Section 3.2. Committee Rules. Unless the Board of Directors otherwise
provides, each committee designated by the Board of Directors may make, alter
and repeal rules for the conduct of its business. In the absence of such rules
each committee shall conduct its business in the same manner as the Board of
Directors conducts its business pursuant to Article II of these by-laws.
ARTICLE IV
----------
Officers
--------
Section 4.1. Executive Officers; Election; Qualifications; Term of Office;
Resignation; Removal; Vacancies. The Board of Directors shall elect a President
and Secretary, and it may, if it so determines, choose a Chairman of the Board
and a Vice Chairman of the Board from among its members. The Board of Directors
may also elect such other officers as the Board may from time to time determine.
Each officer shall hold office until the first meeting of the Board of Directors
after the annual meeting of stockholders next succeeding his election, and until
his successor is elected and qualified or until his earlier death, resignation
or removal. Any officer may resign at any time upon written notice to the
corporation. The Board of Directors may remove any officer with or without cause
at any time, but such removal shall be without prejudice to the contractual
rights of such officer, if any, with the corporation. Any number of offices may
be held by the same person. Any vacancy occurring in any office of the
corporation by death, resignation, removal or otherwise may be filled for the
unexpired portion of the term by the Board of Directors at any regular or
special meeting.
Section 4.2. Powers and Duties of Executive Officers. The officers of the
corporation shall have such powers and duties in the management of the
corporation as may be prescribed by the Board of Directors and, to the extent
not so provided, as generally pertain to their respective offices, subject to
the control of the Board of Directors. The Board of Directors may require any
officer, agent or employee to give security for the faithful performance of his
duties.
ARTICLE V
---------
Stock
-----
7
<PAGE>
Section 5.1. Certificates. Every holder of stock shall be entitled to
have a certificate signed by or in the name of the corporation by the Chairman
or Vice Chairman of the Board of Directors, if any, or the President or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary, of the corporation, certifying the number of shares
owned by him in the corporation. Any of or all the signatures on the certificate
may be a facsimile. In case any officer, transfer agent, or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent, or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer, transfer agent, or registrar at the date of issue.
Section 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of New
Certificates. The corporation may issue a new certificate of stock in the place
of any certificate theretofore issued by it, alleged to have been lost, stolen
or destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate.
ARTICLE VI
----------
Indemnification
---------------
Section 6.1. Right to Indemnification. The corporation shall, to the
fullest extent permitted by Delaware law, as in effect from time to time (but,
in the case of any amendment of the Delaware General Corporation Law, only to
the extent that such amendment permits the corporation to provide broader
indemnification rights than said law permitted the corporation to provide prior
to such amendment), indemnify each person who is or was a director or officer of
the corporation or of any of its wholly-owned subsidiaries, who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, or was or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation or of any of its wholly-
owned subsidiaries, or is or was at any time serving, at the request of the
corporation, any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise in any capacity against all
8
<PAGE>
expense, liability and loss (including, but not limited to, attorneys' fees,
judgments, fines, excise taxes or penalties (with respect to any employee
benefit plan or otherwise), and amounts paid or to be paid in settlement)
incurred or suffered by such director or officer in connection with such
proceeding; provided, however, that, except as provided in Section 6.5, the
corporation shall not be obligated to indemnify any person under this Article VI
in connection with a proceeding (or part thereof) if such proceeding (or part
thereof) was not authorized by the Board of Directors of the corporation and was
initiated by such person against (a) the corporation or any of its subsidiaries,
(b) any person who is or was a director, officer, employee or agent of the
corporation or any of its subsidiaries and/or (c) any person or entity which is
or was controlled, controlled by, or under common control with, the corporation
or has or had business relations with the corporation or any of its
subsidiaries.
Section 6.2. Right to Indemnification a Contract Right; Prepayment of
Expenses. The right to indemnification conferred in this Article VI shall be a
contract right, shall continue as to a person who has ceased to be a director or
officer of the corporation or of any of its wholly-owned subsidiaries and shall
inure to the benefit of his or her heirs, executors and administrators, and
shall include the right to be paid by the corporation the expenses incurred in
connection with the defense or investigation of any such proceeding in advance
of its final disposition; provided, however, that, if and to the extent that
Delaware law so requires, the payment of such expenses in advance of the final
disposition of a proceeding shall be made only upon delivery to the corporation
of an undertaking, by or on behalf of such director or officer or former
director or officer, to repay all amounts so advanced if it shall untimately be
determined that such director or officer or former director or officer is not
entitled to be indemnified by the corporaton.
Section 6.3. Vesting of Right of Indemnification. The Corporation's
obligation to indemnify and to pay expenses in advance of the final disposition
of a proceeding under this Article VI shall arise, and all rights and
protections granted to directors and officers under this Article VI shall vest,
at the time of the occurrence of the transaction or event to which any
proceeding relates, or at the time that the action or conduct to which any
proceeding relates was first taken or engaged in (or omitted to be taken or
engaged in), regardless of when any proceeding is first threatened, commenced or
completed.
Section 6.4. Amendment or Repeal. Notwithstanding any other provision of
these by-laws, no action by the corporation, either by amendment to or repeal of
this Article VI or otherwise shall
9
<PAGE>
diminish or adversely affect any right or protection granted under this Article
VI to any director or officer or former director or officer of the corporation
or of any of its wholly-owned subsidiaries which shall have become vested as
aforesaid prior to the date that any such amendment, repeal or other corporate
action is taken.
Section 6.5. Claim for Indemnification. If a claim for indemnification
and/or for payment of expenses in advance of the final disposition of a
proceeding arising under this Article VI is not paid in full by the corporation
within thirty days after a written claim has been received by the corporation,
the claimant may at any time thereafter bring suit against the corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim.
Section 6.6. Non-Exclusivity of Rights. The right to indemnification and
the payment of expenses incurred in connection with the defense or investigation
of a proceeding in advance of its final disposition conferred in this Article VI
shall not be exclusive of any other right which any person may have or hereafter
acquire under any statute, provision of the Certificate of Incorporation, by-
laws, agreement, vote of stockholders or disinterested directors or otherwise.
The corporation may also indemnify all other persons to the fullest extent
permitted by Delaware law.
ARTICLE VII
-----------
Miscellaneous
-------------
Section 7.1. Fiscal Year. The fiscal year of the corporation shall be
determined by resolution of the Board of Directors.
Section 7.2. Seal. The corporate seal shall have the name of the
corporation inscribed thereon and shall be in such form as may be approved from
time to time by the Board of Directors.
Section 7.3. Waiver of Notice of Meetings of Stockholders, Directors and
Committees. Any written waiver of notice, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor
10
<PAGE>
the purpose of any regular or special meeting of the stockholders, directors, or
members of a committee of directors need be specified in any written waiver of
notice.
Section 7.4. Form of Records. Any records maintained by the corporation
in the regular course of its business, including its stock ledger, books of
account, and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs, or any other information storage
device, provided that the records so kept can be converted into clearly legible
form within a reasonable time. The corporation shall so convert any records so
kept upon the request of any person entitled to inspect the same.
Section 7.5. Amendment of By-Laws. These by-laws may be altered or
repealed, and new by-laws made, by the Board of Directors, but the stockholders
may make additional by-laws and may alter and repeal any by-laws whether adopted
by them or otherwise.
11
<PAGE>
EXHIBIT 10.1
INTERNATIONAL BUSINESS MACHINES CORPORATION
TO
MULTEX SYSTEMS, INC.
===========================================
SUBLEASE
===========================================
DATED AS OF AUGUST 23, 1995
PREMISES: THE ENTIRE 5TH FLOOR
33 MAIDEN LANE
NEW YORK, NEW YORK
<PAGE>
SUBLEASE
--------
SUBLEASE, dated as of the __ day of August, 1995, between INTERNATIONAL
BUSINESS MACHINES CORPORATION, a New York corporation, having its principal
office at Armonk, New York 10504 ("Sublessor") and MULTEX SYSTEMS, INC., a
---------
Delaware corporation, having an office at 2 Journal Square Plaza, Jersey City,
New Jersey 07306 ("Sublessee").
---------
W I T N E S S E T H:
-------------------
WHEREAS, by Lease, dated March 29, 1985, by and between Federal Tower
Associates, as landlord ("Landlord"), and Sublessor, as tenant, which Lease was
--------
supplemented by (aa) that certain letter agreement, dated March 29, 1985,
between Landlord and Sublessor, and was amended by (bb) that certain Lease
Modification Agreement, dated June 28, 1995, between Landlord and Sublessor, and
(cc) that certain Second Lease Modification Agreement, dated February 27, 1992,
between Landlord and Sublessor, (said Lease, as so supplemented and amended,
being hereinafter referred to as the "Main Lease") pursuant to which Landlord
----------
leased to Sublessor the entire second through fifteenth floors and certain
portions of the Concourse Level and Mezzanine Level in the building ("Building")
--------
located at 33 Maiden Lane, New York, New York; and
WHEREAS, Sublessee desires to sublease from Sublessor a portion of the
premises demised under the Main Lease consisting of the entire 5th floor
comprising approximately 21,985 rentable square feet in the Building (the
"Premises"), as more particularly shown by hatching on the floor plan annexed
- ---------
hereto as Exhibit A, upon the terms and conditions hereinafter set forth.
---------
NOW, THEREFORE, in consideration of the sum of ten dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Sublessor and Sublessee hereby agree as follows:
DEFINED TERMS:
- -------------
1. Unless the context clearly indicates a contrary intent, or unless
otherwise specifically provided therein, all capitalized terms used in this
Sublease which are defined in the Main Lease shall be deemed to have the
respective meanings set forth in the Main Lease.
<PAGE>
TERM, PREMISES, USE.
- -------------------
2. A. Sublessor hereby subleases to Sublessee, and Sublessee hereby
takes and hires from Sublessor, for a term (the "Term") commencing on the
----
ate which is the later to occur of the date upon which (i) Sublessor and
Sublessee shall have unconditionally executed and delivered a counterpart of
this Sublease to each other, and (ii) Landlord has consented or been deemed to
consent to the execution and delivery of this Sublease as described in Paragraph
---------
33 hereof (the "Commencement Date") and expiring at 12:00 p.m. on
- -- -----------------
December 30, 2000 (the "Expiration Date") unless sooner terminated, the
----------------
Premises, together with all rights and appurtenances thereunto belonging, at the
rentals and upon and subject to the covenants, conditions and agreements set
forth in this Sublease.
B. The Premises will be occupied and used by Sublessee only for
executive and administrative offices for the business of Sublessee which is the
design and maintenance of software and for no other purpose. Sublessee's offices
will include the operation of a central computer site for computers for the
receipt, storage and distribution of data.
C. When the Commencement Date has been determined by Sublessor in
accordance with the provisions of Paragraph 2A hereof, Sublessor and Sublessee
------------
shall, upon the request of either of them, execute a statement prepared by
Sublessor setting forth such date in substantially the form of Exhibit B
---------
attached hereto. Any failure of Sublessee to execute such statement shall not
affect Sublessor's determination of the Commencement Date.
FIXED RENT; ADDITIONAL RENT.
- ---------------------------
3. A. (i) Sublessee shall pay to Sublessor fixed rent ("Fixed Rent")
----------
for the period commencing on the Commencement Date through the Expiration Date
at the rate of $329,775.00 per annum, payable in equal monthly installments of
--- -----
$27,418.25 each on the first day of each and every month during such period.
The first monthly installment of Fixed Rent shall be paid by Sublessee to
Sublessor upon the execution of this Sublease by Sublessee and shall be applied
to the fourth month of the Term, notwithstanding any provisions of this Sublease
(including the provisions with respect to the Initial Credit, as hereinafter
defined) to the contrary.
(ii) Provided that Sublessee shall not then be in material default
of any of its obligations under this Sublease, Sublessee shall be entitled to a
credit (the "Initial Credit") against the monthly installments of Fixed Rent
---------------
payable during the first, second, third, tenth, eleventh and twelfth months of
the
2
<PAGE>
Term, to be applied in equal monthly installments of $27,481.25 each against the
monthly installments of Fixed Rent coming due for such months under this
Sublease, up to a maximum aggregate amount of $164,887.50; provided, that
Sublessee shall be responsible for Additional Rent, if any, as set forth in
Paragraph 3B of this Sublease and for electricity charges with respect to the
- ------------
Premises as set forth in Paragraph 13 of this Sublease commencing on and at all
------------
times after the Commencement Date, without giving effect to the Initial Credit
set forth in this sub-clause.
B. Sublessee shall pay to Sublessor additional rent ("Additional
----------
Rent"), as follows, which Additional Rent shall be payable to Sublessor on or
- ----
before the date which is thirty (30) days prior to the date such Additional Rent
is payable to Landlord by Sublessor;
(i) Sublessee's Tax Proportionate Share of the amount by which
Taxes payable for the applicable Tax Year exceed the Base Tax Factor;
provided, however, that for purposes of this calculation, the "Base Tax
-------- -------
Factor", as used in the Main Lease, shall mean the Taxes payable with
respect to the Tax Year commencing on July 1, 1995, and ending on June 30,
1996;
(ii) Sublessee's Operating Proportionate Share of the amount by
which Operating Expenses for the applicable Escalation Year exceed the Base
Operating Factor; provided, however, that for purposes of this calculation,
-------- -------
the "Base Operating Factor", as used in the Main Lease, shall mean
Operating Expenses for the twelve (12) month period commencing with the
Commencement Date and ending one (1) day prior to the first anniversary of
the Commencement Date;
(iii) any and all other cost, expenses, charges, payments or
adjustments payable by Sublessor under the Main Lease with respect to the
Premises; and
(iv) all other sums of money as shall become due and payable to
or for the benefit of Sublessor pursuant to the provisions of this
Sublease.
C. For purposes hereof, (i) "Sublessee's Tax Proportionate Share"
-----------------------------------
shall mean 3.94% and (ii) "Sublessee's Operating Proportionate Share" shall mean
-----------------------------------------
3.97%.
D. "Rent" shall mean Fixed Rent and Additional Rent payable
----
hereunder collectively. Sublessor shall have the same remedies for a default in
payment of Additional Rent as for a default in payment of Fixed Rent.
3
<PAGE>
E. If the Commencement Date shall take place on a day other than the
first day of a calendar month, the Fixed Rent and Additional Rent for such month
shall be apportioned to (and shall include) such date, and such apportioned Rent
from the period from the Commencement Date to the end of such calendar month
shall be payable simultaneously with the payment of the monthly installment of
Fixed Rent payable on the first day of the fourth month of the Sublease.
F. In the event that any sums payable by Sublessor under the Main
Lease with respect to the Premises are subject to adjustment by Landlord at the
end of a year or other period, then either (i) Sublessee shall pay to Sublessor
within then (10) days after billing therefore, Sublessee's allocable portion of
any deficiencies payable to Landlord by reason of such adjustment, which
obligation of Sublessee shall survive the termination of this Sublease, or (ii)
Sublessor shall credit against the next payments of Additional Rent coming due
hereunder Sublessee's allocable portion of any refund or credit received by
Sublessor from Landlord by reason of such adjustment, except that if no further
payments of Additional Rent shall be due hereunder, then Sublessor shall refund
such amount to Sublessee promptly upon receipt of the same from Landlord.
Sublessor shall, promptly upon request by Sublessee, furnish copies of bills and
statement received by Sublessor from Landlord with respect to the Premises.
G. Fixed Rent and, except as otherwise specifically provided in this
Sublease, Additional Rent shall be paid by Sublessee to Sublessor, without
notice or demand therefor, in lawful money of the United States of America, by
check drawn on a member of the New York Clearinghouse Association, at the
address of Sublessor set forth herein or at such other address as may be
designated by Sublessor from time to time. There shall be no abatement of,
deduction from, or counterclaim or setoff against Fixed Rent or Additional Rent,
except that Sublessee shall be entitled to an abatement of rent if and so long
as Sublessor shall receive an abatement of rent reserved under the Main Lease
pursuant to Article 15 and Article 16 of the Main Lease with respect to the
Premises. If any amount payable by Sublessee or repayable to Sublessee as
provided for herein shall be determined after the termination of this Sublease,
such amount shall nevertheless be payable by Sublessee or repayable to
Sublessee, as the case may be, in the same manner as if this Sublease had not
terminated.
H. If Sublessee fails to make any payment or shall default in the
performance of any term, covenant, condition or provision of this Sublease which
involves an expenditure of money by Sublessee, Sublessor, at Sublessor's sole
option, upon notice to Sublessee, may make such payment or expend such sums as
may be necessary to perform and fulfill such term, covenant, condition
4
<PAGE>
or provision. In such event, Additional Rent shall include, also, on written
demand, the entire amount of Sublessor's expenditure or payment and any and all
costs of any kind (including, without limitation, legal fees) as may be
necessary to perform and fulfill such term, covenant, condition or provision,
together with interest on the amount thereof from the time such moneys are
expended until paid at an annual rate equal to two (2%) percent per annum above
the prime interest rate on unsecured loans charged by Chemical Bank at its main
office in New York, New York on short-term unsecured loans in effect from time
to time during any period for which computation of interest is made hereunder
("Prime Rate").
----------
CONDITION OF THE PREMISES.
- -------------------------
4. Sublessee has inspected the Premises, knows the condition thereof and
agrees to accept the same "AS IS" on the Commencement Date in the condition in
which it exists as of the Commencement Date. Sublessee acknowledges that
Sublessor has made no representations or warranties whatsoever with respect to
the Premises, and Sublessee agrees that Sublessor has no obligation to alter or
repair the Premises or to prepare the same in any way for Sublessee's occupancy
or use. During the term of the Sublease, Sublessee shall have the use of the
office furniture located on the fifth floor as of the date of this Sublease a
description of which furniture is attached hereto as Exhibit C. Notwithstanding
---------
anything to the contrary contained herein, Sublessor shall be responsible for
any latent defects and any asbestos existing in the Premises prior to the
Commencement Date.
INCORPORATED ARTICLES OF THE MAIN LEASE.
- ---------------------------------------
5. A. The parties agree that except as otherwise provided either in
this Paragraph 5 or elsewhere in this Sublease, and to the extent not
-----------
inconsistent with either the agreements and understandings expressed or implied
in this Sublease or applicable solely to the original parties to the Main Lease,
this Sublease shall specifically incorporate all of the terms, covenants,
conditions and provisions of the Main Lease with the exception of the Excluded
Articles (as hereinafter defined) (the incorporated terms, covenants, conditions
and provisions hereinafter collectively referred to as the "Incorporated
------------
Articles") and Sublessor shall have all the rights, but none of the obligations,
- --------
of Landlord under the Incorporated Articles. Sublessee shall be entitled,
during the Term, (i) to receive all services, utilities, repairs and facilities
to be provided by Landlord under the Main Lease, subject to the provisions of
the Main Lease relating to the furnishing of the such services, utilities,
repairs and facilities, and (ii) to have all rights and benefits afforded to
Sublessor by the Main
5
<PAGE>
Lease, except as set forth above and as otherwise provided in this Sublease.
B. Subject to the provisions of Paragraph 6, Sublessee shall have
-----------
all rights and obligations of a tenant under the Incorporated Articles;
provided, however, that specific inclusion of any article of the Main Lease
- -------- -------
shall not require Sublessee to make double payments of any charges or
escalations thereunder. Any reference to "demised premises" or "premises" in
---------------- --------
the Incorporated Articles shall be deemed a reference to the Premises herein.
With respect to the Incorporated Articles, any reference to "Tenant", shall be
------
deemed to refer to "Sublessee" and any reference to "Landlord" shall be deemed
--------- --------
to refer to "Sublessor". If there shall be any inconsistency between the
---------
Incorporated Articles and the express provisions of this Sublease, such
provisions of this Sublease shall govern. Notwithstanding the foregoing, any
reference to the Main Lease without reference to the Incorporated Articles or to
any specific provisions of the Main Lease shall mean all terms covenants,
conditions and provisions of the Main Lease.
C. "Excluded Articles" shall be deemed to mean the following
-----------------
articles and sections of the Main Lease: Articles and Sections 1.02, 2, 3, 4,
5.01, 5.03, 7.02A (1st parenthetical clause) 7.02A (3rd sentence), 7.02C, 7.02H
(1st sentence), 7.03A (1st parenthetical clause), 7.03F (1st sentence), 10.01,
12.01 (last clause) 15.02A, 16.01B, 17.04, 19.02, 22 (but not excluding 22.08),
23.01B, 25.02, 28, 31.02, 31.03, 32.04, 35, 37, 38, 42 and 44, Exhibits B, C and
I: and Sections 3, 4, 5, 6, 7.02, and Exhibits A, B and C (as incorporated into
Exhibit B of the March 29, 1985 Lease, which is also an Excluded Article) of the
First Modification Agreement.
D. For purposes of this Sublease, the following Exhibits and
Schedule to this Sublease shall be deemed to supersede and replace the
comparable Exhibits to the Main Lease, and shall govern the rights and
obligations of Sublessor and Sublessee with respect to all matters contained
herein:
(i) Exhibit D to this Sublease, with respect to cleaning services,
---------
shall replace Exhibit D to the Main Lease;
---------
(ii) Exhibit E to this Sublease, with respect to certain rules and
---------
regulations, shall replace Exhibit E to the Main Lease; and
---------
(iii) Exhibit F to this Sublease shall replace Exhibits F and G to
--------- ----------------
the Main Lease.
6
<PAGE>
E. Notwithstanding anything to the contrary contained herewith,
Section 7.03(E) of the Incorporated Articles shall be amended to provide that
Sublessor shall submit a Sublessor's Statement within six (6) months after any
such termination.
MATTERS AFFECTING LANDLORD.
- --------------------------
6. A. Sublessor shall have no responsibility or liability of any
kind whatsoever for any default of or by Landlord under the Main Lease or for
the furnishing to Sublessee or the Premises of any services of any kind
whatsoever which Landlord is required to furnish to Sublessor or to the Premises
under the Main Lease. In furtherance (and without limitation) of the foregoing,
Sublessee agrees that Sublessor shall have no obligation to furnish heat, air
conditioning, electricity, cleaning service, and/or any other building services
of any kind whatsoever, and that Sublessor shall not be obligated to make any
repairs or restorations of any kind whatsoever in the Premises.
B. Sublessee agrees to look solely to Landlord for any
services, repairs and/or work of any kind whatsoever to be furnished to the
Premises; however, Sublessor agrees that Sublessor will use reasonable efforts
to cause Landlord to perform Landlord's obligations under the Main Lease with
respect to the Premises, to forward to Landlord any approvals or consents
requested by Sublessee, and to enforce Sublessor's rights against Landlord under
the Main Lease. If Landlord shall default in any of its obligations to
Sublessor with respect to the Premises, Sublessee shall be entitled to
participate with Sublessor in the enforcement of Sublessor's rights against
Landlord (and in any recovery or relief obtained), but Sublessor shall have no
obligation to bring any action or proceeding or to take any steps to enforce
Sublessor's rights against Landlord. Any action or proceeding so instituted by
Sublessor shall be at the sole expense of Sublessee. If, after written request
from Sublessee, Sublessor shall fail or refuse to take appropriate action for
the enforcement of Sublessor's rights against Landlord, Sublessee shall have the
right, at Sublessee's sole cost and expense, to take such action in its own name
and, for that purpose and only to such extent, all of the rights of Sublessor to
enforce the obligations of Landlord under the Main Lease are hereby conferred
upon and are conditionally assigned to Sublessee and Sublessee hereby is
subrogated to such rights (including, without limitation, the benefit of any
recovery or relief); provided, however, if any such action or proceeding against
Landlord in Sublessee's name is barred by reason of lack of privity, non-
assignability or otherwise, then, at Sublessor's option, (i) Sublessee may take
such action or proceeding in Sublessor's name, or (ii) Sublessor shall, at
Sublessee's sole cost and expense, join Sublessee in such action or proceeding,
and Sublessor agrees, in either case, to execute all documents reasonably
7
<PAGE>
requested by Sublessee as necessary to allow such action or proceeding to
proceed, provided further, however that (x) Sublessee shall only have such
rights if Sublessee shall not be in default beyond applicable notice and grace
periods, under this Sublease and (y) Sublessor shall have the right to require
Sublessee to discontinue such action if in the reasonable opinion of Sublessor
such action may cause a cancellation, forfeiture or termination of the Main
Lease or Sublessor's estate and rights thereunder with respect to the Premises.
Sublessee shall indemnify and hold Sublessor harmless from and against any and
all losses, costs, liability, claims, damages, expenses (including, without
limitation, attorneys' fees), penalties and fines to which Sublessor may be
exposed and which Sublessor may incur in connection with or arising out of the
taking of any such action by Sublessee. Sublessor covenants and agrees that
Sublessor shall observe and perform each and every term, covenant and condition
to be observed or performed by Sublessor as tenant under the Main Lease, except
such obligations which are, by the terms hereof, to be performed by Sublessee.
Sublessor shall not do any act or thing which would constitute a default under
the Main Lease.
C. Sublessor shall promptly forward to Sublessee copies of all
statements, notices, demands, and other communications received from Landlord
relating to the Premises, the Sublease or Sublessee.
SUBORDINATION.
- -------------
7. This Sublease and all rights of Sublessee hereunder are and shall
be subject and subordinate to the Main Lease and to all mortgages, ground
leases, leasehold mortgages, encumbrances, covenants, restrictions and other
rights, if any, to which the Main Lease and the Sublessor's interest therein are
subject and subordinate and Sublessor may exercise all of the rights,
privileges, claims, powers and remedies with respect to the Premises reserved to
the Landlord under the Main Lease, to the same extent as if fully set forth
herein at length, including, without limitation, the right (a) arising out of
any default in the payment of money or otherwise, (b) to give or receive any
consent, notice, or willful approval and (c) to exercise any election or option
(including, without limitation, election of remedies). The Sublessee is also
subject to any amendments to the Main Lease or supplemental agreements hereafter
made between Landlord and Sublessor, provided that any such amendments and/or
supplemental agreements do not adversely affect Sublessee or its use of the
Premises or increase Sublessee's or decrease Sublessors obligations hereunder.
Sublessor shall provide Sublessee with copies of any such amendments or
supplemental agreements (with any proprietary information appropriately
8
<PAGE>
redacted) promptly after Sublessor receives final executed copies of the same.
INDEMNIFICATION.
- ---------------
8. A. Sublessee agrees not to do or permit to be done any act or
thing or neglect to take any action which act or thing or neglect will
constitute or cause a breach or violation of any of the terms, covenants,
conditions or provisions of the Main Lease or which will make Sublessor liable
for any damages, claims, fines, costs or penalties under the Main Lease.
Sublessee agrees to indemnify Sublessor and hold Sublessor harmless from and
against all loss, liability, obligation, damage, penalty, cost, charge and
expense of any kind whatsoever (including, but not limited to, attorneys' fees),
whensoever asserted or occurring, with Sublessor may incur or pay out, or which
may be asserted against Sublessor (a) by reason of any failure of or by
Sublessee to perform or comply with any and all of the terms, covenants,
conditions and provisions of this Sublease, (b) by reason of any breach or
violation by (or caused by) Sublessee of the terms, covenants, conditions and
provisions of the Main Lease, (c) by reason of any work or thing of whatsoever
kind done in, or about the Premises or the Building by Sublessee's employees,
contractors, agents, licensees or invitees (including, but not limited to,
construction alternations, repairs or similar acts of any kind whatsoever, and
whether or not authorized by this Sublease), (d) by reason of any negligence or
willful act or omission of Sublessee or Sublessee's employees, contractors,
agents, licensees or invitees or (e) by reason of any injuries to persons or
property occurring in, on or about the Premises or the Building caused by the
negligence or willful act of omission of Sublessee; provided, however, that this
-------- -------
subsection (e) shall not apply to injuries to persons or property caused by the
acts, omissions or negligence of Sublessor or Sublessor's employees,
contractors, agents or licensees. If any action proceeding shall be brought
against Sublessor or Landlord by reason of any such claim, Sublessee, upon not
less than five (5) days' notice from Sublessor which notice shall contain a copy
of any documents received by Sublessor with respect to such action or
proceeding, agrees to resist or defend such action or proceeding and to employ
counsel therefor reasonably satisfactory to Sublessor; it being understood that
counsel for Sublessee's insurance company shall be deemed to be satisfactory to
Sublessor. Sublessee shall pay to Sublessor on demand all sums which may be
owing to Sublessor by reason of the provisions of the provisions of this
Paragraph 8A. Sublessee's obligations under this Paragraph 8A shall survive the
- ------------ ------------
termination of this Sublease.
B. Sublessor agrees not to do or permit to be done any act or
thing or neglect to take any action which act or thing
9
<PAGE>
or neglect will constitute or cause a breach or violation of any of the terms,
covenants, conditions or provisions of the Main Lease as the same applies to the
Premises. Sublessor agrees to indemnify and hold Sublessee harmless from and
against all loss, liability, obligation, damage, penalty, cost, charge and
expense of any kind whatsoever (including, but not limited to, attorneys' fees,
whensoever asserted or occurring, which Sublessee may incur or pay out, or which
may be asserted against Sublessee (a) by reason of any failure of or by
Sublessor to perform or comply with any and all of the terms, covenants,
conditions, and provisions of this Sublease, (b) by reason of any covenants,
conditions and provisions of the Main Lease as the same applies to the Premises,
(c) by reason of any work or thing of whatsoever nature and done in, on or about
the Premises or the Building by Sublessor's employees, contractors, agents,
licensees or invitees (including, but not limited to, construction alterations,
repair or similar acts of any kind whatsoever, and negligence or willful act or
omission of Sublessor or Sublessor's employees, contractors, agents, licensees
or invitees or (e) by reason of any injuries to persons or property occurring
in, on or about the portions of the Building (other than the Premises) leased by
Sublessor pursuant to the Main Lease; provided, however, that sub-clause (e)
-------- -------
shall not apply to injuries to persons or property caused by the acts, omissions
or negligence of Sublessee or Sublessee's employees, contractors, agents or
licensees. If any action or proceeding shall be brought against Sublessee by
reasons of any such claim, Sublessor, upon notice from Sublessee, agrees to
resist or defend such action or proceeding and to employ counsel therefor
reasonably satisfactory to Sublessee; it being understood that counsel for
Sublessor's insurance company shall be deemed to be satisfactory to Sublessee.
Sublessor shall pay to Sublessee on demand all sums which may be owing to
Sublessee by reason of the provisions of this Paragraph 8B. Sublessor's
------------
obligations under this Paragraph 8B shall survive the termination of this
------------
Sublease and the Main Lease.
ALTERATIONS.
- -----------
9. A. All alterations, decorations, installations, additions,
fixtures, equipment, improvements and appurtenances attached to, or built into,
the Premises made by either Sublessor or Sublessee and affixed to the realty so
that removal thereof may cause material damage shall be and remain part of the
Premises and be deemed the property of Landlord and shall not be removed by
Sublessee. All business machines, fixtures, furniture, furnishings and other
articles of personal property owned by Sublessee, located in the Premises and
not so affixed to the realty (all of which are, collectively, hereinafter
referred to as "Sublessee's Property") shall be and remain the property of
--------------------
Sublessee, and may be removed by it at any time during the Term, provided that
Sublessee repairs any damage caused by removal of
10
<PAGE>
Sublessee's Property. Any of Sublessee's Property which shall remain in the
Premises following the termination on of this Sublease and the removal of
Sublessee from the Premises may, at the option of Sublessor, be deemed to have
been abandoned and either may be retained by Sublessor as its property or be
removed and disposed of, without accountability and at Sublessee's expense, in
such manner as Sublessor may see fit, with any damage to the Premises or the
Building caused by such removal to be repaired at Sublessee's expense.
B. Sublessee shall make no alterations, decorations,
installations, additions or improvements (collectively, "Alterations") in the
-----------
Subleased Premises without the prior written consent of Sublessor, which consent
Sublessor shall not unreasonably withhold or delay provided Sublessee complies
with all applicable provisions of the Main Lease. Sublessor and Sublessee agree
that Sublessor has consented to the design concept for the Alterations set forth
on Exhibit G-2 annexed hereto, subject to review and approval by Sublessor and
-----------
Landlord of Sublessee's final plans and specifications to such Alterations and
any other information reasonably required by Sublessor or Landlord in accordance
with the Main Lease with respect to such Alterations, and subject to the further
provisions of this Paragraph 9B. With respect to each consent of Sublessor and
------------
Landlord to any Alterations, Sublessor and Landlord shall indicate which
Alterations, if any, Sublessor shall require Sublessee to remove from the
Premises pursuant to Paragraph 9A upon the termination of this Sublease.
------------
Notwithstanding anything to the contrary contained herein, Sublessor shall not
require the restoration or removal of any alteration, decoration, installation,
or addition performed by Sublessee in the Premises unless Landlord shall require
such restoration pursuant to the provisions of the Main Lease.
INSURANCE.
- ---------
10. Sublessee shall obtain and maintain in full force and effect
during the Term, at its own cost and expense, to protect Sublessor, Landlord,
any superior lessor, any superior mortgagee, Sublessee and any of their
respective agents, as additional insureds, a policy of comprehensive commercial
general public liability insurance with respect to the Premises and other
insurance pursuant to Article 8 of the Main Lease for Sublessor's property and
Sublessee's Property in each instance in accordance with the terms of and in the
amounts specified in Article 8 of the Main Lease.
DAMAGE AND DESTRUCTION.
- ----------------------
11. A. Nothing contained in this Sublease shall relieve Sublessee
from liability that may exist as a result of damage
11
<PAGE>
from fire or other casualty, but each party shall look first to its own
insurance before making any claim against the other Party for recovery for loss
or damage resulting from fire or other casualty. To the extent that such
insurance is in force and collectible and to the extent permitted by law,
Sublessor and Sublessee each hereby releases and waives all right of recovery
against the other or anyone claiming through or under the other by way of
subrogation or otherwise with respect to damage by fire or other casualty. The
foregoing release and waiver shall be in force only if the insurance policies of
Sublessor and Sublessee provide that such release or waiver does not invalidate
the insurance. Each party agrees to use its best efforts to include in its
applicable insurance policies such a provision. If the inclusion of said
provision would involve an additional expense, either party, at its expense, may
require such provision to be inserted in the other's policy.
B. In the event that (A) (i) (a) thirty (30%) percent or more
of the rentable area of the Premises shall be damaged by fire or other casualty,
or (ii) the Premises are damaged to less than the extent of 30% of the rentable
area of the Premises but repairs to the Premises necessary to render the
Premises in substantially the same condition as prior to such damage (the "Pre-
---
existing Condition") cannot, in the reasonable opinion of Landlord's Architect,
- ------------------
be made within 120 days from the date of such damage, or (iii) either (i) or
(ii) occur during the last year of the Term, or (B) (x) the Premises shall be
damaged by fire or other casualty such that Sublessee's access is prevented for
a period of not less than thirty (30) days or (y) the area so damaged contains
Sublessee's central computer site such that the central computer is rendered
totally unusable, then, Sublessee may, by notice given to Sublessor within
thirty (30) days after it receives notice of the opinion of Landlord's
Architect, terminate this Sublease, which termination shall be effective thirty
(30) days after the giving of such notice. If Landlord's Architect states that
the Premises can be restored to their Pre-Existing Condition, but Landlord fails
to complete such restoration within such 120 day period, then Sublessee may,
within thirty (30) days after the expiration of such 120 day period, serve
notice to Sublessor of Sublessee's intention to terminate this Sublease, or the
date which is thirty (30) days after the date of such notice and unless Landlord
shall have complete the restoration of the Premises to its Pre-Existing
Condition within such thirty (30) day period, this Sublease shall automatically
terminate at the end of such thirty (30) day period.
TIME LIMITS FOR NOTICES, ETC.
- -----------------------------
12. Whenever in the Main Lease a time is specified for the giving of
any notice or the making of any demand by the Tenant
12
<PAGE>
thereunder, such time is hereby changed (for the purpose of this Sublease only)
by adding five (5) days thereto; and whenever in the Main Lease a time is
specified for the giving of any notice or the making of any demand by the
Landlord thereunder, such time is hereby changed (for the purpose of this
Sublease only) by subtracting five (5) days therefrom, if such notice, request
or demand given or made by Landlord relates to the payment (or default in the
payment) of Fixed Rent or Additional Rent under the Main Lease, and by fifteen
(15) days if such notice, request or demand of Landlord relates to any subject
other than the payment of fixed rent or additional rent under the Main Lease.
Whenever in the Main Lease a time is specified within which the Tenant
thereunder must give notice or make a demand following an event, or within which
the Tenant must respond to any notice, request or demand previously given or
made by the Landlord thereunder, or to comply with any obligation on the
Tenant's part thereunder, such time is hereby changed (for the purpose of this
Sublease only) by subtracting five (5) days therefrom, if the same shall relate
to the payment of Fixed Rent or Additional Rent under the Main Lease or under
this Sublease, and fifteen (15) days if the same shall relate to any other
obligation under the Main Lease or under this Sublease. Wherever in the Main
Lease a time is specified within which the Landlord thereunder must give notice
or make a demand following an event, or within which the Landlord must respond
to any notice, request or demand previously given or made by the Tenant
thereunder, such time is hereby changed (for the purpose of this Sublease only)
by adding five (5) days thereto. It is the purpose and intent of the foregoing
provisions, among other things, to provide the Sublessor with time within which
to transmit to the Landlord any notices or demand received from the Sublessee
and to transmit to the Sublessee any notices or demands received from the
Landlord. Sublessor shall use reasonable efforts to transmit such notices as
promptly as possible, but in no event later than the time periods set forth in
this Paragraph 12.
------------
ELECTRICITY.
- -----------
13. A. Electrical energy shall be furnished to the Premises through
presently installed electrical facilities for Sublessee's reasonable use of
normal office equipment, including computer equipment, printers, copiers and
related equipment, and for such lighting and electrical appliances and other
machines and equipment as Sublessor may reasonably permit to be installed in the
Premises. Subject to the provisions with respect to submetering set forth in
Paragraph 13B, there shall be no specific charge by way of measuring such
- -------------
electrical energy on any meter or otherwise as the cost of furnishing of such
electrical energy (the "Base Charge", which Base Charge is initially $43,970.00
-----------
per annum), which Base Charge shall be Additional Rent under this Sublease and
- --- -----
payable in equal monthly installments of
13
<PAGE>
$3,664.17 on the first day of each and every month during the Term, subject to
the further provisions of this Paragraph 13. If either the quantity or
------------
character of electrical services is changed by the public utility corporation
supplying electrical services to the Building, or is no longer available or
suitable for Sublessee's requirements, no such change, unavailability or
unsuitability shall constitute an actual or constructive eviction, in whole or
in part, or entitle Sublessee to an abatement or diminution of Rent, or relieve
Sublessee from any of its obligations under this Sublease or impose any
liability upon Sublessor or Sublessor's agents, provided, however, if electrical
-------- -------
services are no longer available, the Base Charge shall no longer be payable to
Sublessor and Sublessee, at its sole cost and expense, shall make the necessary
provisions to receive electrical service (subject to the applicable provisions
of the Main Lease).
B. Sublessor, shall cause a submeter (the "Submeter") to be
--------
installed at Sublessor's expense to measure Sublessee's consumption of
electrical energy in the Premises promptly following the Commencement Date and
in any event within sixty (60) days of the Commencement Date, subject to the
provisions of this Paragraph 13(B) hereinafter set forth, and Sublessee shall
---------------
pay, as Additional Rent, on demand for its consumption of electrical energy at
the then applicable rate, if any, for submetered electrical energy, or, if not
such rate is promulgated, then at the same rate and frequency that Sublessor
would be obligated to pay together with 2% of each such periodic payment to
defray Sublessor's administrative costs, and in such event, Sublessee's
liability for the Base Charge attributable to electrical energy as provided in
Paragraph 13A hereof, as the same may be increased or decreased pursuant to this
- -------------
Paragraph 13, shall terminate as of commencement of the operation of such
- ------------
Submeter; provided that, (i) such submetering is permitted by applicable law in
-------------
the premises demised under the Main Lease pursuant to an action of the Public
Service Committee of the State of New York or otherwise and (ii) Landlord shall
have consented in writing to such submetering. Such Submeter shall be installed
by Sublessor or Sublessor's contractor. Once the Submeter is installed, it
shall be maintained at the sole cost and expense of Sublessee. In no event,
however, shall the amount payable by Sublessee per kilowatt and/or kilowatt hour
be less than Sublessor's cost per kilowatt and/or kilowatt hour (utilizing the
then current Electric Rate (as hereinafter defined)) of electrical energy for
the entire premises demised under the Main Lease. For the purposes of this
Paragraph 13B, the rate to be paid by Sublessee in the event of submetering
- -------------
shall include all of the components of the Electric Rate. In the event that any
tax shall be imposed upon Sublessor's receipts from the sale or resale of
electrical energy to Sublessee, such
14
<PAGE>
tax shall be passed on to, included in the bill of, and paid by Sublessee if and
to the fullest extent permitted by law.
C. "Electric Rate" shall be deemed to mean the rate at which
-------------
Sublessor purchases electrical energy from the public utility supplying
electrical service to the Building, including any surcharges or charges incurred
(except for interest or late fees) or taxes payable by Landlord in connection
therewith and increased or decreased by reason of a fuel adjustment or any
substitutions for such electrical rate or additions thereto.
DEFAULT OF SUBLESSEE.
- --------------------
14. In the event that Sublessee shall default in the performance of
any of the terms, covenants and conditions on its part to be performed under
this Sublease, or in the event that Sublessee shall default in the performance
of any of the terms, covenants and conditions on the tenant's part to be
performed under the Main Lease and the same are not cured at least five (5) days
prior to the expiration of the time for the curing thereof under the Main Lease,
then Sublessor shall have the same rights and remedies with respect to such
default as are given to Landlord under the Main Lease with respect to defaults
by the tenant under the Main Lease, all with the same force and effect as though
the provisions of the Main Lease with respect to defaults and the rights and
remedies of Landlord thereunder in the event thereof were set forth at length
herein. Sublessor agrees promptly to give notice to Sublessee of any notices of
default relating to the Premises which may be received by Sublessor from
Landlord, but failure of Sublessor to give such notice to Sublessee shall not
diminish Sublessee's obligations hereunder. If Sublessee shall default in the
performance of any of Sublessee's obligations under this Sublease or under the
provisions of the Main Lease, Sublessor, without thereby waiving such default,
may, at Sublessor's option, perform the same for the account and at the expense
of Sublessee.
FAILURE TO DELIVER POSSESSION.
- -----------------------------
15.A. If Sublessor shall be unable to give possession of the Premises
on the Commencement Date, Sublessor shall not be subject to any liability for
failure to give possession on such date and the validity of this Sublease shall
not be impaired under such circumstances, nor shall the same be construed in any
way to extend the Term, provided, however the Commencement Date shall be
extended by the number of days beyond the Commencement Date that Sublessor is
unable to give possession of the Premises to Sublessee and the Initial Credit
shall not be applied until the Commencement Date.
15
<PAGE>
B. Notwithstanding anything to the contrary contained herein, if
Sublessor fails to deliver possession of the Premises by September 30, 1995,
Sublessee may, by giving written notice to Sublessor within ten (10) days
thereafter, elect to terminate this Sublease, in which event this Sublease shall
be deemed terminated on the fifth day following the delivery of such notice
("Termination Date"), provided that Sublessor has not prior to the Termination
- ------------------
Date delivered possession to Sublessee, and in the event of such termination
neither party shall have any further obligations to the other except Sublessor
shall refund to Sublessee any advance rentals paid hereunder.
NOTICES.
- -------
16. All notices, requests, demands, elections, consents, approvals
and other communications hereunder ("Notices") must be in writing and addressed
as follows (or to any other address which such party may designate by Notice)
If to Sublessor: (1) International Business Machines
Corporation
150 Kettletown Road
Mail Drop 323
Southbury, Connecticut 06488
Attention: Manager, Real Estate Operations
(2) International Business Machines
Corporation
Old Orchard Road
Armonk, New York 10504
Attention: Corporate Counsel,
Real Estate
Corporate Services
If to Sublessee: At the address first above written,
Attention: Isaak Karaev,
President & CEO
Any Notice required by this Sublease to be given or made within a specified
period of time, or on or before a date certain, shall be deemed duly given or
made only if sent by hand, evidenced by written receipt or by certified mail,
return receipt requested, and postage and registry fees prepaid. A Notice sent
by certified mail (as above) shall be deemed given on the date of mailing. All
other Notices shall be deemed given when received.
16
<PAGE>
OVERTIME HVAC.
- -------------
17. In the event that Sublessee shall require overtime heating,
ventilating or air conditioning, or any other service for which Landlord may
impose a separate charge, Sublessee shall notify Landlord directly in accordance
with the provisions of the Main Lease, and Sublessee shall reimburse Sublessor
for the full amount of the charges made by Landlord for providing such services,
such reimbursement to be paid on demand.
WAIVER OF REDEMPTION AND OF JURY TRIAL.
- --------------------------------------
18. To the extent permitted by law, Sublessee hereby waives service of
notice of intention to re-enter. Sublessee (for itself and for persons claiming
through or under Sublessee) hereby expressly waives any and all rights, under
any present or future law, to redeem the Premises or to a new trial, after
reentry by Sublessor or after issuance or entry of any warrant to dispossess in
any summary proceeding or otherwise to enforce the provisions hereof. If
Sublessor acquires possession of the Premises by summary proceeding or in any
other lawful manner, with or without judicial proceeding, Sublessor shall be
deemed to have re-entered within the meaning of this Paragraph 18. To the full
------------
extent now or hereafter permitted by law, Sublessee and Sublessor waive trial by
jury in any action or proceeding brought by either against the other with
respect to the Premises or to any matter pertaining to this Sublease.
SURRENDER OF PREMISES.
- ---------------------
19. On the termination of this Sublease, Sublessee shall quit and
surrender the Premises and the office furniture set forth on Exhibit C to
Sublessor broom-clean and in the condition, subject to this Sublease that the
same existed on the Commencement Date, except for ordinary wear and tear, damage
by fire or other casualty, and any other damage which Sublessee shall not be
obligated to repair pursuant to the terms hereof, and in accordance with the
applicable provisions of the Main Lease. If the Subleased Premises are not
surrendered upon the termination of this Sublease, Sublessee hereby indemnifies
Sublessor from and against all loss, cost, liability, claim, damage and expense
(including, without limitation, reasonable attorneys' fees) resulting from delay
by Sublessee in so surrendering the Premises and Sublessee, at the option of
Sublessor, shall be deemed to be occupying the Premises as a tenant from month
to month, at a monthly rental equal to three times the Rent payable during the
last month of the Term and subject to all of the other terms of this Sublease
insofar as the same are applicable to a month-to-month tenancy. Sublessee's
obligations under this Paragraph 19 shall survive the termination of this
------------
Sublease. Notwithstanding anything to the contrary
17
<PAGE>
contained herein, in the event that Landlord waives the payment by Sublessor of
the amounts set forth in Section 21.04 with respect to a holdover, then
Sublessor shall waive the requirements of this Paragraph 19 for a period not to
exceed sixty (60) days from the Expiration Date of this Sublease.
QUIET ENJOYMENT.
- ---------------
20. As long as Sublessee shall pay the Rent and shall duly perform all the
terms, covenants and conditions of this Sublease on its part to be performed,
Sublessee shall, subject to the terms hereof and of the Main Lease, quietly hold
and enjoy the Premises during the Term without hindrance, ejection, molestation
or interruption. Notwithstanding the foregoing, if the Main Lease terminates or
is terminated for any reason whatsoever prior to the date on which this Sublease
is scheduled to expire, this Sublease shall thereupon terminate. Sublessor
shall not be liable to Sublessee by reason of any such termination and
thereafter shall have no further obligations to Sublessee hereunder, except as
specifically set forth herein.
ASSIGNMENT AND SUBLETTING.
- -------------------------
21. A. Neither this Sublease nor the term and estate hereby granted
shall be assigned, mortgaged, pledged, encumbered or otherwise transferred by
Sublessee, by operation of law or otherwise, and neither the Premises, nor any
part thereof, nor any of the Sublessee's Property shall be encumbered or sublet
or used or occupied or permitted to be used or occupied, or utilized for desk
space or for mailing privileges by anyone other than Sublessee, except as set
forth in Paragraph 21C hereof.
--------------
B. For purposes of this Paragraph 21, (a) the issuance of interests
------------
in any entity, or the transfer of interests in any entity (whether stock,
partnership interest or otherwise) to any person or group of related persons,
whether in a single transaction or a series of related or unrelated
transactions, in such quantities that after such issuance or transfer, as the
case may be, such transferee shall have control (as hereinafter defined) of such
entity, if such issuance shall have been made for the principal purpose of
transferring this subleasehold estate, shall be deemed an assignment, except
that the transfer of the outstanding capital stock of any corporate Sublessee by
persons or parties (other than persons or parties owning 5% or more of the
voting stock of such corporation) through the "over-the-counter" market or any
recognized national securities exchange, shall not be included in the
calculation of such transfer of control, (b) a "take-over agreement" pursuant to
which one or more persons shall agree to assume the obligations of Sublessee
hereunder in consideration of Sublessee leasing space in another building shall
be deemed an assignment of this
18
<PAGE>
Sublease, and (c) a modification or amendment of a sublease which decreases the
rent, extends the term or increases or decreases the subleased space shall be
deemed a sublease. For the purposes of the preceding sentence, stock ownership
shall be determined in accordance with the principles set forth in Section 544
of the Internal Revenue Code of 1986, as the same existed on January 1, 1987.
For the purposes hereof, "control" shall mean with respect to any corporation,
partnership or other business entity, the possession of the power directly or
indirectly to direct or cause the direction of management and policy of such
corporation, partnership or other business entity, whether through the ownership
of voting securities, by contract, common directors or officers, the contractual
right to manage the business affairs of any such corporation, partnership or
business entity, or otherwise. Any person or legal representative of Sublessee,
to whom Sublessee's interest under this Sublease passes by operation of law or
otherwise, shall be bound by the provisions of this Paragraph 21.
------------
C. If at any time, Sublessee desires to sublet all or any portion of
the Premises or to assign its interest in this Sublease, Sublessee shall submit
to Sublessor the name and address of the proposed sublessee or assignee, its
proposed use of the Premises or portion thereof proposed to be subleased, a
reasonably detailed description of such proposed sublessee's or assignee's
business and any other information about such proposed sublessee or assignee
reasonably requested by Sublessor. Sublessor agrees not to unreasonably
withhold or delay its consent to any such subletting or assignment by Sublessee,
provided that the following conditions shall have been satisfied:
(a) In the reasonable judgment of Sublessor the nature of the
proposed sublessee's or assignee's business and its reputation is in
keeping with the character of the Premises, Building and its tenancies;
(b) The purposes for which the proposed sublessee or assignee
intends to use the Premises are uses expressly permitted by and not
prohibited by the Main Lease, this Sublease or by any other lease of space
in the Building;
(c) Sublessee shall not have (i) advertised or publicized in any
way the availability of all or part of the Premises without Sublessor's
consent, which shall not be unreasonably withheld, and no advertisement
shall state the name or the address of the Building or the proposed rental
or (ii) listed or publicly advertised the Premises or any part thereof for
subletting, whether through a broker, agent, representative or otherwise,
at a rental rate less than the rent then payable hereunder for such space;
however, Sublessee may negotiate and consummate a sublease
19
<PAGE>
at a lesser rate of rent insofar as permitted under the provisions of this
Sublease and the Main Lease;
(d) The proposed occupancy shall not impose a material extra
burden upon the Building Equipment or Building services;
(e) The proposed sublease or assignment shall prohibit any
assignment or subletting;
(f) The proposed sublease or assignment shall be expressly
subject and subordinate to all of the terms of the Main Lease and this
Sublease;
(g) Sublessee shall not be in default beyond any applicable grace
period in the performance of any of its obligations under this Sublease at
the time Sublessor's consent to such subletting or assignment is requested
or at the commencement of the term of any proposed sublease;
(h) The proposed sublessee or assignee shall not then be a tenant
or occupant of any space in the Building or a corporation related to or
affiliated with any other tenant or occupant or a party who is then
negotiating with, or within the six (6) months immediately preceding
Sublessee's request for Sublessor's consent, has dealt with, Sublessor or
Sublessor's agent, or Landlord or Landlord's agent (either directly or
through a broker) for the rental of any space in the Building;
(i) The proposed sublessee or assignee shall not be entitled,
directly or indirectly, to diplomatic or sovereign immunity and shall be
subject to the service of process in, and the jurisdiction of the courts
of, New York State;
(j) The proposed sublessee or assignee shall not be a person,
firm or corporation described in Subparagraph D of this Paragraph 21;
-------------- ------------
(k) Sublessor shall remain fully and primarily liable for the
payment and performance of all of the obligations of Sublessee hereunder;
and
(l) The Landlord under the Main Lease shall have consented in
writing to the proposed sublease or assignment and agreed that Sublessor
may deliver the consent for such proposed sublease or assignment,
notwithstanding any provision of the Main Lease to the contrary.
20
<PAGE>
Within ten (10) days after the commencement of the term of any such subletting,
or within ten (10) days after the effective date of any such assignment, notice
of such commencement or effective date and a duplicate original of such sublease
or assignment shall be delivered by Sublessee to Sublessor.
D. Notwithstanding any of the foregoing provisions of this Paragraph
---------
21, in no event shall Sublessee sublet or permit occupancy of all or any part of
- --
the Premises or assign its interest under this Sublease to any person, firm or
entity which as a major part of its business which Sublessor deems to be in a
business which competes with any business of Sublessor and which derives in
excess of 50% of its annual gross revenues from such competitive business.
E. Notwithstanding anything to the contrary contained herein, if
Sublessee shall sublet the Premises or any portion thereof for rents, additional
charges or other consideration (including, without limitation, sums designated
by the subtenant as paid for the purchase or use of Sublessee's Property in the
Premises, less the then fair market rental value thereof), which, after
deducting from the amount of such rents, charges or other consideration, any
brokerage commissions, actual and reasonable costs for labor and materials in
preparing the space for subletting, and attorneys' fees and disbursements
reasonably incurred by Sublessee for such subletting (the "Deductions"), shall,
----------
for any period, exceed the Rents payable for the subleased space under this
Sublease for the same period (computed on a per square foot basis in the event
of a subletting of less than the whole of the Premises), Sublessee shall pay to
Sublessor, as Additional Rent, within ten (10) days after the date or dates on
which such rents, charges and other sums have been paid to Sublessee, 50% of any
such excess. Notwithstanding anything to the contrary contained in this
Paragraph 21E or elsewhere in this Sublease, Sublessee shall have been deemed to
- -------------
grant to Sublessor the option, with respect to any portion of the Premises which
is the subject of a proposed sublet or assignment pursuant to Paragraph 21D (or
-------------
any proposed sublet, assignment or occupancy which Sublessee undertakes in
violation of the provisions of this Paragraph 21D), an option (the "Recapture
------------- ---------
Right") to be exercised within fifteen (15) business days after receipt of all
- -----
items to be submitted by Sublessee pursuant to Paragraph 21C (and which
-------------
satisfies the conditions of Paragraph 21C (a) to (l)) or receipt by Sublessor of
-------------------------
notice of any such prohibited sublease, assignment or occupancy) to terminate
this Sublease on the terms and conditions hereinafter set forth with respect
only to the portion of the Premises which is subject to any proposed subletting,
assignment or occupancy (the "Recaptured Area"). In the event that Sublessor
---------------
exercises the Recapture Right then, as to the Recaptured Area:
21
<PAGE>
(a) Sublessee shall vacate and surrender the Recaptured Area on or
before the day immediately preceding the proposed commencement date of the
proposed assignment, sublease or occupancy and the Sublease shall terminate
with respect to such Recaptured Area on such proposed commencement date as
if such date were the Expiration Date;
(b) from and after such date of termination, this Sublease shall be
deemed amended to (1) eliminate the Recaptured Area from the Premises, (2)
reduce the Fixed Rent payable hereunder by an amount equal to the Fixed
Rent payable with respect to the Recaptured Area immediately prior to such
termination, (3) reduce the Sublessee's Tax Proportionate Share and
Sublessee's Operating Proportionate Share to reflect the elimination of the
Recaptured Area from the Premises, and (4) make such other changes as are
appropriate to reflect the elimination of the Recaptured Area from the
Premises. Sublessor and Sublessee shall execute a written amendment to
this Sublease prepared by Sublessor and reasonably satisfactory to
Sublessor and Sublessee setting forth the foregoing modifications;
(c) Sublessor may, and shall have no liability to Sublessee if
Sublessor shall, sublease the Recaptured Area (or any part thereof) to
Sublessee's prospective subtenant, assignee or occupant for all or any
portion of the term of the proposed subletting, assignment or occupancy;
and
(d) Sublessor, at its expense, shall make such alterations as may be
required to separate physically the Recaptured Area from the remainder of
the Premises and to comply with all Legal Requirements and Insurance
Requirements (unless the same would have been the responsibility of the
subtenant pursuant to the proposed assignment, sublease or occupancy), and,
at Sublessor's expense (unless the same would have been the responsibility
of Sublessee pursuant to the proposed assignment, sublease or occupancy
agreement), shall repair or restore to tenantable condition any part of the
remainder of the Premises which is damaged by such separation. If required
by Legal Requirements and Insurance Requirements, Sublessor shall afford
Sublessee and its agents, tenants, undertenants, or licensees reasonably
appropriate means of ingress to and egress from the Recaptured Area, and,
if required by Legal Requirements and Insurance Requirements, Sublessee
shall afford Sublessor and its agents, undertenants and licensees
reasonably appropriate means of ingress to and egress from the remainder of
the Premises; and
22
<PAGE>
(e) on or prior to the Expiration Date, Sublessee shall restore, or
reimburse Sublessor for its restoration cost with respect to, the
Recaptured Area to the condition required by this Sublease and/or the Main
Lease, including removal of any alterations made in the Recaptured Area by
any party to the extent required by this Sublease and/or the Main Lease.
OCCUPANCY TAX.
- -------------
22. Sublessee agrees to file all requisite New York City occupancy tax
returns with the Department of Finance of the City of New York on a timely basis
and to pay directly to the City of New York all occupancy and commercial rent
taxes which may be payable by Sublessee with respect to Rent and shall pay
directly to the appropriate taxing authority any and all other taxes the payment
of which shall be imposed directly on the occupant of the Premises.
Termination of Main Lease.
- -------------------------
23. A. In the event of and upon the termination or cancellation of the
Main Lease pursuant to the terms and provisions thereof, this Sublease shall
automatically cease and terminate, subject however to all of the rights of the
Landlord pursuant to the Main Lease.
B. Reference in this Sublease to "termination" of this Sublease
includes expiration or earlier termination of the Term or cancellation of this
Sublease pursuant to any of the provisions of this Sublease or pursuant to law.
Upon the termination of this Sublease, the term and estate granted by this
Sublease shall end at 12:00 p.m. on the date of termination as if such time and
date were the time and date of expiration of the Term, and neither party shall
have any further obligation or liability to the other after such termination,
except (i) as shall be expressly provided for in this Sublease, and (ii) for
such obligations as by their nature or under the circumstances can only be, or
by the provisions of this Sublease, may be, performed after such termination
and, in any event, unless otherwise expressly provided in this Sublease, any
liability for a payment which shall have accrued to or with respect to any
period ending at the time of such termination shall survive the termination of
this Sublease.
C. Provided this Sublease is in full force and effect and Sublessee
is not in material default hereunder beyond any applicable cure period,
Sublessor covenants and agrees to observe and perform all of the terms,
covenants and conditions to be performed by the Tenant in the Main Lease and
further covenants and agrees not to do or suffer or permit anything to be done
23
<PAGE>
which would result in a default under or cause the Main Lease to be terminated
or which would result in an elimination of reduction of services under the Main
Lease. Sublessor shall not terminate or surrender the Main Lease provided
however, nothing contained herein shall be deemed to prevent Sublessor from
exercising any right of termination Sublessor might have pursuant to the Main
Lease with respect to Article 15 or Article 16 of the Main Lease.
---------- ----------
BROKER.
- ------
24. Sublessee represents and warrants to Sublessor that there is no
broker, finder or similar person entitled to a commission, fee or other
compensation in connection with the consummation of this Sublease and no
conversations or prior negotiations were had by Sublessee with any broker,
finder or similar person concerning the renting of the Subleased Premises other
than The Galbreath Company and Park Tower Realty Corp. (collectively, the
"Brokers"). Sublessee agrees to indemnify and hold Sublessor harmless from and
- --------
against all loss, cost, liability, claim, damage or expense (including, without
limitation, court costs and reasonable attorneys' fees) incurred in connection
with or arising out of any claims for brokerage commissions, finder's fees, or
other compensation resulting from or arising out of any conversations,
negotiations or actions had by Sublessee or anyone acting on behalf of Sublessee
with any broker, finder or similar person. Sublessor hereby agrees to pay the
brokerage commission due Brokers pursuant to a separate agreement. The
provisions of this Paragraph 24 shall survive the termination of this Sublease.
------------
CONSENTS AND APPROVALS OF SUBLESSOR.
- -----------------------------------
25. A. Sublessee agrees that in any case where the provisions of this
Sublease require the consent or approval of Sublessor prior to the taking of any
action, it shall be a condition precedent to the taking of such action that the
prior consent or approval of Landlord shall have been obtained, if the consent
of Landlord must be obtained under the Main Lease in such case. Sublessor,
provided Sublessee is not in default hereunder with respect to a default of
which notice has been given by Sublessor to Sublessee, agrees that its consent
or approval will not be unreasonably withheld or delayed in any such case as to
which the Landlord shall have consented. By way of illustration, but not of
limitation, Sublessor shall not be deemed to have unreasonably withheld its
consent if the action or other matter as to which such consent is sought may, in
the good-faith judgment of Sublessor, increase Sublessor's duties or liabilities
under this Sublease or the Main Lease. The provisions of this Paragraph 25
------------
shall not apply to any assignment or mortgaging or encumbrancing of Sublessee's
interest in this Sublease or the
24
<PAGE>
subletting or further subletting of the whole or any part of the Premises, which
shall be governed by the provisions of Paragraph 21 of this Sublease.
------------
B. (a) Sublessee hereby waives any claim against Sublessor which it
may have based upon any assertion that Sublessor has unreasonably withheld or
unreasonably delayed any such consent, and Sublessee agrees that its sole and
exclusive remedy for any claimed unreasonable withholding or delay of any
consent shall be an action or proceeding to enforce any such provision or for
specific performance, injunction or declaratory judgment, without Sublessor
being subject to any money damages whatsoever, directly or indirectly.
(b) If the determination in the action or proceeding referred to
in subsection (a) of this Paragraph 25B shall be favorable to Sublessee, the
-------------
requested consent shall be deemed to have been granted; however, Sublessor shall
have no personal, monetary or other liability to Sublessee for its refusal or
failure to give such consent.
MISCELLANEOUS.
- -------------
26. Neither Sublessor nor any agent, representative or employee of
Sublessor has made any representations, agreements or promises with respect to
the Building or the Premises or the use thereof other than those expressly set
forth in this Sublease and no rights are to be deemed acquired by Sublessee, by
implication or otherwise, except those expressly granted herein. This Sublease
shall be construed and enforced in accordance with and governed by the laws of
the State of New York. This Sublease contains the entire agreement and
understanding between Sublessor and Sublessee with respect to the Premises and
all prior negotiations and agreements are merged in this Sublease. This
Sublease may not be modified or amended or any term or provision hereof waived
or discharged except in a writing signed by the party against whom such
amendment, modification, waiver or discharge is sought to be enforced. Any
executory agreement hereafter made between Sublessor and Sublessee shall be
ineffective to change, modify, waive, release, discharge, terminate or effect an
abandonment or surrender of this Sublease, in whole or in part, unless such
agreement is in writing and signed by the parties.
RIGHTS CUMULATIVE.
- -----------------
27. Each right and remedy of Sublessor provided for in this Sublease shall
be cumulative and shall be in addition to every other right and remedy provided
for in this Sublease or now or hereafter existing at law or in equity or by
statute or otherwise.
25
<PAGE>
BINDING EFFECT.
- --------------
28. The terms, covenants and conditions contained in this Sublease whether
so expressed or not shall be binding upon and inure to the benefit of and be
enforceable by Sublessor and Sublessee and their respective successors and
assigns, except that no violation of the provisions of Paragraph 21 hereof shall
------------
operate to vest any rights in any successor or assignee of Sublessee. It is
understood and agreed that the obligations of Sublessor under this Sublease
shall not be binding upon Sublessor with respect to any period subsequent to the
transfer of its interest in the Main Lease, and that in the event of such
transfer said obligations shall be binding upon the transferee of Sublessor's
interest as tenant under the Main Lease, but only with respect to the period
commencing on the date of such transfer and ending on the date of a subsequent
transfer thereof.
READINGS.
- --------
29. The headings of this Sublease are for purposes of reference only and
shall not limit or otherwise affect the Leaning thereof.
NONRECOURSE.
- -----------
30. Notwithstanding anything in this Sublease to the contrary, Sublessor's
exculpation or limitation of liability or Sublessee's assumption of liability or
obligation to repair shall not apply if the loss, damage or expense is covered
by Sublessor's insurance, results from the negligent acts or omissions of
Sublessor, its agents or employees; or the failure of Sublessor to: (a) perform
its obligations in accordance with the terms of this Sublease or (b) enforce the
obligations of other sublessees under their respective subleases to the extent
that proximate harm results to Sublessee.
COUNTERPARTS.
- ------------
31. This Sublease may be executed in several counterparts each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.
SECURITY DEPOSIT.
- ----------------
32. Sublessee has simultaneously herewith deposited with Sublessor a
certified or bank check in the amount of $100,000.00 the proceeds of which (the
"Security"). All sums deposited by Sublessee with Sublessor pursuant to this
--------
Paragraph 32 shall be held as security for the full and punctual performance by
- ------------
Sublessee of all the terms of this Sublease and shall be maintained in an
interest-bearing account selected by Sublessor.
26
<PAGE>
If Sublessee defaults in the performance of any of the terms of this Sublease,
including the payment of Fixed Rent or any Additional Rent, Sublessor may use,
apply or retain the whole or any part of the Security and interest thereon to
the extent required for the payment of any such Rent or for any sum which
Sublessor may expend or may be required to expend by reason of Sublessee's
default in respect of any of the terms of this Sublease, including any damages
or deficiency in the re-letting of the Premises, whether accruing before or
after summary proceedings or other re-entry by Sublessor. In the case of every
such use, application or retention, Sublessee shall, on demand, pay to Sublessor
the sum so used, applied or retained which shall be added to the Security so
that the same shall be replenished to its former amount, and any failure by
Sublessee to pay such sum on demand shall constitute a default under this
Sublease. If any bankruptcy, insolvency, reorganization or other credit-debtor
proceedings shall be instituted by or against Sublessee, or its successors or
assigns, or the guarantor, if any, any Security and interest thereon with
Sublessor pursuant to this Paragraph shall be deemed to be applied first to the
payment of any Rents and/or other charges due Sublessor for all periods prior to
the institution of such proceedings and the balance, if any, of such Security
with Sublessor may be retained by Sublessor in partial liquidation of
Sublessor's damages. If Sublessee shall fully and punctually comply with all of
the terms of this Sublease, the unapplied portion of the Security, with
interest, shall be returned to Sublessee after the termination of this Sublease
and delivery of exclusive possession of the Premises to Sublessor; provided that
until the occurrence of such events, Sublessor may retain a one (1%) percent
administration fee per annum with respect to such Security. In the event of a
transfer of Sublessor's interest under this Sublease, Sublessor shall have the
right to transfer the Security and interest thereon to the transferee and
Sublessor shall upon such transfer be released by Sublessee from all liability
for the return of such Security; and Sublessee agrees to look solely to the
transferee Sublessor for the return of said Security; and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
Security to a Sublessor. Sublessee shall not assign or encumber or attempt to
assign or encumber the sums deposited herein as Security or the interest thereon
and neither Sublessor nor its successors or assigns shall be bound by any such
assignment, encumbrance or attempted assignment or encumbrance.
LANDLORD'S CONSENT.
- ------------------
33. Sublessee hereby acknowledges and agrees that this Sublease shall not
become effective until, and is expressly conditioned upon, either (i) the
delivery by Landlord of a writing signed by Landlord (the "Consent") in
-------
substantially the form pursuant to which Landlord shall consent to this
Sublease,
27
<PAGE>
or (ii) consent having been deemed given pursuant to any applicable provision of
the Main Lease. Promptly after the execution and delivery of this Sublease,
Sublessor shall submit this Sublease to Landlord, together with Sublessor's
request that Landlord deliver the Consent. Sublessee shall cooperate in good
Faith with Sublessor and shall comply with any reasonable request made of
Sublessee by Sublessor or Landlord in the procurement of the Consent. Sublessor
or Sublessee shall not be obligated to make any payment to Landlord or incur any
other expenses or enter into litigation with Landlord in order to obtain the
Consent. Sublessor or Sublessee shall not be subject to any liability for
failure to obtain the Consent, including any asserted damages or costs or
expenses of any nature of Sublessee, its agents, contractors, architects or
other professional representatives, and in the event that the Consent is not
delivered by Landlord or consent is not deemed given by Landlord pursuant to any
applicable provision of the Main Lease, Sublessor and Sublessee shall destroy
any executed counterparts of this Sublease in their possession and neither party
shall have any further liability to the other with respect to the transaction
described herein.
RELOCATION.
- ----------
34. Sublessor shall, at its option, have a one-time right, at any time
during the Term, to elect by eight (8) weeks prior written notice (the
"Relocation Notice") to Sublessee to substitute for the Premises other office
-----------------
space in the Building (herein called the "Substitute Premises") designated by
-------------------
Sublessor, provided, that in all events Sublessor shall cooperate and consult
with Sublessee prior to giving the Relocation Notice, and, to the extent
-----
reasonably possible, cause the Landlord to cooperate and consult with Sublessee
to assure that Sublessee will be able to utilize its twenty-four hour central
computer equipment without interruption in the Substitute Premises and to make
available the Substitute Premises free of dust and with appropriate HVAC and
electrical connections already in place, and provided further that such
Substitute Premises (1) contains at least the same rentable square foot area as
the Premises; (2) has a configuration substantially similar to that of the
Premises to the extent of the same number of offices, workstations, HVAC,
electricity and conference areas; (3) is no lower than the fifth (5th) floor in
the Building; (4) shall be made available and access provided to Sublessee at
the time of the Relocation Notice to enable Sublessee to install or duplicate
its Central Computer Site in the Substitute Premises so that the Central
Computer Site may be relocated to the Substitute Premises and operated
continuously and without interruption in the Substitute Premises; and (5) shall
have the same Building Services (as defined in the Main Lease) and services
specified hereunder available for Sublessee's use, subject to the provisions of
the Main Lease and the provisions of this Sublease, including Paragraph 6
-----------
hereof.
28
<PAGE>
The Relocation Notice shall be accompanied by a plan of the Substitute Premises,
and such Relocation Notice or the plan shall set forth the rentable square foot
area of the Substitute Premises. Sublessee shall occupy the Substitute Premises
promptly in accordance with the terms of this Sublease. Sublessee shall pay the
same Rents with respect to the Substitute Premises as were payable with respect
to the Premises, without regard to the rentable square foot area of the
Substitute Premises. In the event of the application of the provisions of this
subclause with respect to the Substitute Premises, this Sublease shall no longer
apply to the Premises, and shall apply to the Substitute Premises as if the
Substitute Premises had been the space originally demised under this Sublease;
provided, that the property referred to on Exhibit C attached hereto shall be
---------
made available for Sublessee's use in the Substitute Premises in the event that
Sublessor exercises its option as described in this sub-clause. Sublessor shall
have no liability to Sublessee in the event of such substitution, but Sublessor
shall reimburse Sublessee for any reasonable costs and expenses it has incurred
in connection with Sublessee's relocation, including costs and expenses for
architects or engineers in connection with the Premises, the costs of any
renovations Sublessee has made in the Substitute Premises (including, without
limitation, telephone systems, any Local Area Network (LAN) or Wide Area
Network, servers and racks necessary to move to the Substitute Premises to allow
the computer and servers to operate continuously and without interruption during
such move, HVAC, and electricity, all to the extent of the comparable systems
which were included in the Premises and in quality at least equal to those
systems which were in the Premises), reasonable hourly overtime costs for
employees of Sublessee reasonably required to supervise or assist in such move,
and replacement letterhead, business cards and other reasonable costs incurred
by Sublessee directly as a result of such move, all as substantiated to the
reasonable satisfaction of Sublessor. Sublessor at Sublessor's expense, shall
construct and install the central site work stations, LAN, or Wide Area Network,
as appropriate, HVAC and electricity and shall move Sublessee's furniture,
office equipment, supplies and other items existing in the Premises at the time
of the Relocation Notice no earlier than eight (8) weeks after the Relocation
Notice is delivered to Sublessee. Sublessor shall perform such move, or cause
such move to be performed, by a reputable bonded moving company. The move shall
be commenced and completed during non-business hours (i.e., on a Saturday or a
----
Sunday) so that there will be interruption to Sublessee's business activities in
the Premises.
29
<PAGE>
MISCELLANEOUS
- -------------
35. A. Sublessor shall use good-faith efforts to cause Landlord to have
Sublessee's name and the names of its officers and employees listed in the
building directory, provided, however, that Sublessee shall be entitled to the
number of listings normally provided by the Landlord for a full floor Tenant in
the building.
B. Sublessor shall use good-faith efforts to cause Landlord to
provide to Sublessee the use of the freight elevator and other facilities that
Sublessee may reasonably require for a period of time not to exceed four (4)
hours, at no cost to Sublessee, for Sublessee's initial move-in to the Premises.
C. Sublessor represents that Sublessee's use specified in the
Sublease does not invalidate any policies of insurance of the Sublessor covering
the Premises. Sublessee shall not be obligated to reimburse Sublessor for
increases in fire insurance premiums resulting from Sublessee's use of the
Premises in accordance with Paragraph 2 hereof and not resulting from
-----------
Sublessee's negligence, misuse or neglect thereof, or breach of its obligations
hereunder nor shall Sublessee be obligated to make any alterations or repairs to
the Premises which may be required by Sublessor's insurance coverage if
Sublessee conducts its business in accordance with Paragraph 2 hereof.
-----------
D. If Sublessor fails to pay any charge, imposition, rent or claim
under the Main Lease, upon receipt by Sublessee of any notice from Landlord, in
accordance with Landlord's consent to this Sublease, requesting that all
payments of rent due under the Sublease be paid to Landlord because of a default
by Sublessor, Sublessee may fully rely thereon and make such payment to
Landlord, even though the existence and nature of the default may be questioned
or denied by Sublessor. Sublessee shall have no liability whatsoever to
Sublessor and Sublessor shall look solely to Landlord for the recovery of any
monies or claim for the rent due under the Sublease.
E. Sublessor represents that the Main Lease is in full force and
effect.
F. Subject to the consent of Landlord, either in the Consent or
pursuant to separate agreement, additional service work with respect to the
Premises or overtime HVAC service may be contracted for directly between
Landlord and Sublessee, including billing and payment by Sublessee of any
specific charges therefor. In the event that Landlord agrees to deal directly
with Sublessee with respect to overtime HVAC charges or other additional service
work, and Landlord agrees to bill Sublessee
30
<PAGE>
directly, then the provisions of Paragraph 17 of this Sublease shall have no
------------
further application as to any such services.
31
<PAGE>
IN WITNESS WHEREOF, Sublessor and Sublessee have duly executed this
Sublease as of the day and year first above written.
SUBLESSOR:
INTERNATIONAL BUSINESS MACHINES CORPORATION
By: /s/ Tom Ghirardi
----------------------------------------------
Title: Program Manager
SUBLESSEE:
MULTEX SYSTEMS, INC.
By: /s/ Isaak Karaev
-----------------------------------------------
Title: President
32
<PAGE>
EXHIBIT 10.2
CONFIDENTIAL
INTERACTIVE SERVICES AGREEMENT
------------------------------
This agreement (the "Agreement"), effective as of March 20, 1998 (the
"Effective Date"), is made and entered into by and between America Online, Inc.
("AOL") a Delaware corporation, with its principal offices at 22000 AOL Way,
Dulles, Virginia 20166, and Multex Systems, Inc. ("Interactive Content
Provider" or "ICP") a Delaware corporation, with its principal offices at 33
Maiden Lane, New York, NY 10038 (each a "Party" and collectively the "Parties").
INTRODUCTION
------------
AOL and ICP each desires that AOL provide access to the ICP Internet Site
(as defined below) through the AOL Network (as defined below), subject to the
terms and conditions set forth in this Agreement. Defined terms used but not
defined in the body of this Agreement or in Exhibit C shall be as defined on
Exhibit B attached hereto.
TERMS
-----
1. DISTRIBUTION; PROGRAMMING
-------------------------
1.1 ANCHOR TENANCY. ICP shall receive anchor tenant distribution within
--------------
the Personal Finance Channel (as defined below) (or any specific
successor thereof) offered on the AOL Service, as follows: AOL shall
(a) continuously and prominently place an agreed-upon ICP logo or
banner (the "Anchor Tenant Button") on the Investment Research main
screen (or any specific successor thereof) which logo or banner shall
link to the Welcome Mat, (b) provide ICP with the keyword "Multex",
which shall link to the Welcome Mat, and (c) list the ICP Internet
Site in AOL's "Directory of Services" and "Find" features. Except to
the extent expressly described herein, the exact form, placement and
nature of the Anchor Tenant Button shall be determined by AOL in its
reasonable editorial discretion, however, no ICP Competitor (as
defined in Exhibit B) will receive more prominent placement,
integration and promotion than ICP for the offering of "brokerage
research" content within the Investment Research Area.
1.2 CONTENT. The ICP Internet Site shall consist of the Content described
-------
on Exhibit A hereto. ICP shall not authorize or permit any third
party to distribute any other Content of ICP through the AOL Network
absent AOL's prior written approval, such approval not to be
unreasonably withheld. The inclusion of any additional Content for
distribution through the AOL Network (including, without
<PAGE>
CONFIDENTIAL
limitation, any features, functionality or technology) not expressly
described on Exhibit A shall be subject to AOL's prior written
approval, such approval not to be unreasonably withheld.
1.3 LICENSE. ICP hereby grants AOL a worldwide license to use, market,
-------
license, store, distribute, display, communicate, perform, transmit,
and promote the ICP Internet Site and Licensed Content contained
therein (or any portion thereof) through the AOL Network as AOL may
determine in its sole discretion, including without limitation the
right to integrate Content from the ICP Internet Site by linking to
specific areas on the ICP Internet Site and by integrating the Content
into any search mechanism AOL may implement, provided that the
presentation of any such Content on the AOL Network shall conform with
the specifications set forth on Exhibit D.
1.3.1 The Licensed Content will always be of at least equal quality
(in terms of breadth, depth, accuracy, timeliness, etc.) to
that which is available through any ICP Interactive Site or
through any other online or interactive distributor for the
consumer market. ICP will offer its consumer research services
in their entirety (e.g. all standard content, features,
services, customer support, etc.) to AOL Members at a price
that is at least the same, if not less than, the price
available through any ICP Interactive Site or through other ICP
partner sites. AOL Members will always receive a price that is
not greater than the lowest price compared to the subscribers
of any other online or Internet access provider, content
aggregator or online financial services provider, (e.g.
[Confidential Portion Omitted]).
1.4 MANAGEMENT. ICP shall, design, create, edit, manage, update, and
----------
maintain the ICP Internet Site. Except as specifically provided for
herein, AOL shall have no obligations of any kind with respect to the
ICP Internet Site. ICP shall be responsible for any hosting or
communication costs associated with the ICP Internet Site (including,
without limitation, the costs associated with (i) any agreed-upon
direct connections between the AOL Network and the ICP Internet Site
or (ii) a mirrored version of the ICP Internet Site). AOL Members
shall not be required to go through a registration process (or any
similar process) in order to access and use the ICP Internet Site.
AOL Members may be required to go through a registration process in
order to purchase the content offered on the ICP Internet Site.
1.5 CARRIAGE FEE. In consideration for anchor tenancy, ICP shall pay AOL
------------
a total of [Confidential Portion Omitted] during the Term according to
the following schedule:
2
<PAGE>
CONFIDENTIAL
(a) ICP shall pay AOL [Confidential Portion Omitted] no later than 30
days after the Launch Date.
(b) ICP shall pay AOL [Confidential Portion Omitted] no later than 30
days after the first anniversary of the Launch Date.
2. PROMOTION
---------
2.1 COOPERATION. Each Party shall cooperate with and reasonably assist
-----------
the other Party in supplying material for marketing and promotional
activities.
2.2 INTERACTIVE SITE. During the Term, ICP shall include within each ICP
----------------
Interactive Site (a) a continuous promotional button/link for AOL
appearing "above the fold" on the page that promotes ICP's
distribution partners, or any successor thereto; (b) a prominent "Try
AOL" feature where users can obtain promotional information about AOL
products and services and, at AOL's option, download or order AOL's
then-current version of client software for the America Online@) brand
service or other AOL products, such as AOL's "Instant Messenger(R)";
(c) prominent promotion for the keywords associated with ICP's
Internet Site and a description of the benefits of accessing ICP
through AOL; and (d) links from the ICP Interactive Site to the
relevant topic areas on AOL's primary site on the World Wide Web (and,
to the extent technologically feasible, the relevant topic areas in
the Online Area).
2.3 OTHER MEDIA. ICP shall use commercially reasonable efforts to
-----------
prominently and regularly promote AOL and the ICP Internet Site's
availability through the AOL Service in publications, programs,
features or other forms of media over which ICP exercises at least
partial editorial control.
2.4 KEYWORD. In any instances when ICP makes consumer-targeted (i.e.
-------
non-institutional) promotional reference to an ICP Interactive Site,
including any listings of the applicable "URL(s)" for such web site(s)
(each a "Web Reference"), ICP shall include a listing of the
applicable AOL "keyword" of comparable prominence to the Web
Reference.
2.5 PREFERRED ACCESS PROVIDER.
-------------------------
2.5.1 When promoting AOL to the consumer market (i.e. non-
institutional), ICP shall promote AOL as a preferred access
provider through which a user can access the ICP Internet Site
(and ICP shall not implement or authorize any other promotions
on behalf of any third parties which are inconsistent with the
foregoing).
3
<PAGE>
CONFIDENTIAL
2.5.2 With respect to any ICP Interactive Site accessible or
operating through any operating system (including without
limitation any Microsoft system) or through a channel or area
delivered through a "push" product such as the Pointcast
Network or interactive environment such as Microsoft's proposed
"Active Desktop" or Netscape's "Netcaster" (each an "Operating
System"), ICP shall (a) include in any such ICP Interactive
Site a prominent "Try AOL" feature that will cause a user of
such site to link directly to AOL access software within the
Operating System, and (b) use or support any AOL provided
software or feature that directs a user of such ICP Interactive
Site who does not have Internet access to the AOL application
setup program within the Operating System (instead of the
Internet Referral Server or any similar service). ICP's
commitments specified above shall be subject to any standard
policies and restrictions generally proscribed by the operator
of the Operating System.
3. REPORTING
---------
3.1 USAGE AND OTHER DATA. AOL shall make available to ICP a monthly
--------------------
report specifying for the prior month aggregate usage and Impressions
with respect to ICP's presence on the AOL Network. ICP will supply AOL
with monthly reports which reflect total impressions by AOL Members to
the ICP Internet Site during the prior month and the number of and
dollar value associated with the transactions involving AOL Members at
the ICP Internet Site during the period in question. ICP shall also
provide AOL with "click-through" data with respect to the promotions
specified in Section 2.
3.2 PROMOTIONAL COMMITMENTS. ICP shall provide to AOL a monthly report
-----------------------
documenting its compliance with any promotional commitments it has
undertaken pursuant to this Agreement in the form attached as Exhibit
E hereto.
3.3 PAYMENT SCHEDULE. Except as otherwise specified herein, each Party
----------------
agrees to pay the other Party all amounts received and owed to such
other Party as described herein on a monthly basis within forty five
(45) days of the end of the month in which such amounts were collected
by such Party.
4. ADVERTISING AND MERCHANDISING
-----------------------------
4.1 ADVERTISING SALES. AOL owns all right, title and interest in and to
-----------------
the advertising and promotional spaces within the AOL Network
(including, without limitation, advertising and promotional spaces on
any AOL forms or pages
4
<PAGE>
CONFIDENTIAL
preceding or framing the ICP Internet Site). The specific advertising
inventory within any such AOL forms or pages shall be as reasonably
determined by AOL.
4.2 WELCOME MAT ADVERTISEMENTS/REVENUES. With respect to any Welcome Mat,
-----------------------------------
AOL hereby grants ICP the right to license or sell promotions,
advertisements, links, pointers or similar services or rights in or
through the Welcome Mat ("Welcome Mat Advertisements"), subject to (i)
AOL's approval for each Welcome Mat Advertisement and (ii) the
Advertising Minimum. Until ICP receives [Confidential Portion
Omitted] in Advertising Revenues and Transaction Revenues ("Total
Revenues"), ICP shall pay AOL [Confidential Portion Omitted] of the
Advertising Revenues generated by ICP or its agents with respect to
Welcome Mat Advertisements. Beginning on the date on which ICP
receives [Confidential Portion Omitted] in Total Revenues, and
continuing through the remainder of the Term, ICP shall pay AOL
[Confidential Portion Omitted] of the Advertising Revenues generated
by ICP or its agents with respect to Welcome Mat Advertisements.
4.3 ADVERTISING POLICIES. Any Welcome Mat Advertisements sold by ICP or
--------------------
its agents shall be subject to AOL's then standard advertising
policies. In connection with the sale by ICP of any Welcome Mat
Advertisement, ICP shall, in each instance, provide AOL with a
completed standard AOL advertising registration form relating to such
Welcome Mat Advertisement. ICP shall take all reasonable steps
necessary to ensure that any Welcome Mat Advertisement sold by ICP
complies with all applicable federal, state and local laws and
regulations. To the extent ICP sells a Welcome Mat Advertisement as
part of an advertising package including multiple placement locations
(e.g., both Welcome Mat and another area or site), ICP shall allocate
the payment for such advertising package between or among such
locations in an equitable fashion, subject to the Advertising Minimum.
4.4 INTERACTIVE COMMERCE/TRANSACTION REVENUES. Any merchandising on the
-----------------------------------------
ICP Internet Site shall be subject to (i) the then-current
requirements of AOL's merchant certification program, (ii) the
Approved Merchandise Category contained in Exhibit A and (iii) ICP
implementing sufficient procedures to protect the security of all
merchandising on the site (i.e., ICP shall as of the Effective Date
use 40-bit SSL technology and, if requested by AOL, 28-bit SSL).
Until ICP receives [Confidential Portion Omitted] in Total Revenues,
ICP shall pay AOL [Confidential Portion Omitted] of the Transaction
Revenues generated by ICP or its agents with respect to Interactive
Commerce. Beginning on the date on which ICP receives [Confidential
Portion Omitted] in Total Revenues and continuing through the
remainder of the Term, ICP shall pay AOL [Confidential
5
<PAGE>
CONFIDENTIAL
Portion Omitted] of the Transaction Revenues generated by ICP or its
agents with respect to Interactive Commerce.
5. CUSTOMIZED LINKED INTERACTIVE SITE
----------------------------------
5.1 PERFORMANCE.
-----------
5.1.1 GENERALLY. ICP shall optimize the ICP Internet Site for
---------
distribution hereunder according to AOL specifications and
guidelines to ensure that (i) the functionality and features
within the ICP Internet Site are optimized for the client
software then in use by a majority of AOL Members and (ii) the
forms used in the ICP Internet Site are designed and populated
in a manner intended to minimize delays when AOL Members
attempt to access such forms. ICP will ensure that the
performance and availability of the ICP Internet Site (a) is
monitored on a continuous, 24/7 basis and (b) remains
competitive in all material respects with the performance and
availability of other similar sites based on similar form
technology.
5.1.2 SPECIFIC.
--------
(a) ICP shall design the ICP Internet Site to support the
Windows version of the Microsoft Internet Explorer 3.0 browser,
and make commercially reasonable efforts to support all other
AOL browsers listed at:
http://webmaster.info.aol.com/BrowTable.html.
(b) ICP shall configure the server from which it serves the ICP
Internet Site to examine the HTTP User-Agent field in order to
identify the AOL User-Agents listed at:
http://webmaster.info.aol.com/Brow2Text.html (the "AOL User-
Agents").
(c) ICP shall design its web site to support HTTP 1.0 or later
protocol as defined in RFC 1945 (available at
http://ds.internic.net/rfc/rfcl945.text) and to adhere to AOL's
parameters for refreshing cached information listed at
http://webmaster.info.aol.com/CacheText.html.
(d) AOL reserves the right to review the ICP Internet Site to
ensure that such site is compatible with AOL's then-available
client and host software and the AOL Network.
5.2 CUSTOMIZATION. ICP shall customize the ICP Internet Site for AOL
-------------
Members as follows:
6
<PAGE>
CONFIDENTIAL
(a) create a customized, co-branded home page "welcome mat" for AOL
Members for each area on the ICP Internet Site linked to from the AOL
Network on a continuous basis (each a "Welcome Mat"), which Welcome
Mat(s) shall be subject to AOL approval;
(b) ensure that AOL Members linking to the ICP Internet Site do not
receive advertisements, promotions or links for any entity reasonably
construed to be in competition with AOL (e.g. [Confidential Portion
Omitted]) or otherwise in violation of AOL's then-standard advertising
policies or exclusivities; and
(c) provide continuous navigational ability for AOL Members to return
to an agreed-upon point on the AOL service (for which AOL shall supply
the proper address) from ICP Internet Site (e.g., the point on the AOL
service from which the ICP Internet Site is linked), which, at AOL's
option, may be satisfied through the use of a hybrid browser format.
5.3 LINKS ON ICP INTERNET SITE. The Parties will work together on
--------------------------
mutually acceptable links (including links back to AOL) within the ICP
Internet Site in order to create a robust and engaging AOL member
experience. ICP shall take reasonable efforts to insure that AOL
traffic is generally either kept within the ICP Internet Site or
channeled back into the AOL Network. To the extent that AOL notifies
ICP in writing that, in AOL's reasonable judgment, links from such
site cause an excessive amount of AOL traffic to be diverted outside
of such site and the AOL Network in a manner that has a detrimental
effect on the traffic flow of the AOL audience, then ICP shall
immediately reduce the number of links out of such site(s). In the
event that ICP cannot or does not so limit diverted traffic from the
ICP Internet Site, AOL reserves the right to terminate the links from
the AOL Network to the ICP Internet Site at issue and ICP shall only
be responsible to pay a pro-rata share of the carriage fees otherwise
owed by ICP hereunder for the period for which the links are in place.
5.4 HOSTING; CAPACITY. ICP will provide all computer servers, routers,
-----------------
switches and associated hardware in an amount reasonably necessary to
meet anticipated traffic demands, adequate power supply (including
generator back-up) and HVAC, adequate insurance, adequate service
contracts and all necessary equipment racks, floor space, network
cabling and power distribution to support the ICP Internet Site.
7
<PAGE>
CONFIDENTIAL
6. TERM AND TERMINATION
--------------------
6.1 TERM. Unless earlier terminated as set forth herein, the initial term
----
of this Agreement shall be two (2) years from the Launch Date (the
"Initial Term"). AOL will have the option to renew this Agreement for
an additional one (1) year period at the expiration of the Initial
Term. Upon termination of this Agreement, AOL shall have the option,
for a period equal to the Initial Term, to promote one or more
"pointers" or links from the AOL Network to the ICP Internet Site.
6.2 TERMINATION FOR BREACH. Either Party may terminate this Agreement at
----------------------
any time in the event of a material breach by the other Party which
remains uncured after sixty (60) days written notice thereof.
6.3 TERMINATION FOR BANKRUPTCY/INSOLVENCY. Either Party may terminate
-------------------------------------
this Agreement immediately following written notice to the other Party
if the other Party (i) ceases to do business in the normal course,
(ii) becomes or is declared insolvent or bankrupt, (iii) is the
subject of any proceeding related to its liquidation or insolvency
(whether voluntary or involuntary) which is not dismissed within
ninety (90) calendar days or (iv) makes an assignment for the benefit
of creditors.
7. TERMS AND CONDITIONS. The legal terms and conditions set forth on Exhibit
--------------------
C attached hereto are hereby made a part of this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the Effective Date.
AMERICA ONLINE, INC. MULTEX SYSTEMS, INC.
By: /s/ Barry Schuler By: /s/ P. Callaghan
------------------------------------ ------------------------------
Print Name: Barry Schuler Print Name: P. Callaghan
---------------------------- ----------------------
Title: President - AOL Interactive Svcs. Title: CFO
--------------------------------- ---------------------------
Date: 4/13/98 Date: 3/20/98
---------------------------------- ----------------------------
Tax ID/EIN#: 22-3253344
---------------------
8
<PAGE>
CONFIDENTIAL
EXHIBIT A
The Licensed Content shall consist of the following:
1. Brokerage Research: ICP will be responsible for the editorial and technical
design, development, maintenance and support of a brokerage research area
("Broker Research Area") for the AOL Investment Research area. ICP will be
responsible for the ongoing development, refinement and integration of new
information resources and features into the Broker Research Area. ICP will
use commercially reasonable efforts to supply AOL with special or one time
content requests, but ICP will not be contractually obligated to provide
more than is provided on the ICP Internet site.
2. Data: ICP will, each day, make available to AOL an updated index file of
its research reports which will be formatted according to reasonable
standards determined by AOL. Implementation of the Broker Research Area
will be a two phased approach: Phase 1: A link to the ICP Internet Site.
Phase 2: ICP will provide AOL with an index file of its reports which will
then be hosted on AOL Servers and integrated in the Investment Research
Search. From that index list there will be links back to the appropriate
reports on the ICP Internet site.
3. Free Area: ICP will co-develop with AOL an online area on the AOL service
that contains a sampling of the content and features of the ICP products
(the "Free Area"). The Free Area will act as an advertisement and
acquisition vehicle for ICP products. ICP will make commercially
reasonable efforts but cannot guarantee that the Free Areas will include
sample brokerage reports because of its contractual obligations to brokers.
4. Branding: Upon entrance into the ICP Internet Site, AOL Members will be
shown a welcome screen customized for AOL Members. ICP will provide
continuous AOL co-branding throughout the ICP Internet site, except for
rare instances where, in ICP's reasonable opinion, this is not technically
feasible.
5. Integration: ICP will work with AOL to integrate appropriate AOL Personal
Finance offerings (other than Brokerage Center links) into the site (e.g.
links to the Personal Finance Channel, the AOL Brokerage Center, etc.).
6. Site Performance: ICP will optimize the ICP Internet site for distribution
over the AOL service according to AOL specifications and guidelines
9
<PAGE>
CONFIDENTIAL
APPROVED MERCHANDISE CATEGORY
ICP may sell products or services related to Brokerage Research (the "Approved
Merchandise Category"). Any other category of merchandise must be approved by
AOL.
10
<PAGE>
CONFIDENTIAL
EXHIBIT B -- DEFINITIONS
------------------------
DEFINITIONS. The following definitions shall apply to this Agreement:
- -----------
ADVERTISING REVENUES. Aggregate amounts collected plus the fair market value of
- --------------------
any other compensation received (such as barter advertising) by ICP or ICP's
agents, as the case may be, arising from the license or sale of Welcome Mat
Advertisements, less applicable Advertising Sales Commissions; provided that, in
order to ensure that AOL receives fair value in connection with Welcome Mat
Advertisements, ICP shall be deemed to have received no less than the
Advertising Minimum in instances when ICP makes a Welcome Mat Advertisement
available to a third party at a cost below the Advertising Minimum.
ADVERTISING MINIMUM. (i) [Confidential Portion Omitted] or (ii) such different
- -------------------
rate or rates as AOL may establish based upon market conditions and publish
during the Term.
ADVERTISING SALES COMMISSION. In the case of a Welcome Mat Advertisement,
- ----------------------------
actual amounts paid as commission to third party agencies in connection with
sale of the AOL Advertisement.
AOL SERVICE. The narrow-band U.S. version of the America Online(R) brand
- -----------
service, specifically excluding (a) AOL.com or any other AOL Interactive Site,
(b) the international versions of an America Online service (e.g., AOL Japan),
(c) "Driveway," "AOL NetFind," "AOL Instant Messenger" or any similar
independent product or service which may be offered by, through or with the U.S.
versions of the American Online(R) brand service, (d) any programming or content
area offered by or through the U.S. version of the America Online(R) brand
service over which AOL does not exercise complete operational control
(including, without limitation, Content areas controlled by AOL Studios (e.g.,
Digital Cities), Content areas controlled by other information providers and
member-created Content areas), (e) any yellow pages, white pages, classifieds or
other search, directory or review services or Content offered by or through the
U.S. version of the America Online(R) brand service, (f) any property, feature,
product or service which AOL or its affiliates may acquire subsequent to the
Effective Date and (g) any other version of an America Online service which is
materially different from the narrow-band U.S. version of the America Online
brand service, by virtue or its branding, distribution, functionality, Content
and services, including, without limitation, any co-branded version of the
service and any version distributed through any broadband distribution
platform or through any platform or device other than a desktop personal
computer.
AFFILIATE. Any agent, distributor or franchisee of AOL or an entity in which
- ---------
AOL hold at least a nineteen percent (19%) equity interest.
AOL LOOK AND FEEL. The distinctive and particular elements of graphics, design,
- -----------------
organization, presentation, layout, user interface, navigation, trade dress and
stylistic convention (including the digital implementations thereof) within the
AOL Network and the total appearance and impression substantially formed by the
combination, coordination and interaction of these elements.
AOL MEMBER(S). Authorized users of the AOL Network, including any sub-accounts
- -------------
using the AOL Network under an authorized master account.
AOL NETWORK. (i) The AOL Service, (ii) AOL's Driveway product, (iii) AOL.com,
- -----------
(iv) any international versions of the America Online service through which AOL
or its affiliates elect to offer the ICP Internet Site and (v) any other product
or service owned, operated, distributed or authorized to be distributed by or
through AOL or its Affiliates worldwide through which such party elects to offer
the ICP Internet Site (which may include, without limitation, Internet sites
promoting AOL products and services and any "offline" information browsing
products of AOL or its Affiliates).
CONFIDENTIAL INFORMATION. Any information relating to or disclosed in the
- ------------------------
course of the Agreement, which is, or should be reasonably understood to be,
confidential or proprietary to the disclosing Party, including, but not limited
to, the material terms of this Agreement, information about AOL Members,
technical processes and formulas, source codes, product designs, sales, cost and
other unpublished financial information, product and business plans, projections
and marketing data. "Confidential Information" shall not include information
(a) already lawfully known to or independently developed by the receiving Party,
(b) disclosed in published materials, (c) generally known to the public, (d)
lawfully obtained from any third party or (e) required or reasonably advised to
be disclosed by law.
CONTENT. Text, images, video, audio (including, without limitation, music used
- -------
in time relation with text, images, or
11
<PAGE>
CONFIDENTIAL
video), and other data, products, services, advertisements, promotions, links,
pointers, technology and software.
ICP COMPETITORS. First Call, Investext, IBES, Zacks Investment Research,
- ---------------
Nelsons and any others as may be added by ICP from time to time and provided in
writing to AOL.
ICP INTERACTIVE SITE. Any interactive site or area which is managed, maintained
- --------------------
or owned by ICP or its agents or to which ICP provides and/or licenses
information, content or other materials, including, by way of example and
without limitation (i) an ICP site on the World Wide Web portion of the Internet
or (ii) a channel or area delivered through "push" product such as the
Pointcast Network or interactive environment such as Microsoft's proposed
"Active Desktop."
ICP INTERNET SITE. The Internet site and Content, currently located at
- -----------------
URL:http://www.multex.com which are managed, maintained or owned by ICP or its
agents or to which ICP licenses information, content or other materials.
IMPRESSION. User exposure to the page containing the applicable Promotion, as
- ----------
such exposure may be reasonably determined and measured by AOL in accordance
with its standard methodologies and protocols.
LICENSED CONTENT. All Content provided by ICP or its agents through the ICP
- ----------------
Internet Site for distribution pursuant to this Agreement.
NEW MEMBER. Any person or entity (a) who registers for the AOL Network using
- ----------
ICP's special promotion identifier and (b) who remains active who for three
filling cycles for the use of the AOL Network.
PERSONAL FINANCE CHANNEL. The area on the AOL Service which generally provides
- ------------------------
content relating to personal finance.
PRODUCTS. Any product, good or service which ICP offers, sells or licenses to
- --------
AOL Members through (a) the Welcome Mat, (b) the ICP Internet Site, or (c) any
"offline" means (e.g. toll-free number) for receiving orders related to specific
offers within the Welcome Mat or ICP Internet Site requiring purchasers to
reference a specific promotional identifier or tracking code, including, without
limitation, products sold through surcharged downloads (to the extent permitted
hereunder).
TERM. The period beginning on the Launch Date and ending upon the expiration or
- ----
earlier termination of the Agreement.
TRANSACTION REVENUES. Aggregate amounts paid by AOL Members in connection with
- --------------------
the sale, licensing, distribution or provision of any Products, including, in
each case, handling, shipping, service charges, and excluding, in each case, (a)
amounts collected for sales or use taxes or duties and (b) credits and
chargebacks for returned or cancelled goods or services, but not excluding cost
of goods sold or any similar cost.
EXHIBIT C -- STANDARD LEGAL TERMS AND CONDITIONS
------------------------------------------------
12
<PAGE>
CONFIDENTIAL
I. AOL NETWORK
CONTENT. ICP represents and warrants that all Content contained within the ICP
- -------
Internet Site (i) does and will conform to AOL's applicable Terms of Service,
the terms of this Agreement and any other standard, written AOL policy, (ii)
does not and will not infringe on or violate any copyright, trademark, U.S.
patent or any other third party right, including without limitation, any music
performance or other music related rights, and (iii) does not and will not
contain any Content which violates any applicable law or regulation
(collectively, the "Rules"). In the event that AOL notifies ICP in writing that
any such Content, as reasonably determined by AOL, does not comply or adhere to
the Rules, then ICP shall use its commercially reasonable efforts to block
access by AOL Members to such Content. In the event that ICP cannot, through
its commercially reasonable efforts, block access by AOL Members to such Content
in question, then ICP shall provide AOL prompt written notice of such fact. AOL
may then, at its option, either (i) restrict access from the AOL Network to the
Content in question using technology available to AOL or (ii) in the event
access cannot be restricted, direct ICP to remove any such Content until such
time as the Content in question is no longer displayed. ICP will cooperate with
AOL's reasonable requests to the extent AOL elects to implement any such access
restrictions.
CHANGES TO AOL SERVICE. AOL reserves the right redesign or modify the
- ----------------------
organization, structure, "look and feel," navigation and other elements of the
AOL Service. If AOL implements changes and modification to the screens
specified in Exhibit A in a manner that substantially modifies the nature of the
placements for ICP described in Section 1.1 in an adverse fashion, AOL will work
with ICP in good faith to provide ICP with a comparable package of placements
which are reasonably satisfactory to ICP.
CONTESTS. ICP shall take all steps necessary to ensure that any contest,
- --------
sweepstakes or similar promotion conducted or promoted through the ICP Internet
Site (a "Contest") complies with all applicable federal, state and local laws
and regulations. ICP shall provide AOL with (i) at least thirty (30) days prior
written notice of any Contest and (ii) upon AOL's request, an opinion from ICP's
counsel confirming that the Contest complies with all applicable federal, state
and local laws and regulations.
AOL LOOK AND FEEL. ICP acknowledges and agrees that AOL shall own all right,
- -----------------
title and interest in and to the AOL Look and Feel. In addition, AOL shall
retain editorial control over the portions of the AOL pages and forms which
frame the ICP Internet Site (the "AOL Frames"). AOL may, at its discretion,
incorporate navigational icons, links and pointers or other Content into such
AOL Frames.
OPERATIONS. AOL shall be entitled to require reasonable changes to the ICP
- ----------
Internet Site to the extent such site will, in AOL's good faith judgment,
adversely affect operations of the AOL Network.
CLASSIFIEDS. ICP shall not implement or promote any classifieds listing
- -----------
features through the Welcome Mat(s) without AOL's prior written approval. Such
approval may be conditioned upon, among other things, ICP's conformance with
any then-applicable service-wide technical or other standards related to online
classifieds.
DUTY TO INFORM. ICP shall promptly inform AOL of any information related to the
- --------------
ICP Internet Site which could reasonably lead to a claim, demand or liability of
or against AOL and/or its Affiliates by any third party.
RESPONSE TO QUESTIONS/COMMENTS; CUSTOMER SERVICE. ICP shall respond promptly
- ------------------------------------------------
and professionally to questions, comments, complaints and other reasonable
requests regarding the ICP Internet Site by AOL Members or on request by AOL,
and shall cooperate and assist AOL in promptly answering the same.
STATEMENTS THROUGH AOL NETWORK. ICP shall not make, publish, or otherwise
- ------------------------------
communicate through the AOL Network any deleterious remarks concerning AOL or
its Affiliates, directors, officers, employees, or agents (including, without
limitation, AOL's business projects, business capabilities, performance of
duties and services, or financial position) which remarks are based on the
relationship established by this Agreement or information exchanged hereunder.
This section is not intended to limit good faith editorial statements made by
ICP based upon publicly available information, or information developed by ICP
independent of its relationship with AOL and its employees and agents.
PRODUCTION WORK. In the event that ICP requests any AOL production assistance,
- ---------------
ICP shall work with AOL to develop detailed production plans for the requested
production assistance (the "Production Plan"). Following receipt of the final
Production Plan, AOL shall notify ICP of (i) AOL's availability to perform the
requested production work, (ii) the proposed fee or fee structure for the
requested production and maintenance work and (iii) the estimated development
schedule for such work. To
13
<PAGE>
CONFIDENTIAL
the extent the Parties reach agreement regarding implementation of agreed-upon
Production Plan, such agreement shall be reflected in a separate work order
signed by the Parties. To the extent ICP elects to retain a third party
provider to perform any such production work, work produced by such third party
provider must generally conform to AOL's production Standards & Practices (a
copy of which will be supplied by AOL to ICP upon request). The specific
production resources which AOL allocates to any production work to be performed
on behalf of ICP shall be as determined by AOL in its sole discretion.
TRAINING AND SUPPORT. AOL shall make available to ICP standard AOL training and
- --------------------
support programs necessary to produce any AOL areas hereunder. ICP can select
its training and support program from the options then offered by AOL. ICP
shall be responsible to pay the fees associated with its chosen training and
support package. In addition, ICP will pay travel and lodging costs associated
with its participation in any AOL training programs (including AOL's travel and
lodging costs when training is conducted at ICP's offices).
LAUNCH DATE. In the event that any terms contained herein relate to or depend
- -----------
on the commercial launch date of the online area or other property contemplated
by this Agreement (the "Launch Date"), then it is the intention of the Parties
to record such Launch Date in a written instrument signed by both Parties
promptly following such Launch Date; provided that, in the absence of such a
written instrument, the Launch Date shall be as reasonably determined by AOL
based on the information available to AOL.
II. TRADEMARKS
TRADEMARK LICENSE. In designing and implementing any marketing, advertising,
- -----------------
press releases or other promotional materials related to this Agreement and/or
referencing the other Party and/or its trade names, trademarks and service marks
(the "Promotional Materials") and subject to the other provisions contained
herein, ICP shall be entitled to use the following trade names, trademarks and
service marks of AOL: the "America Online(R)" brand service, "AOL"
service/software and AOL's triangle logo; and AOL and its Affiliates shall be
entitled to use the trade names, trademarks and service marks of ICP
(collectively, together with the AOL marks listed above, the "Marks"); provided
that each Party: (i) does not create a unitary composite mark involving a Mark
of the other Party without the prior written approval of such other Party and
(ii) displays symbols and notices clearly and sufficiently indicating the
trademark status and ownership of the other Party's Marks in accordance with
applicable trademark law and practice.
RIGHTS. Each Party acknowledges that its utilization of the other Party's Marks
- ------
will not create in it, nor will it represent it has, any right, title or
interest in or to such Marks other than the licenses expressly granted herein.
Each Party agrees not to do anything contesting or impairing the trademark
rights of the other Party.
QUALITY STANDARDS. Each Party agrees that the nature and quality of its
- -----------------
products and services supplied in connection with the other Party's marks shall
conform to quality standards communicated in writing by the other Party for use
of its trademarks. Each Party agrees to supply the other Party, upon request,
with a reasonable number of samples of any Materials publicly disseminated by
such party which utilize the other Party's Marks. Each Party shall comply with
all applicable laws, regulations and customs and obtain any required government
approvals pertaining to use of the other Party's Marks.
PROMOTIONAL MATERIALS/PRESS RELEASES. Each Party will submit to the other
- ------------------------------------
Party, for its prior written approval, which shall not be unreasonably withheld
or delayed, any Promotional Materials; provided, however, that after initial
public announcement of the business relationship between the Parties in
accordance with the approval and other requirements contained herein, either
Party's subsequent factual reference to the existence of a business relationship
between AOL and ICP, including, without limitation, the availability of the
Licensed Content through the AOL Network, or use of screen shots relating to the
distribution under this Agreement (so long as the AOL Network is clearly
identified as the source of such screen shots) for promotional purposes shall
not require the approval of the other Party. Once approved, the Promotional
Materials may be used by a Party and its affiliates for the purpose of promoting
the distribution of the Licensed Content through the AOL Network and reused for
such purpose until such approval is withdrawn with reasonable prior notice. In
the event such approval is withdrawn, existing inventories of Promotional
Materials may be depleted.
INFRINGEMENT PROCEEDINGS. Each Party agrees to promptly notify the other Party
- ------------------------
of any unauthorized use of the other Party's Marks of which it has actual
knowledge. Each Party shall have the sole right and discretion to bring
proceedings alleging infringement of its Marks or unfair competition related
thereto; provided, however, that each Party agrees to provide the other Party,
at such other Party's expense, with its reasonable cooperation and
14
<PAGE>
CONFIDENTIAL
assistance with respect to any such infringement proceedings.
III. REPRESENTATIONS AND WARRANTIES
Each Party represents and warrants to the other Party that: (i) such Party has
the full corporate right, power and authority to enter into this Agreement, to
grant the licenses granted hereunder and to perform the acts required of it
hereunder; (ii) the execution of this Agreement by such Party, and the
performance by such Party of its obligations and duties hereunder, do not and
will not violate any agreement to which such Party is a party or by which it is
otherwise bound; (iii) when executed and delivered by such Party, this Agreement
will constitute the legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms; (iv) such Party's
Promotional Materials will neither infringe on any copyright, U.S. patent or any
other third party right nor violate any applicable law or regulation and (v)
such Party acknowledges that the other Party makes no representations,
warranties or agreements related to the subject matter hereof which are not
expressly provided for in this Agreement.
IV. CONFIDENTIALITY
Each Party acknowledges that Confidential Information may be disclosed to the
other Party during the course of this Agreement. Each party agrees that if will
take reasonable steps, at least substantially equivalent to the steps it takes
to protect its own proprietary information, during the term of this Agreement,
and for a period of three years following expiration or termination of this
Agreement, to prevent the duplication or disclosure of Confidential Information
of the other Party, other than by or to its employees or agents who must have
access to such Confidential Information to perform such Party's obligations
hereunder, who will each agree to comply with this section. Notwithstanding the
foregoing, either Party may issue a press release or other disclosure containing
Confidential Information without the consent of the other Party, to the extent
such disclosure is required by law, rule, regulation or government or court
order. In such event, the disclosing Party will provide at least five (5)
business days prior written notice of such proposed disclosure to the other
Party or lesser notice if reasonable under the circumstances. Further, in the
event such disclosure is required of either Party under the laws, rules or
regulations of the Securities and Exchange Commission or any other applicable
governing body, such Party will (i) redact mutually agreed-upon portions of this
Agreement to the fullest extent permitted under applicable laws, rules and
regulations and (ii) submit a request to such governing body that such portions
and other provisions of this Agreement receive confidential treatment under the
laws, rules and regulations of the Securities and Exchange Commission or
otherwise be held in the strictest confidence to the fullest extent permitted
under the laws, rules or regulations of any other applicable governing body.
V. RELATIONSHIP WITH AOL MEMBERS
SOLICITATION OF SUBSCRIBERS. During the Term and for the two-year period
- ---------------------------
following the expiration or termination of this Agreement, neither ICP nor its
agents will use the AOL Network to (i) solicit or participate in the
solicitation of AOL Members when that solicitation is for the benefit of any
entity (including ICP) which could reasonably be construed to be or become in
competition with AOL or (ii) promote any services which could reasonably be
construed to be in competition with services available through AOL including,
but not limited to, services available through the Internet (e.g., the ICP
Internet Site). ICP may not send any AOL Member unsolicited e-mail
communications on or through the AOL Network without a "Prior Business
Relationship." For purposes of this Agreement, a "Prior Business Relationship"
shall mean that the AOL Member has either (i) purchased Products from ICP
through the AOL Network or (ii) voluntarily provided information to ICP through
a contest, registration, or other communication, which included clear and
conspicuous notice to the AOL Member that the information provided by the AOL
Member could result in an e-mail being sent to the AOL Member by ICP or its
agents. In any commercial e-mail communications to AOL Members which are
otherwise permitted hereunder, ICP shall provide the recipient with a prominent
and easy means to "opt-out" of receiving any future commercial e-mail
communications from ICP.
COLLECTION OF MEMBER INFORMATION. ICP is prohibited from collecting AOL Member
- --------------------------------
screennames from public or private areas of the AOL Network, except as
specifically provided below. ICP shall ensure that any survey, questionnaire or
other means of collecting Member Information including, without limitation,
requests directed to specific AOL Member screennames and automated methods of
collecting screennames (an "Information Request") complies with (i) all
applicable laws and regulations, (ii) AOL's applicable Terms of Service, and
(iii) any privacy policies which have been issued by AOL in writing during the
Term (the "AOL Privacy Policies"). Each Information Request shall clearly and
conspicuously specify to the AOL Members at issue the purpose for which Member
Information collected through the
15
<PAGE>
CONFIDENTIAL
Information Request shall be used (the "Specified Purpose").
USE OF MEMBER INFORMATION. ICP shall restrict use of the Member Information
- -------------------------
collected through an Information Request to the Specified Purpose. In no event
shall ICP (i) provide AOL Member names, screennames, addresses or other
identifying information ("Member Information") to any third party (except to the
extent specifically (a) permitted under the AOL Privacy Policies or (b)
authorized by the AOL Members in question) or (ii) otherwise use any Member
Information in contravention of the above section regarding "Solicitation of
Members."
VI. TREATMENT OF CLAIMS
LIABILITY. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER
- ---------
PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES
(EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES),
ARISING FROM BREACH OF THIS AGREEMENT, THE USE OF OR INABILITY TO USE THE AOL
NETWORK OR ANY OTHER PROVISION OF THIS AGREEMENT, SUCH AS, BUT NOT LIMITED TO,
LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS (COLLECTIVELY,
"DISCLAIMED DAMAGES"); PROVIDED THAT EACH PARTY SHALL REMAIN LIABLE TO THE OTHER
PARTY TO THE EXTENT ANY DISCLAIMED DAMAGES ARE CLAIMED BY A THIRD PARTY AND ARE
SUBJECT TO INDEMNIFICATION BELOW, EXCEPT AS PROVIDED BELOW IN THE "INDEMNITY"
SECTION, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR MORE THAN THE
AGGREGATE AMOUNTS PAYABLE HEREUNDER IN THE YEAR IN WHICH LIABILITY ACCRUED;
PROVIDED THAT EACH PARTY SHALL REMAIN LIABLE FOR THE AGGREGATE AMOUNT OF ANY
PAYMENT OBLIGATIONS OWED TO THE OTHER PARTY UNDER THE PROVISIONS OF THIS
AGREEMENT.
NO ADDITIONAL WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT,
- ------------------------
NEITHER PARTY MAKES, AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS, ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE AOL NETWORK, OR
ANY AOL PUBLISHING TOOLS, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF
DEALING OR COURSE OF PERFORMANCE, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, AOL SPECIFICALLY DISCLAIMS ANY WARRANTY REGARDING THE PROFITABILITY
OF AOL NETWORK OR THE ICP INTERNET SITE.
INDEMNITY. Each Party will defend, indemnify, save and hold harmless the other
- ---------
Party and the officers, directors, agents, affiliates, distributors, franchisees
and employees of the other Party from any and all third party claims, demands,
liabilities, costs or expenses, including reasonable outside and in-house
attorney's fees ("Liabilities"), resulting from the indemnifying Party's
material breach of any obligation, duty, representation or warranty of this
Agreement, except where Liabilities result from the gross negligence or knowing
and willful misconduct of the other Party.
CLAIMS. Each Party agrees to (i) promptly notify the other Party in writing of
- ------
any indemnifiable claim and give the other Party the opportunity to defend or
negotiate a settlement of any such claim at such other Party's expense and (ii)
cooperate fully with the other Party, at that other Party's expense, in
defending or settling such claim. AOL reserves the right to assume the
exclusive defense and control of any matter otherwise subject to indemnification
by ICP hereunder.
ACKNOWLEDGMENT. AOL AND ICP EACH ACKNOWLEDGES THAT THE PROVISIONS OF THIS
- --------------
AGREEMENT WERE NEGOTIATED TO REFLECT AN INFORMED, VOLUNTARY ALLOCATION BETWEEN
THEM OF ALL RISKS (BOTH KNOWN AND UNKNOWN) ASSOCIATED WITH THE TRANSACTIONS
CONTEMPLATED HEREUNDER. THE LIMITATIONS AND DISCLAIMERS RELATED TO WARRANTIES
AND LIABILITY CONTAINED IN THIS AGREEMENT ARE INTENDED TO LIMIT THE
CIRCUMSTANCES AN EXTENT OF LIABILITY. THE PROVISIONS OF THIS SECTION VI SHALL
BE ENFORCEABLE INDEPENDENT OF AND SEVERABLE FROM ANY OTHER ENFORCEABLE OR
UNENFORCEABLE PROVISION OF THIS AGREEMENT.
VII. MISCELLANEOUS
AUDITING RIGHTS. Each Party shall maintain complete, clear and accurate records
- ---------------
of all expenses, revenues, fees, transactions and related documentation
(including agreements) in connection with the performance of this Agreement
("Records"). All such Records shall be maintained for a minimum of five (5)
years following
16
<PAGE>
CONFIDENTIAL
termination of this Agreement. For the sole purpose of ensuring compliance with
this Agreement, each Party shall have the right, at its expense, to direct an
independent certified public accounting firm subject to strict confidentiality
restrictions to conduct a reasonable and necessary copying and inspection of
portions of the Records of the other Party which are directly related to amounts
payable to the Party requesting the audit pursuant to this Agreement. Any such
audit may be conducted after twenty (20) business days prior written notice,
subject to the following. Such audits shall not be made more frequently than
once every twelve months. No such audit of AOL shall occur during the period
beginning on June 1 and ending October 1. In lieu of providing access to its
Records as described above, a Party shall be entitled to provide the other Party
with a report from an independent certified public accounting firm confirming
the information to be derived from such Records.
EXCUSE. Neither Party shall be liable for, or be considered in breach of or
- ------
default under this Agreement on account of, any delay or failure to perform as
required by this Agreement as a result of any causes or conditions which are
beyond such Party's reasonable control and which such Party is unable to
overcome by the exercise of reasonable diligence.
INDEPENDENT CONTRACTORS. The Parties to this Agreement are independent
- -----------------------
contractors. Neither Party is an agent, representative or partner of the other
Party. Neither Party shall have any right, power or authority to enter into any
agreement for or on behalf of, or incur any obligation or liability of, or to
otherwise bind, the other Party. This Agreement shall not be interpreted or
construed to create an association, agency, joint venture or partnership between
the Parties or to impose any liability attributable to such a relationship upon
either Party.
NOTICE. Any notice, approval, request, authorization, direction or other
- ------
communication under this Agreement will be given in writing and will be deemed
to have been delivered and given for all purposes (i) on the delivery date if
delivered by electronic mail on the AOL Network (to screenname "AOLNotice" in
the case of AOL) or by confirmed facsimile; (ii) on the delivery date if
delivered personally to the Party to whom the same is directed; (iii) one
business day after deposit with a commercial overnight carrier, with written
verification of receipt; or (iv) five business days after the mailing date,
whether or not actually received, if sent by U.S. mail, return receipt
requested, postage and charges prepaid, or any other means of rapid mail
delivery for which a receipt is available. In the case of AOL, such notice will
be provided to both the Senior Vice President for Business Affairs (fax no.
703-265-1206) and the Deputy General Counsel (fax no. 703-265-1105), each at the
address of AOL set forth in the first paragraph of this Agreement. In the case
of ICP, except as otherwise specified herein, the notice address shall be the
address for ICP set forth in the first paragraph of this Agreement, with the
other relevant notice information, including the recipient for notice and, as
applicable, such recipient's fax number or AOL e-mail address, to be as
reasonably identified by AOL.
NO WAIVER. The failure of either Party to insist upon or enforce strict
- ---------
performance by the other Party of any provision of this Agreement or to exercise
any right under this Agreement shall not be construed as a waiver or
relinquishment to any extent of such Party's right to assert or rely upon any
such provision or right in that or any other instance; rather, the same shall be
and remain in full force and effect.
RETURN OF INFORMATION. Upon the expiration or termination of this Agreement,
- ---------------------
each Party shall, upon the written request of the other Party, return or destroy
(at the option of the Party receiving the request) all confidential information,
documents, manuals and other materials specified the other Party.
SURVIVAL. Sections IV, V, VI, and VII of this Exhibit C shall survive the
- --------
completion, expiration, termination or cancellation of this Agreement.
ENTIRE AGREEMENT. This Agreement sets forth the entire agreement and supersedes
- ----------------
any and all prior agreements of the Parties with respect to the transactions set
forth herein. Neither Party shall be bound by, and each Party specifically
objects to, any term, condition or other provision which is different from or in
addition to the provisions of this Agreement (whether or not it would materially
alter this Agreement) and which is proffered by the other Party in any
correspondence or other document, unless that Party to be bound thereby
specifically agrees to such provision in writing.
AMENDMENT. No change, amendment or modification of any provision of this
- ---------
Agreement shall be valid unless set forth in a written instrument signed by the
party subject to enforcement of such amendment.
FURTHER ASSURANCES. Each Party shall take such action (including, but not
- ------------------
limited to, the execution, acknowledgment and delivery of documents) as may
reasonably be requested by any other Party for the
17
<PAGE>
CONFIDENTIAL
implementation or continuing performance of this Agreement.
CONSTRUCTION; SEVERABILITY. In the event that any provision of this Agreement
- --------------------------
conflicts with the law under which this Agreement is to be construed or if any
such provision is held invalid by a court with jurisdiction over the Parties to
this Agreement, (i) such provision shall be deemed to be restated to reflect as
nearly as possible the original intentions of the Parties in accordance with
applicable law, and (ii) the remaining terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect.
REMEDIES. Except where otherwise specified, the rights and remedies granted to
- --------
a Party under this Agreement are cumulative and in addition to, and not in lieu
of, any other rights or remedies which the Party may possess at law or in
equity.
APPLICABLE LAW; JURISDICTION. This Agreement shall be interpreted, construed
- ----------------------------
and enforced in all respects in accordance with the laws of the Commonwealth of
Virginia except for its conflicts of laws principles. Each Party irrevocably
consents to the exclusive jurisdiction of the courts of the Commonwealth of
Virginia and the federal courts situated in the Commonwealth of Virginia, in
connection with any action to enforce the provisions of this Agreement, to
recover damages or other relief for breach or default under this Agreement, or
otherwise arising under or by reason of this Agreement.
EXPORT CONTROLS. Both parties shall adhere to all applicable laws, regulations
- ---------------
and rules relating to the export of technical data and shall not export or re-
export any technical data, any products received from the other Party or the
direct product of such technical data to any proscribed country listed in such
applicable laws, regulations and rules unless properly authorized.
HEADINGS. The captions and headings used in this Agreement are inserted for
- --------
convenience only and shall not affect the meaning or interpretation of this
Agreement.
COUNTERPARTS. This Agreement may be executed in counterparts, each of which
- ------------
shall be deemed an original and all of which together shall constitute one and
the same document.
18
<PAGE>
CONFIDENTIAL
EXHIBIT D
---------
FORMAT FOR ICP'S PRESENCE ON THE AOL NETWORK
. Any ICP trademark or logo
. Any headline or picture from ICP content
. Any teaser, icon, link to ICP Internet Site or Welcome Mat
. Any other Content which originates from, describes or promotes ICP or ICP's
Content
19
<PAGE>
CONFIDENTIAL
EXHIBIT E
---------
CERTIFICATION OF COMPLIANCE WITH COMMITMENTS
REGARDING PROMOTIONS
Pursuant to Section 3 of the Interactive Services Agreement between Multex, Inc.
("ICP") and America Online, Inc. ("AOL") dated as of ______________, 1998 (the
"Agreement"), the following report is delivered to AOL for the month ending
_____________ (the "Month"):
I. PROMOTIONAL COMMITMENTS
ICP hereby certifies to AOL that ICP completed the following promotional
commitments during the Month:
<TABLE>
<CAPTION>
TYPE OF PROMOTION DATE(S) OF PROMOTION DURATION/CIRCULATION RELEVANT
OF PROMOTION CONTRACT
SECTION
<C> <S> <C> <C> <C>
- ----------------------------------------------------------------------------------------
1.
- ----------------------------------------------------------------------------------------
2.
- ----------------------------------------------------------------------------------------
3.
</TABLE>
IN WITNESS WHEREOF, this Certificate has been executed this _____ day of
___________, 199___.
_____________________________________
By: _________________________________
Print Name: _________________________
Title: ______________________________
Date: _______________________________
20
<PAGE>
EXHIBIT 10.3
[MULTEX SYSTEMS, INC. LETTERHEAD]
BLOOMBERG - MULTEX DISTRIBUTION
AND JOINT SOURCING AGREEMENT
BLOOMBERG L.P.
499 Park Avenue
New York, NY 10022
Telephone: (212) 318-2000
Facsimile: (212) 980-4585
This Agreement (the "Agreement") is dated as of June 4, 1996 by and between
Bloomberg L.P., a Delaware limited partnership) ("BLP"), and Multex Systems,
Inc. ("Multex").
WHEREAS, BLP owns and operates a worldwide electronic network ("THE BLOOMBERG
terminal"*) consisting of software, data and equipment (the "Equipment") for
the electronic delivery of financial market information and analytic services;
WHEREAS, Multex collects data from brokerage firms and third parties
("Contributors") such as analysis, research and commentary, relating to the
financial markets, including, if any, but not limited to, if any, debt, equity,
option, credit, commodities and foreign exchange data, and certain related data
including, but not limited to, if any, earnings estimates, dividend estimates,
buy/sell recommendations, recommended lists, intraday research bulletins, and
the like ("Reports");
WHEREAS, Multex desires to obtain the opportunity to distribute the service
described on Schedule A hereto (the "Service") to only certain users of THE
BLOOMBERG terminal (the "Users") and BLP desires to make the Bloomberg-Multex
Research Service available to such Users, hereinafter described as "the Research
Service" as described in Schedule A.
WHEREAS, BLP and Multex desire to cooperate to develop products for consumer
online services, Internet delivery and "pay-per-view" delivery;
NOW, THEREFORE, in consideration of the mutual promises and agreements contained
herein, it is hereby agreed as follows:
- ---------------------
* BLOOMBERG, THE BLOOMBERG terminal, Bloomberg L.P., and BLOOMBERG FINANCIAL
MARKETS are trademarks, trade names and service marks of BLP.
<PAGE>
1. DISTRIBUTION OF MULTEX SERVICE.
(a) Subject to the terms and conditions of this Agreement, Multex hereby grants
to BLP, and BLP hereby accepts, a nonexclusive, worldwide license to market
and deliver the Service to Users electronically by means of THE BLOOMBERG
terminal. Multex represents that it has all such rights in, and licenses
to, the information contained in the Service as may be required in order to
permit it to grant to BLP the license granted hereby and to transmit to the
Service to BLP and Users.
(b) Multex represents and warrants to BLP the following: (i) the Service to be
delivered by Multex by means of THE BLOOMBERG terminal will include, at a
minimum, all Reports delivered by Multex to its clients by other "third
party" electronic distribution systems under similar conditions and
circumstances and subject to any limitation contained in any agreement
Multex has with its Contributors; (ii) Multex has obtained the right from
its Contributors to the Reports and has full power, right and authority to
obtain, transmit, and distribute the Service to BLP and its Users subject to
the applicable Contributor agreement with Multex, and (iii) when supplied by
Multex to BLP and its Users the Service and the Reports shall be no less
correct or complete and no less current than similar Reports distributed by
Multex to other Third Party Distributors under the same or similar
conditions or circumstances.
(c) Multex agrees to make available the Service to BLP for transmission to Users
by THE BLOOMBERG terminal no later than the time that the Service is made
available to any other "third party" electronic distribution system.
(d) Multex shall use reasonable commercial efforts to (i) keep the Service
current and complete, (ii) notify BLP promptly of any errors or omissions,
and (iii) if the error or omission is the fault of Multex, correct any such
errors or omissions as promptly as possible under the circumstances.
(e) Each User shall pay (i) to BLP the monthly rental charge such User is
required to pay with respect to THE BLOOMBERG terminal and (ii) any fees
imposed by Multex for access to the Service. Multex agrees that the fees
charged to Users for access to the Service via THE BLOOMBERG terminal will
be no greater than the fees charged for the Service on other "third party"
platforms for the same or similar Service under the same or similar
conditions and to parties similarly situated. Multex agrees that the fee
charged per terminal will remain under [Confidential Portion Omitted] for
the first [Confidential Portion Omitted] years of this Agreement and future
increases will be by mutual consent.
(f) Multex agrees to permit BLP to display the Service without charge over all
BLP internal terminals worldwide for marketing, demonstration and data
quality control purposes. Multex also agree to permit BLP to reference the
Service and Reports, and report on the Service and Reports as part of its
print, broadcasting, and multimedia news gathering
<PAGE>
operations, subject to Contributor approval. BLP agrees to attribute
information derived from the Service to Multex, as appropriate.
(g) Multex agrees to supply certain data to the Service without charge to BLP or
Users, including, but not limited to; (i) the headlines of its broker-dealer
Contributor reports (ii) earnings estimates and (iii) broker dealer morning
notes, subject to Contributor approval.
(h) Multex agrees to integrate reports, including earnings estimates, morning
notes, and published reports into the "Bloomberg Research" function, subject
to Contributor approval. Subscription based Contributor Reports, where an
additional subscription fee is charged, i.e. Third Parties, will be
displayed on separate Multex menus.
2. CO-MARKETING AND JOINT SOURCING.
(a) BLP agrees to assist Multex in sourcing Strategic Contributors and
Additional Contributors to the Service. Multex agrees to implement
[Confidential Portion Omitted] Strategic Contributors selected by BLP and
Multex at no charge. BLP and Multex agree to meet once per quarter to
define, establish and review the target list of Strategic Contributors.
Strategic Contributors and Additional Contributors pay all communications
costs to deliver Reports to Multex.
(b) Strategic Contributors will be issued a letter jointly written by BLP and
Multex on behalf of Multex soliciting their participation in the "Service".
(c) Existing Contributors to Multex will be issued a letter jointly written by
BLP and Multex soliciting their continued participation in the "Service."
BLP agrees to not directly or indirectly solicit any existing Contributors
to Multex, except as provided in 2(k).
(d) Multex agrees to implement and maintain Additional Contributors at its cost,
which will cover hardware, software and monthly service charges. In the
event Multex declines or refuses to incur the cost or to implement and
maintain the Additional Contributors, BLP agrees to undertake these charges,
and in such event, BLP will have the right to restrict the distribution of
the Contributor's information to other third party platforms that are
competitive to BLP (e.g., [Confidential Portion Omitted]) via Multex.
Notwithstanding such restrictions, Multex has the right to distribute all
data to its own services, i.e., Multex Publisher, MultexNet, without
exception. In the event this Agreement is terminated for any reason,
ownership of the equipment installed at the Additional Contributor's
location will revert to BLP.
(e) When applicable, BLP and Multex agree to conduct joint sourcing meetings
with prospective Strategic Contributors and Additional Contributors.
(f) Contributors will not be charged to see their own Reports.
3
<PAGE>
(g) Multex and BLP may mention this Joint Sourcing agreement in press releases,
customer and prospect correspondence and marketing literature. Multex and
BLP agree to circulate a positioning statement of this Joint Sourcing
Agreement to all internal parties involved within 30 days of execution of
this Agreement.
(h) The Service will be branded the "Bloomberg-Multex Research Service". BLP
acknowledges that Multex is the sole and exclusive owner of the Multex name
and copyright. BLP is hereby licensed to use the Multex name in order to
market the "Bloomberg-Multex Research Service." When Multex distributes
Additional Contributor Reports on other platforms with BLP's permission per
Section 2(d), the Reports will be attributed as coming from the "Bloomberg-
Multex Research Service." Both parties shall not use any of the other
party's trademarks, trade names, or service marks in any manner which
creates the impression that such names and marks belong to or are identified
with the other party, and each acknowledges that it has no ownership rights
in and to any of the names and marks of the other.
(i) BLP will retain exclusive distribution rights to all Earnings Estimate
information, including the right to approve distribution to other third
party platforms that are competitive to BLP (e.g., Reuters, Telerate,
Bridge, ILX, Quotron) via Multex. Where Contributors are transmitting
Morning Notes and Earnings Estimates as well as Published Research, the
Morning Notes and Earnings Estimates will take priority over Published
Research in implementation.
(j) Multex retains the exclusive distribution and redistribution rights to all
Morning Notes and Published Research. BLP cannot provide the Reports either
directly or indirectly to a competitor of Multex.
(k) BLP has the right, at any point in time, to take Contributor Reports
directly from any source that directly communicates with either party that
it wishes to bypass Multex.
(l) BLP may at any time enter into Distribution and Joint Sourcing Agreements
with other entities, including direct competitors to Multex provided however
that for a period of [Confidential Portion Omitted] year from the signing
date of this Agreement, BLP may not enter into any type of Agreement with
[Confidential Portion Omitted], unless [Confidential Portion Omitted] agrees
to waive all broker penalties and its exclusive rights to broker research
for all [Confidential Portion Omitted] sources, of Morning Notes and
Research Direct Reports.
(m) Notwithstanding anything herein to the contrary set forth in Paragraph 2(d)
and 2(i) Multex shall have the unqualified right to distribute any data
restricted under Paragraph 2(d) and 2(i) via its own services, i.e., Multex
Publisher and MultexNet.
4
<PAGE>
3. FEES.
(a) Multex agrees to pay BLP within 30 days of collection of Service Fees, a
Distribution Fee based on [Confidential Portion Omitted] derived from the
distribution of the Service over THE BLOOMBERG terminal. This percentage is
outlined in Schedule B.
(b) In the event that BLP collects, on Multex's behalf, subscriber fees for the
Service, then the per annum Distribution Fee may be retained by BLP from
such fees and the balance remitted to Multex.
4. COOPERATIVE ADVERTISING CREDITS.
(a) BLP will provide [Confidential Portion Omitted] per month in Bloomberg
Magazine promoting the "Bloomberg-Multex Research Service" at no cost to
Multex.
(b) Multex shall have the option of applying up to [Confidential Portion
Omitted] of the Distribution Fee towards the purchase of advertising in any
Bloomberg media, including Bloomberg Magazine in accordance with BLP's
published rates.
(c) Multex shall have the option of applying the first [Confidential Portion
Omitted] of the per annum BLP Distribution Fee towards mutually agreed joint
marketing activities. Any unused portion of the aforesaid funds shall be
carried over to a subsequent year, provided however, if the unused amount
exceeds [Confidential Portion Omitted], the excess over [Confidential
Portion Omitted] or any amount not spent shall be remitted to BLP.
5. REPORTS AND RECORDKEEPING.
(a) Within 15 days after the end of each month. BLP shall deliver to Multex an
entitlement and usage report of users of the service and Multex shall
deliver to BLP a monthly statement setting forth the revenues derived from
the distribution of the Service over THE BLOOMBERG terminal and the
calculation of the Distribution Fee, if any.
(b) Once per calendar year, upon written request and BLP's expense, Multex will
allow BLP and/or its authorized representatives access to those Multex's
premises, systems, records and other information solely related to the
service as may be needed for verification of the Distribution Fee
calculation.
(c) Bloomberg acknowledges that Multex will have the exclusive entitlement
rights using The Bloomberg FPV function. No other party will have or
exercise the authority to make any Multex entitlement change without the
expressed written consent of Multex Systems, Inc.
5
<PAGE>
6. BLOOMBERG TERMINALS.
(a) During the term of this Agreement, BLP will provide Multex with
[Confidential Portion Omitted] free Bloomberg terminals, pursuant to Multex
signing a Bloomberg Agreement and Schedule of Services. Multex agrees to
pay all line and installation charges. Multex will pay full market rate for
any additional Bloomberg terminals.
7. OPTION TO INVEST IN MULTEX.
(a) Multex shall grant BLP a [Confidential Portion Omitted] option to purchase
[Confidential Portion Omitted] shares of Multex common stock at
[Confidential Portion Omitted] per share.
(b) After the expiration of the first option, Multex shall grant BLP an
additional [Confidential Portion Omitted] option to purchase [Confidential
Portion Omitted] shares of Multex common stock at [Confidential Portion
Omitted] per share.
8. TERM AND TERMINATION.
(a) This Agreement shall be effective for five years from the date it is
accepted by BLP and shall be automatically renewed for successive five-year
periods unless BLP elects not to renew by giving not less than 180 day's
prior written notice to Multex. Multex may terminate this Agreement if BLP
provides the Reports either directly or indirectly to a competitor of
Multex, or enters a more favorable Joint Sourcing arrangement with
[Confidential Portion Omitted], or fails to pay the fees due to Multex.
(b) NOTWITHSTANDING SUBPARAGRAPH (a) ABOVE, BLP SHALL HAVE THE RIGHT AT ANY
TIME, IN ITS SOLE DISCRETION, TO DISCONTINUE DISTRIBUTION OF THE SERVICE TO
USERS BY MEANS OF THE BLOOMBERG TERMINAL IN THE EVENT THE SERVICE CONTAINS
MATERIAL WHICH DOES NOT COMPLY WITH APPLICABLE LAWS, RULES OR REGULATIONS OR
BLP'S REASONABLE POLICIES AND PRACTICES.
(c) Notwithstanding Sections 3(a) and 3(b), BLP may terminate this Agreement
with immediate effect by notice in writing on any of the following events
(i) if Multex enters into a voluntary or involuntary bankruptcy,
receivership or makes an assignment for the benefit its creditors, (ii) if
BLP is in a material breach of this or (iii) if Multex fails to provide the
Service to BLP (except items (ii) and (iii) shall not apply in the case of
force majeure or for reasons beyond the control of either party) and such
breach is not cured within 90 days of written notice thereof (provided,
however, if the failure cannot be reasonably corrected within 90 days and
the defaulting party has commenced performance during such ninety (90) day
period and proceeds to cure the default, the time curing such default shall
be extended for such period as may be necessary to cure
6
<PAGE>
the default. Except in the case of monies due, or fees required to be paid
hereunder, the notwithstanding above such monies or fees shall be paid
within thirty (30) days after Notice.
In the event of termination under 3(b) or 3(c), Multex will make available a
license to the Multex technology, software, hardware, Contributor lists and
contacts, 180 days of assistance, and other materials as may be necessary
for BLP to continue operation of the Service directly without Multex's
participation.
9. ASSIGNABILITY.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. Neither the Multex nor
BLP shall assign this Agreement or any right or obligation hereunder without
the prior written consent of the other. Furthermore, this Agreement shall
inure to the benefit of and be binding on any successor to all or
substantially all of the business and or properties of Multex relating to
the subject matter of this Agreement, whether by merger, sale of assets or
other agreements or operations of law.
10. LIMITATIONS OF LIABILITIES AND INDEMNIFICATION.
BLP, its officers, employees, suppliers, and third party agents shall have
no responsibility or liability, contingent or otherwise, for any injury or
damages, whether caused by the negligence of BLP, its employees,
subcontractors, agents, equipment vendors or otherwise, arising in
connections with the use or transmission of Service pursuant to this
Agreement and shall not be liable for any lost profits, punitive, incidental
or consequential damages or any claim against Multex by any other party. BLP
shall not be responsible for or have any liability for any injuries or
damages caused by the Service or delays or interruptions of the Services,
from whatever cause. Multex is solely responsible for the Service and the
resultant output thereof in whatever form. BLP shall have no liability or
responsibility for the security or maintenance of any Service input by
Multex. BLP shall have no liability or responsibility for any errors,
omissions, delays or inaccuracies in the Service, nor for any damages
suffered by Multex or any others resulting from disseminating the Service
through THE BLOOMBERG terminal. Multex shall indemnify BLP and hold it
harmless and at Multex's expense defend BLP against any loss, claim, demand
or expense (including reasonable attorneys fees) arising out of the
negligence of Multex.
BLP acknowledges and agrees that the Research provided by the Multex
Technology shall remain the property of the Contributors and BLP shall not
in any way transfer or encumber any interest in the Research or assert any
rights therein. BLP understands, and agrees that the transmittal of the
Research to BLP may be restricted by applicable securities laws or by the
internal policies and practices of the Contributors.
7
<PAGE>
BLP shall refrain from (i) making any representations or warranties of any
kind concerning the Research; or (ii) modifying, amending, editing, or
otherwise revising, in any manner, the content or format of the Research.
The Research shall be transmitted to clients in its entirety (including all
accompanying disclaimers and proprietary notices) and without revision by
BLP. BLP shall use reasonable efforts to prevent interception, inappropriate
disclosure, or use of the Research by unauthorized persons. Towards that
end, BLP will ensure that its employees abide by the provisions of this
agreement and do not illegally trade on or wrongfully disclose any
information given to BLP by Multex.
To the extent any such Research Agreements provide for the following, it
shall be made a part of this Agreement and apply to that Contributor, BLP
shall defend, indemnify and hold harmless Multex and the Contributor, and
their successors and assigns, against any and all actions, proceedings,
claims, liabilities, demands, costs, damages, losses, and expenses to which
Multex or the Contributors may be subjected by reason of Distributors
distribution and use of the Research. MULTEX shall provide notice to BLP of
any Research Agreement which contains language of this Section 3.9, and will
provide separate rider to be executed by such parties.
11. WARRANTY DISCLAIMER.
BLP MAKES NO EXPRESS OR IMPLIED WARRANTIES RELATING TO THE PRODUCTS OR
SERVICES COVERED BY THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
NEITHER THE CONTRIBUTOR NOR MULTEX MAKE ANY WARRANTIES WHATSOEVER, EXPRESSED
OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY WARRANTIES OR FITNESS FOR A
PARTICULAR PURPOSE OR MERCHANTABILITY, CONCERNING THIS AGREEMENT, THE
SERVICES OR EQUIPMENT (IF ANY) PROVIDED HEREUNDER, THE BLOOMBERG-MULTEX
RESEARCH SERVICE OR THE REPORTS. THE REPORTS AND THE SERVICES PROVIDED
HEREUNDER ARE PROVIDED "AS IS" WITH NO WARRANTIES WHATSOEVER. NEITHER THE
CONTRIBUTORS NOR MULTEX MAKES ANY REPRESENTATION OR WARRANTY THAT THE
OPERATION OF THE SOFTWARE SHALL BE UNINTERRUPTED OR ERROR FREE NOR GUARANTEE
THE ACCURACY, VALIDITY OR COMPLETENESS OF THE REPORTS. MULTEX AND THE
CONTRIBUTORS HEREBY DISCLAIM ANY LIABILITY FOR, INDIRECT, COMPENSATORY,
CONSEQUENTIAL, SPECIAL, LOST PROFITS, PUNITIVE, OR OTHER DAMAGES, COSTS OR
EXPENSES OF ANY KIND ARISING FROM THIS AGREEMENT, OR BLP'S RECEIPT, USE OF,
OR DELAY IN RECEIVING OR FAILURE TO RECEIVE, THE REPORTS.
8
<PAGE>
Multex's and its Contributors shall not have any obligation or liability to
BLP or any third party relating to, or arising (i) the supplying, furnishing
or the failure to supply or furnish the Reports (including the information
contained therein) or Services, (ii) errors or omissions in connecting,
routing, processing, transmitting, distributing or displaying the Reports,
or (iii) the accuracy of the Reports or securities or commodities
information and prices, and related market and statistical information and
prices displayed, carried or furnished by or through the Services. Multex
and Contributors shall not have any liability for damages, direct or
indirect, special, consequential, compensatory, lost profits, for any
defaults arising out of this Agreement.
Multex maximum liability hereunder for any other cause not exculpated
hereunder, whether in tort or contract, shall not exceed the actual damages.
Multex may discontinue and terminate providing all or a portion of the
Reports upon ten (10) days prior notice (or such shorter notice if the
Contributor so directs) (i) if the Contributor of such Reports notifies and
directs Multex to discontinue or terminate providing the Reports, (ii) BLP
has breached its agreement with the Contributor, (iii) Contributor has
terminated its agreement with BLP, (iv) Contributor discontinues offering
such Reports, (v) Contributor, for whatever reason, directs Multex to
discontinue providing the Reports to BLP, (vi) BLP has not received
authorization from Contributor to receive the Reports, and (vii) Contributor
terminates its agreement with Multex.
BLP recognizes and understands that Multex cannot and does not guarantee in
any way, the content, timeliness, or availability of the Reports or
Services. Accordingly, BLP agrees that Multex shall not have any obligation
or liability to BLP (whether caused directly or indirectly) relating to or
arising out of (i) the interruption, delay or failure in connecting,
transmitting, routing, delivery, or distributing the Services or Reports,
(ii) errors in connecting, transmitting, processing, disseminating,
furnishing, displaying or distributing the Reports or Services, (iii) the
unavailability of Reports or Services, (iv) the accuracy of the Reports
(including the securities, pricing or commodities information contained
therein) or the accuracy of the Reports as may be displayed, furnished or
transmitted by or through the Services, (v) errors in entitling BLP with
Reports that BLP is not entitled to receive or the failure to entitle BLP,
(vi) the acts or omissions of the Contributors, including the termination or
discontinuance of the Reports by Contributors to Multex or BLP. Multex's
sole liability to BLP or any Third Party for claims, notwithstanding the
form of such claims (e.g., contract, negligence or otherwise), arising out
of items (i) through (vi) above, shall be to use reasonable efforts to
resume the Services, make the Services or Reports available to BLP or
correct any errors as promptly as reasonably and feasibly practicable.
12. MAINTENANCE AND CIRCUMSTANCES BEYOND BLP'S CONTROL.
9
<PAGE>
Neither BLP nor Multex will be deemed in default or liable hereunder if, as
a result of any cause or circumstances beyond such party's reasonable
control or any repair work or routine maintenance, there occurs a delay in
or failure or interruption of (1) service to any User, or (2) transmission
of the Service. So long as any such failure continues, the party responsible
for such service or transmission will use its reasonable best efforts to
eliminate such conditions and will keep the other party fully informed at
all times concerning the matters causing such delay or default and the
prospects for their termination.
13. CONFIDENTIALITY.
(a) The following materials and information and all copies thereof of whatever
nature are designated as "confidential" and are the proprietary information
and trade secrets of BLP: (i) the computer software possessed by BLP and
all source documents relating to such computer software; (ii) proprietary
business information of BLP (including, without limitation, the names and
addresses of Users, information providers and suppliers), and business
information that BLP does not generally make available to the public; (iii)
the methods, means, personnel, Equipment and software by and with which BLP
provides THE BLOOMBERG terminal; and (iv) any other information that BLP
reasonably designates, by notice in writing delivered to Multex, as being
confidential or a trade secret.
(b) The following materials and information and all copies thereof of whatever
nature are designated as "confidential" and are the proprietary information
and trade secrets of the Multex: (i) proprietary business information of
the Multex, and business information that the Multex does not generally make
available to the public; and (ii) any other information that the Multex
reasonably designates; by notice in writing delivered to BLP, as being
confidential or a trade secret.
(c) All such proprietary or confidential information of BLP or of Multex shall
be kept secret by the Multex or BLP, as the case may be, to the degree it
keeps secret its own confidential or proprietary information. Such
information belonging to either party shall not be disclosed by the other
party to its employees except on a need-to-know basis or to agents or
contractors of such other party, but may be disclosed by such other party to
state or federal agencies, authorities or courts upon their order or request
provided prompt notice of such order or request is given by such other party
to the party to which such information belongs, if such notice is legally
permitted.
(d) No information that would otherwise be proprietary or confidential for the
purposes of this Agreement pursuant to paragraph (a) or (b) above shall be
subject to the restrictions on disclosure imposed by paragraph (c) hereof in
the event and to the extent that (i) such information is in, or becomes part
of, the public domain otherwise than through the fault of the party to which
such information does not belong, (ii) such information was known
10
<PAGE>
to such party prior to the execution of this Agreement, or (iii) such
information was revealed to such party by a third party; or (iv) is required
to be disclosed pursuant to any law or court.
14. WAIVER.
No waiver by either party of a breach of any provision of this Agreement by
the other party shall operate as a waiver of any subsequent breach.
15. ADVERTISING OR PUBLICITY.
Either party may routinely reference the other in advertising, marketing or
publicity releases; provided, however, that prior approval must be obtained
for claims of substance.
16. COMPLETE AGREEMENT MODIFICATIONS OR WAIVERS.
This Agreement, together with Schedule A and B is the complete and exclusive
statement of the agreements between the parties with respect to the subject
matter hereof and supersedes any oral or written communications or
representations of agreements relating thereto. No changes, modifications or
waivers regarding this Agreement shall be binding unless in writing and
SIGNED BY THE PARTIES HERETO.
17. APPLICABLE LAW.
This Agreement and its validity, construction and performance shall be
governed in all respects by the laws of the State of New York. The parties
hereto, their successors and assigns, consent to the jurisdiction of the
courts of the State of New York with respect to any legal proceedings that
may result from a dispute as to the interpretation or breach of any of the
terms and conditions of this Agreement.
BLOOMBERG L.P.
MULTEX SYSTEMS, INC. Bloomberg, Inc., General Partner
By:/s/ Isaak Karaev By:/s/ Michael Bloomberg
----------------------------- --------------------------------
Name: Isaak Karaev Name: Michael Bloomberg
Title: President & CEO Title: President
Address: 33 Maiden Lane 5th Floor Address: 499 Park Avenue
New York, NY 10038 New York, NY 10022
11
<PAGE>
SCHEDULE A
1. Multex will provide BLP with the Multex Feed, a tagged feed of a) broker-
dealer full-text research reports, morning notes, earnings estimates, and b)
third party commentary and research in ASCII for display over THE BLOOMBERG
terminal, and in a mutually acceptable "desktop publishing" format (i.e.,
Postscript or Adobe Acrobat) for printing. Multex will be responsible for
the document collection and processing. Report summaries in ASCII will be
provided as soon as Multex has completed the computer processing to collect
them.
2. BLP will provide, install and maintain the Multex Server, router modems and
56KB frame relay circuit required to transmit and accept the Multex Feed.
3. Multex may discontinue and terminate providing all or a portion of the Multex
Feed to BLP upon ten (10) days written notice (or such shorter notice if any
Contributor so directs (a) if any Contributor to the Multex Feed notifies and
directs Multex to discontinue or terminate providing its reports to the
Multex Feed or (b) if any Contributor terminates its agreement with Multex.
Upon such discontinuance and termination, Multex shall have no liability
whatsoever.
4. In providing the Multex Feed, Multex uses its own software ("Multex
Publisher") and in certain circumstances third party software ("Third Party
Software"). Multex Publisher and the Third Party Software are referred to
herein as the Software.
5. BLP is granted a limited internal object code license and/or sublicense to
use Multex Publisher solely for the provision of the Multex Feed. This
license is non-exclusive and non-transferable. BLP acknowledges that Multex
Publisher is the sole property of Multex Systems Inc. and may not be copied
without the express written permission of Multex or used in any manner not
authorized by Multex.
6. Multex will make available its PC architected product via the Open Bloomberg
at current market prices for the "Bloomberg-Multex Research Service."
12
<PAGE>
SCHEDULE B
DISTRIBUTION FEE SCHEDULE
BLOOMBERG-MULTEX RESEARCH SERVICE
- ---------------------------------
MONTHLY REVENUES BLP DISTRIBUTION FEE
- ----------------------------------------------------------------
[Confidential Portion Omitted] per month [Confidential Portion Omitted] (as
specified under section 4c)
[Confidential Portion Omitted] per month [Confidential Portion Omitted]
[Confidential Portion Omitted] per month [Confidential Portion Omitted]
[Confidential Portion Omitted] [Confidential Portion Omitted]
13
<PAGE>
EXHIBIT 10.4
CONFIDENTIAL
SOFTWARE AND RECIPROCAL DATA LICENSE AGREEMENT
AGREEMENT, dated as of June 1, 1995, by and between REUTERS LIMITED, an
English company with its principal offices at 85 Fleet Street, London EC4P 4AJ
England ("Reuters"), and MULTEX SYSTEMS, INC., a Delaware corporation with its
principal offices at 2 Journal Square Plaza, 4th Floor, Jersey City, New Jersey
07306 ("Multex").
W I T N E S S E T H:
WHEREAS, Multex has developed the Multex Technology, a software product
that, among other things, is capable of displaying Final Product produced from
Research supplied by Financial Institutions and displaying Final Product on
Subscriber Keystations;
WHEREAS, Multex is currently engaged in the business of collecting Research
from Financial Institutions, processing the same and distributing Multex Final
Product to Multex Subscribers;
WHEREAS, the Reuter Group, among other things, supplies data to
participants in the global capital markets;
WHEREAS, the Reuter Group proposes to engage in the business of collecting
Research from Financial Institutions, processing and reformatting the same and
distributing Reuter Final Product to Reuter Subscribers;
WHEREAS, Multex is willing to license the Multex Technology to Reuters, on
behalf of the Reuter Group, and to undertake the development and support
obligations with respect to the Multex Technology hereinafter described, and
Reuters, on behalf of the Reuter Group, is willing to accept such licensee, all
on the terms and subject to the conditions hereinafter set forth;
WHEREAS, Multex is willing to license the Multex Final Product to Reuters,
on behalf of the Reuter Group, and Reuters, on behalf of the Reuter Group, is
willing to accept such license, all on the terms and subject to the conditions
hereinafter set forth;
<PAGE>
WHEREAS, Reuters, on behalf of the Reuters Group, is willing to license the
Reuter Final Product to Multex, and Multex is willing to accept such license,
all on the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual agreements,
covenants and warranties contained herein, the parties hereto agree as follows:
Article I
DEFINITIONS
1.1 Definitions. (a) As used in this Agreement, the following terms have
the following respective meanings:
"Affiliate" means, with respect to any given Person, any other Person
directly or indirectly Controlling, Controlled by or under common Control with
such Person.
"Authorized Distributor" means any Person identified on Schedule 1.1 that
is authorized to distribute Multex Technology or Multex Final Product by a
member of the Reuter Group.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in the City of London or New York City are authorized
or obligated by law, regulation or executive order to be closed.
"Commencement Date" means the date of this Agreement set forth above.
"Contract Month" means one of a series of consecutive months during the
Term, each of which corresponds to a calendar month; provided, that the first
Contract Month shall commence on the Commencement Date and end on the last day
of the calendar month next succeeding the calendar month in which the
Commencement Date falls, and the last Contract Month shall end upon expiration
of the Term.
"Control" over a Person means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or other equity
interest, representation on its board of directors or body performing similar
functions, by contract or otherwise. The terms "Controlling" and "Controlled"
have corollary meanings.
"Final Product" means Multex Final Product, Reuter Final Product or both,
as applicable.
2
<PAGE>
"Financial Institution" means any financial institution, broker, dealer,
bank, investment bank, financial investment adviser or similar investment
industry professional.
"Governmental Body" means any supranational body or organization, country
or government (federal, state, local or foreign), any governmental or regulatory
body thereof, any political subdivision thereof, any agency, instrumentality or
authority thereof, any self-regulatory organization the rules and regulations of
which are enforceable by law (including any such securities futures or commodity
exchange), or any court of competent jurisdiction.
"Intellectual Property Right" means any patent, copyright, trademark,
service mark (and any application or registration respecting the foregoing),
trade secret, know-how and other intellectual property right of any type.
"Keystation" means a video-display terminal or other similar device that is
capable of displaying data, whether such device is an "interactive" display or a
"slave" display, and regardless of whether it is used, under common ownership or
control, linked or "networked" with other similar devices.
"Multex Final Product" means all data formatted and displayed with the
Multex Technology and based upon Multex Research.
"Multex Final Product Keystation" means a Keystation that Reuters has
authorized to display Multex Final Product.
"Multex Group" means, collectively, Multex and each of its Affiliates.
"Multex Property" means the Intellectual Property Rights and other
proprietary and property rights in or embodied in the Multex Technology, the
Multex Research and the Multex Final Product.
"Multex Research" means Research supplied by a Financial Institution
pursuant to a Research Agreement with a member of the Multex Group.
"Multex Subscriber" means (x) any Person that on or after the date hereof
subscribes to and obtains any Reuter Final Product from Multex or (y) any Person
with whom a member of the Multex Group is engaged in discussions with the intent
that such Person become a Multex Subscriber within the meaning of clause (x).
"Multex Technology" means the technology heretofore marketed by Multex
under the trade name MULTEX PUBLISHER(TM), together with any modifications,
upgrades or enhancements required to be made thereto by Multex pursuant to the
terms hereof.
3
<PAGE>
"Multex Technology Keystation" means a Keystation that Reuters has
authorized to use the Multex Technology.
"Payment Date" means each March 31, June 30, September 30 and December 31
following the Commencement Date.
"Person" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental Body, or other entity.
"Potential Subscriber" means a Person described in clause (y) of the
definition of Multex Subscriber or a Person described in clause (y) of the
definition of Reuter Subscriber, as applicable.
"Research" means data primarily in narrative form of the type commonly
found in Financial Institutions' "research reports" and containing an analysis
of the general affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of an issuer of securities.
"Research Agreement" means any written agreement between a Financial
Institution and either (x) a member of the Multex Group or (y) a member of the
Reuter Group, as applicable, pursuant to which, among other things, the
Financial Institution agrees to supply Research for purposes of producing Final
Product.
"Reuter Final Product" means all data formatted and displayed with the
Multex Technology and based upon Reuter Research.
"Reuter Final Product Keystation" means a Keystation that a member of the
Multex Group has authorized to display Reuter Final Product.
"Reuter Group" means, collectively, Reuters and all existing and future
subsidiaries of Reuters Holdings PLC.
"Reuter Network" means any network, system or method (whether broadcast,
electronic, digital or other) operated or used by the Reuter Group at any time
for the distribution of Reuter products and services to Reuter Subscribers.
"Reuter Property" means the Intellectual Property Rights and other
proprietary and property rights in or embodied in (w) the Reuter Research, (x)
the Reuter Final Product, (y) any Upgrade identified under Part B of Exhibit 2.4
and (z) any product, feature, package or service (including computer software,
"user interfaces" and other components).
(i) relating to access to, retrieval of information from, or the
operation of, the Reuter Network,
4
<PAGE>
(ii) relating to the use, generation, display, modification,
processing or manipulation of any data supplied or obtained over the Reuter
Network (except for any such computer software developed by Multex or by
any Person other than a member of the Reuter Group on behalf of Multex),
(iii) developed by and for, or on behalf of, the Reuter Group
(except for any such computer software developed by Multex or by any Person
other than a member of the Reuter Group on behalf of Multex) and used in
generating, displaying, modifying, processing or manipulating the Final
Product and
(iv) relating to compilations of data by the Reuter Group.
"Reuter Research" means Research supplied by a Financial Institution
pursuant to a Research Agreement with a member of the Reuter Group.
"Reuter Subscriber" means (x) any Person that on or after the date hereof
(1) subscribes to and obtains any Multex Technology or Multex Final Product from
a member of the Reuter Group or (5) subscribes to and obtains any Multex
Technology or Multex Final Product from any Authorized Distributor or (y) any
Person with whom a member of the Reuter Group or any Authorized Distributor is
engaged in discussions with the intent that such Person become a Reuter
Subscriber within the meaning of clause (x).
"Subscriber" means either or both of a Multex Subscriber and a Reuter
Subscriber.
"Subscriber Agreement" means any written agreement between, as applicable,
(x) Multex and a Multex Subscriber, pursuant to which, among other things, such
Subscriber is permitted to use Reuter Final Product or (y) a member of the
Reuter Group (or a licensee thereof) and a Reuter Subscriber, pursuant to which,
among other things, such Subscriber is permitted to use the Multex Technology or
Multex Final Product.
"Third Party Technology" means any component of the Multex Technology with
respect to which Multex does not own all Intellectual Property Rights and other
proprietary and property rights (including all computer software forming part of
the Multex Technology that is licensed from Adobe Systems Incorporated or
Fulcrum Technologies Inc.).
"Time and Materials Expenses" in relation to a given project means (x) the
documented portion of a Multex employee's time allocated to a given project,
times [Confidential Portion Omitted] per hour in the case of a programmer,
[Confidential Portion Omitted] per hour in the case of a programming supervisor
having responsibility for no more than 4 programmers and [Confidential Portion
Omitted] per hour in the case of a programming manager having departmental
responsibility (each of which hourly rates will increase by [Confidential
Portion Omitted] on June 1, 1996 and on each anniversary thereof during the
Term) and (y) Multex's
5
<PAGE>
documented out-of-pocket expenses reasonably incurred for materials consumed in
connection with Multex's work on such project and for any related travel and
lodging.
(b) Each of the following terms is defined in the Section indicated:
Audited Party 5.3
Auditing Party 5.3
Assertion 9.2
Claims Notice 9.2
Confidential
Information 6.4
Damages 9.1
Disclosing Party 6.4
Escrow Agent 4.9
Indemnitee 9.2
Indemnitor 9.2
Multex Permits 7.2
Multex Technology
Source Code 4.9
Other Party 8.2
Permissioning Upgrade 2.4
Receiving Party 6.4
Reuter Permits 7.1
Substantial Enhancement 2.6
Term 8.1
Terminating Party 8.2
Termination Date 8.1
Third Party Licensor 6.2
Upgrade 2.4
1.2 Rules of Construction. As used in this Agreement, neutral pronouns and
any variations thereof shall be deemed to include the feminine and masculine and
all terms used in the singular shall be deemed to include the plural, and vice
versa, as the context may require. The words "herein," "hereof" and "hereunder"
and other words of similar import refer to this Agreement as a whole, including
the Exhibits and Schedules hereto, as the same may from time to time be amended
or supplemented and not to any particular subdivision contained in this
Agreement. The word "including" when used herein is not intended to be
exclusive, or to limit the generality of the preceding words, and means
"including, without limitation". References herein to "dollars" and "$" are to
United States dollars. References herein to an Article, Section, subsection,
clause, Exhibit or Schedule shall refer to the appropriate Article, Section,
subsection, clause, Exhibit or Schedule in or to this Agreement. All references
herein to times of the day are to the times of the day in New York City.
6
<PAGE>
Article II
THE MULTEX TECHNOLOGY
2.1 Multex Technology License.
(a) Multex hereby grants to Reuters on behalf of the Reuter Group, and
Reuters on behalf of the Reuter Group hereby accepts from Multex,
(i) the worldwide, non-exclusive, fully paid-up and perpetual
right (subject to payment in accordance with Section 5.1 (a)) to use
and reproduce the Multex Technology, and
(ii) the worldwide, non-exclusive, fully paid-up right (subject
to payment in accordance with Section 5.1 (a)) during the Term to
market and distribute the Multex Technology and to grant to Reuter
Subscribers worldwide, non-exclusive, nontransferable (subject to
subsection (c)) and perpetual rights (or, in Reuters discretion, less
extensive rights; in either case subject to payment in accordance with
Section 5.1 (a)) to use the Multex Technology.
(b) Subject to the terms of this Agreement, the Reuter Group may,
without further liability to Multex, use, reproduce, market or distribute the
Multex Technology to provide (or in connection with providing) any Reuter
Subscriber with any data or technology of any kind (except for technology that
is incompatible with the Multex Technology), for any use and from any source
whatsoever, all in accordance with applicable law, and as determined in the sole
discretion of the Reuter Group (it being understood that if such Reuter
Subscriber shall be permitted to use the Multex Technology in accordance
herewith after expiration of the Term, the provisions of this subsection shall
continue to apply).
(c) Any right granted during the Term to a Reuter Subscriber pursuant
to subsection (a)(ii) may, at the Reuter Group's option, (x) inure to the
benefit of such Reuter Subscriber and any successor of, and any assignee of a
material portion of the business of, such Reuter Subscriber (each of which
successors and assigns shall be deemed to be a Reuter Subscriber and shall
execute a Subscriber Agreement) and (y) be renewed after the Term.
that:
2.2 Certain Representations and Warranties.
(a) Multex represents and warrants that:
(i) it is not subject to any contractual or other obligation or
restriction, that prohibits or would prohibit, or impairs or would impair,
its grant of licenses and rights hereunder upon the terms and conditions
provided herein;
7
<PAGE>
(ii) it has all rights, titles, licenses, permissions and
approvals necessary to grant the licenses and rights it grants hereunder
upon the terms and conditions provided herein (including all necessary
rights, titles, licenses, permissions and approvals in respect of the Third
Party Technology);
(iii) the Multex Technology, the use, reproduction, marketing
and distribution thereof by the Reuter Group upon the terms and conditions
provided herein and the use thereof by Reuter Subscribers upon the terms
and conditions provided herein does not in any manner contravene, breach or
constitute an unauthorized use or misappropriation of any Intellectual
Property Right or any other property or proprietary right of any Person
(including the owners of all such rights in the Third Party Technology);
(iv) the licenses and rights granted by it hereunder are free and
clear of any liens, claims or encumbrances whatsoever, however and whenever
arising, that would, in the aggregate, have a material adverse effect on
the ability of the Reuter Group and the Reuter Subscribers fully to use
such licenses and rights in accordance with the terms hereof;
(v) the Multex Technology has been and will have been developed
in a professional manner and properly displays Final Product; and
(vi) Multex is not aware that the Multex Technology contains any
"computer virus" or "Trojan horse," and has taken and will take
commercially reasonable steps in the development of the Multex Technology
to ensure that no such "computer virus" or "Trojan horse" is otherwise
contained in the Multex Technology.
(b) Without prejudice to any of the rights or remedies of Reuters
hereunder, Multex covenants and agrees that it will take such action as is
necessary to cause its representations and warranties set forth in this Section
to be true and correct throughout the Term, and thereafter until such further
time as Reuters royalty-payment obligation under Section 5. I (a) shall have
ceased, as if made continuously throughout the Term and until such further time.
(c) This Section shall survive the termination of this Agreement for
any reason until such time as Reuters royalty-payment obligation under Section
5.l(a) shall have ceased.
2.3 Reuters to Receive Benefit of Upgrades, Discharge of Liens. Multex
covenants and agrees that:
(a) subject to Section 2.6, Multex will upgrade and enhance the
computer software delivered to Reuters hereunder so that, unless directed
otherwise by Reuters in a specific case, the Multex Technology is at all times
at least as useful, upgraded and enhanced
8
<PAGE>
as the most useful, upgraded and enhanced Financial Institution research
technology supplied by Multex to any Person (provided that the foregoing will
not apply to any enhancement made for the sole benefit of a third party who
funded the development expenses related thereto, as long as Multex offered
Reuters the opportunity to participate in such development on the same terms as
were offered to such third party, and Reuters rejected such offer), and
(b) if Multex shall become aware of the existence of any liens, claims
or encumbrances with respect to the Multex Technology or Multex Final Product
that shall arise at any time, and any such liens, claims or encumbrances would,
in the aggregate, have a material adverse effect on the ability of the Reuter
Group or the Reuter Subscribers fully to use the Multex Technology or the Multex
Final Product in accordance with the terms hereof, Multex will cause such liens,
claims or encumbrances to be removed, discharged or terminated as promptly as
possible, or will as promptly as possible post a bond or other security such
that no such lien, claim or encumbrance will affect such ability of the Reuter
Group or the Reuter Subscribers.
Subsection (b) shall survive the termination of this Agreement for any
reason until such time as Reuters royalty-payment obligation under Section
5.1(a) shall have ceased.
2.4 Required Multex Technology Upgrades.
(a) From time to time during the Term, Reuters may elect that Multex
upgrade, modify and enhance the Multex Technology theretofore delivered to
Reuters so that it has each of the capabilities described on Exhibit 2.4 (each
separately numbered upgrade, modification or enhancement described on Exhibit
2.4, under Part A or Part B, being referred to as an "Upgrade"). Reuters shall
give Multex written notice of each such election specifying the relevant Upgrade
whereupon Multex will use commercially reasonable efforts to ensure that such
Upgrade is delivered to Reuters as soon as practicable and that it functions to
the specifications agreed to by the parties. It is understood that, except as
provided in subsection (c), Reuters is under no obligation to make any election
pursuant to this Section. From time to time during the Term, the parties may by
mutual agreement add additional Upgrades to Schedule 2.4 in accordance with
Section 10.6.
(b) Reuters will reimburse Multex in accordance with Section 6.8 for
its Time and Materials Expenses incurred in connection with each Upgrade
identified on Exhibit 2.4, provided that
(x) with respect to any such Upgrade identified under Part A of
Exhibit 2.4 Reuters may, in accordance with Section 5.2(c), but
subject to Section 6.8(e), off-set all related expenses reimbursed to
Multex under this subsection (b) against future royalty payments owing
from Reuters to Multex pursuant to Section 5.1 (a) or (b); and
9
<PAGE>
(y) if Multex subsequently incorporates any such Upgrade
identified under Part B of Exhibit 2.4 into a product or service that
Multex provides to a Person other than a member of the Reuter Group,
Multex will give Reuters notice thereof, and in any event Reuters may,
in accordance with Section 5.2(c), but subject to Section 6.8(e), off-
set all related expenses reimbursed to Multex under this subsection
(b) against future royalty payments owing from Reuters to Multex
pursuant to Section 5.1 (a) or (b).
(c) Reuters hereby elects Upgrade No. 1 identified under Part A of
Exhibit 2.4 (the "Permissioning Upgrade"). Multex will use commercially
reasonable efforts to ensure that the Permissioning Upgrade functions to Reuters
specifications and has been delivered to Reuters as soon as practicable.
2.5 Error Correction.
(a) Multex will use commercially reasonable efforts to correct errors
occurring in the Multex Technology for the benefit of Reuters and the Reuter
Subscribers, provided that with respect to any Third Party Technology, if Multex
does not have the right to correct errors in the same, Multex will promptly
notify the relevant licenser and use commercially reasonable efforts to procure
that such error is corrected as promptly as possible in accordance with the
relevant licensing agreement.
(b) To the extent that any Multex Technology is replaced with upgraded
or enhanced Multex Technology, Multex will continue to correct errors in the
replaced Multex Technology in accordance with this Section for so long as such
replaced Multex Technology is being used by any Reuter Subscriber.
(c) Multex will not be responsible for (but will at the expense and
reasonable request of Reuters cooperate with Reuters in remedying) (i) any error
in the Reuter Network, in a Reuter Subscriber's network or in the operating or
telecommunications environment of Reuters or any Reuter Subscriber, (ii) any
error in any software other than the Multex Technology, (iii) any error caused
by the use of any faulty or defective equipment, or any equipment, platform,
system or configuration that is incompatible with the Multex Technology (it
being agreed that Multex will fully cooperate with Reuters in determining
whether any equipment, platform, system or configuration is or would be
incompatible therewith), (iv) any error arising out of any use of the Multex
Technology not in accordance with the terms hereof, (v) any error in the Multex
Technology caused by the use of faulty, defective or incompatible third-party
software (other than Third Party Technology) or (vi) any error caused by the
misconduct of any third party than Multex personnel).
(d) If Reuters at any time discovers an error in the Multex
Technology, Reuters may give Multex a written report thereof. Each such error
report will include a description of the relevant error and of the operating
environment (hardware or software) in
10
<PAGE>
which the Multex Technology was running when such error was discovered, and, if
practicable, a test case which demonstrates the error.
(e) If Multex cannot reproduce a reported error in its own operating
environment, Multex will send a member of its support staff to observe the error
in the Reuter (or Reuter Subscriber) operating environment, and the parties will
evenly share any related travel expenses and Time and Materials Expenses
(provided that if the parties subsequently agree that Multex was not responsible
for the reported error in accordance with subsection (c), Reuters shall be
solely responsible for such expenses).
(f) Subject to subsections (a) and (c), Multex will use reasonable
commercial efforts to correct each reported error as soon as practicable, giving
due regard to the seriousness of such error (and in any event no later than the
next generally available release of the Multex Technology), provided that if
Reuters informs Multex that correction of such error is critical to the use or
operation of the Technology, or if such error involves substantial loss of the
ability to process or display Final Product, or continuous and repeated failure
of the Multex Technology, Multex will use best efforts to correct such error as
promptly as practicable. Multex will respond to each error report within 7 days
(or 5 days, in the case of any error referred to in the preceding proviso),
either correcting such error or providing a plan for correcting the same
together with an estimated time frame for correction.
(g) Except as otherwise provided in subsections (c) and (e), Multex
will be solely responsible for any costs and expenses incurred by it under this
Section (it being understood that the parties will equitably apportion the
expenses relating to any error that involves a combination of one or more
factors specified in subsection (c) and one or more factors outside the scope of
subsection (c)).
(h) This Section shall survive the termination of this Agreement for
any reason until such time as Reuters royalty-payment obligation under Section
5.1 (a) shall have ceased.
2.6 Substantial Enhancements.
(a) In the event that Multex produces any upgrade or enhancement to
the Multex Technology identified on Exhibit 2.6 (each, a "Substantial
Enhancement") and would be required to provide such Substantial Enhancement to
Reuters in accordance with Section 2.3(a), Multex shall specifically notify
Reuters thereof prior to providing the same to Reuters, and will at a reasonable
time and place designated by Reuters demonstrate the operation of such
Substantial Enhancement to Reuters. Within 90 days of such demonstration,
Reuters will, by notice to Multex, accept or reject such Substantial Enhancement
in accordance with the provisions of this Section.
(b) If Reuters accepts any such Substantial Enhancement:
11
<PAGE>
(i) Multex will thereupon deliver such Substantial Enhancement to
Reuters and, except to the extent provided in clause (ii), such Substantial
Enhancement will thereupon be deemed incorporated into the Multex
Technology; and
(ii) commencing with the 25th Contract Month after the Reuter
Group first makes Multex Technology Keystations available to Reuter
Subscribers generally (otherwise than in connection with Beta testing).
Multex may charge Reuters a per-Keystation premium over and above the
royalties payable under Section 5.1(a) in respect of each Multex Technology
Keystation that Reuters authorizes to use the Multex Technology, as
upgraded with such Substantial Enhancement; provided that no such premium
shall be payable in respect of any Multex Technology Keystation that is not
authorized by Reuters to use the Multex Technology as so upgraded.
(c) If Reuters rejects any such Substantial Enhancement:
(i) subject to clause (ii), Multex will be under no obligation to
deliver such Substantial Enhancement to Reuters and such Substantial
Enhancement will not, unless and until later accepted by Reuters, be deemed
incorporated into the Multex Technology;
(ii) Reuters may, by notice to Multex given at any time during
the Term, thereafter accept such Substantial Enhancement, whereupon the
provisions of subsection (b) will apply; and
(iii) Multex will not license or otherwise permit any other
Person to use such Substantial Enhancement on a basis that would prevent
Multex from subsequently complying with clause (ii) and subsection (b) with
respect to such Substantial Enhancement, unless (x) prior to granting any
exclusive right in respect of such Substantial Enhancement to a third
party, Multex notifies Reuters of its intention to do so, (y) Multex again
offers the Substantial Enhancement to Reuters and (z) Reuters once again
rejects such Substantial Enhancement (it being understood that Reuters
failure to respond within 20 days of such notification will be deemed a
rejection of such offer).
2.7 Return of Software. As soon as practicable after such time as Reuters
royalty-payment obligation under Section 5.1 (a) shall have ceased, Reuters
will, at Multex's request, either destroy or return to Multex all copies of the
Multex Technology software in Reuters possession or under its control, and
provide Multex with a certificate to that effect signed by an authorized
employee.
Article III
THE FINAL PRODUCT
12
<PAGE>
3.1 Multex Final Product License. Multex hereby grants to Reuters on
behalf of the Reuter Group, and Reuters on behalf of the Reuter Group hereby
accepts from Multex, the worldwide, non-exclusive, fully paid-up and perpetual
right (subject to Section 3.3 and to payment in accordance with Section 5.1
(b)):
(a) to use the Multex Final Product produced prior to or during the
Term and to market and distribute such Multex Final Product to Reuter
Subscribers, and
(b) to use the Multex Final Product produced after expiration of the
Term and to market and distribute such Multex Final Product to (x) Reuter
Subscribers that received Multex Final Product at any time during the Term and
(y) any successor of, and any assignee of a material portion of the business of,
any such Reuter Subscriber (each of which successors and assigns shall be deemed
to be a Reuter Subscriber).
3.2 Reuter Final Product License. Reuters on behalf of the Reuter Group
hereby grants to Multex, and Multex hereby accepts from Reuters on behalf of the
Reuter Group, the worldwide, non-exclusive, fully paid-up and perpetual right
(subject to Section 3.3 and to payment in accordance with Section 5.1 (c)):
(a) to use the Reuter Final Product produced during the Term and to
market and distribute such Reuter Final Product to Multex Subscribers, and
(b) to use the Reuter Final Product produced after expiration of the
Term and to market and distribute such Reuter Final Product to (x) Multex
Subscribers that received Reuter Final Product at any time during the Term and
(y) any successor of, and any assignee of a material portion of the business of,
any such Multex Subscriber (each of which successors and assigns shall be deemed
to be a Multex Subscriber).
3.3 Restrictions on Distribution of Final Product Imposed by Financial
Institutions.
(a) It is understood that each Research Agreement may set forth
certain agreements regarding the Persons to whom Final Product produced
thereunder may be distributed or may not be distributed and other applicable
limitations, and that neither party will be under an obligation to supply the
other party with Final Product from a given Financial Institution to the extent
that such Financial Institution fails or refuses to supply the same.
(b) Subject to the next sentence, it is the obligation of each party
to ensure that all Final Product produced under a Research Agreement to which it
is a party is properly coded so that it may only be distributed to authorized
Persons, and each party agrees to abide by the distribution restrictions
applicable to Final Product as reflected in such coding. The obligation and
agreement of Reuters under this Section will obtain only to the extent that the
Multex Technology permits Reuters to entitle particular Persons to receive
particular Final Product, and
13
<PAGE>
prevents properly coded Final Product from being distributed to Persons not
authorized to receive such Final Product under the applicable Research
Agreement.
(c) This Section shall survive the termination of this Agreement for
any reason.
3.4 No Third-Party Distribution of Final Product. Multex will not provide
any Reuter Final Product to any Multex Subscriber for purposes of the
redistribution thereof by such Multex Subscriber to Persons who are not
Affiliated with such Multex Subscriber, and will include such a restriction in
the relevant Subscriber Agreements. Reuters will not provide any Multex Final
Product to any Reuter Subscriber for purposes of the redistribution thereof by
such Reuter Subscriber to Persons who are not Affiliated with such Reuter
Subscriber, and will include such a restriction in the relevant Subscriber
Agreements (it being understood that Reuters may provide Multex Final Product to
Authorized Distributors for redistribution). This Section shall survive the
termination of this Agreement for any reason.
3.5 No Additional Royalty Obligation. Multex represents to Reuters that
there are no royalties in respect of any Multex Final Product (or the underlying
Research) payable by Reuters or any Reuter Subscriber to any Financial
Institution supplying such Multex Final Product (or the underlying Research), to
any other third party, or, except as provided in Section 5.1 (b), to Multex.
Reuters represents to Multex that there are no royalties in respect of any
Reuter Final Product (or the underlying Research) payable by Multex or any
Multex Subscriber to any Financial Institution supplying such Reuter Final
Product (or the underlying Research), to any other third party, or, except as
provided in Section 5.1(c), to Reuters.
Article IV
CERTAIN ADDITIONAL AGREEMENTS WITH RESPECT TO
THE MULTEX TECHNOLOGY AND THE FINAL PRODUCT
4.1 Title and Related Matters.
(a) The parties acknowledge and agree that, as between the Reuter
Group and Multex, Multex shall retain ownership of all Multex Property and the
Reuter Group shall retain ownership of all Reuter Property. Neither Reuters nor
Multex will take
any action with respect to the Multex Property or Reuter Property, respectively,
inconsistent with the foregoing acknowledgement.
(b) All Intellectual Property rights or other proprietary rights that
may arise in Reuters by operation of law after the date hereof in any part of
the Multex Property are hereby transferred by Reuters to Multex. If such
transfer would at any time be considered invalid or ineffective, Reuters shall
be deemed with effect from the date on which the relevant right arose to have
granted to Multex a perpetual, royalty-free and exclusive license to use such
right in any manner Multex sees fit, and Reuters will, at the request of Multex,
promptly do all
14
<PAGE>
reasonable acts and things necessary to achieve the transfer of such right to
Multex (provided that Reuters reimburses Multex for all of its third-party
expenses thereby incurred, including attorney's fees).
(c) All Intellectual Property rights or other proprietary rights that
may arise in Multex by operation of law after the date hereof in any part of the
Reuter Property are hereby transferred by Multex to Reuters on behalf of the
Reuter Group. If such transfer would at any time be considered invalid or
ineffective, Multex shall be deemed with effect from the date on which the
relevant right arose to have granted to Reuters on behalf of the Reuters Group a
perpetual, royalty-free and exclusive license to use such right in any manner
Reuters sees fit, and Multex will, at the request of Reuters, promptly do all
reasonable acts and things necessary to achieve the transfer of such right to
Reuters on behalf of the Reuter Group (provided that Reuters reimburses Multex
for all of its third-party expenses thereby incurred, including attorney's
fees).
(d) Unless otherwise agreed in writing by the parties in a specific
case, any computer software or "user interface" developed by or on behalf of the
Reuter Group for purposes of enabling Reuter Subscribers to access and use the
Multex Technology or Final Product over the Reuter Network does not constitute a
modification or enhancement to (or derivative work based upon) the Multex
Technology or the Final Product, and shall for all purposes hereunder be deemed
to be Reuter Property.
(e) This section shall survive the termination of this Agreement for
any reason.
4.2 Attribution.
(a) To the extent consistent with Section 4.1, Reuters will not remove
any copyright notice of Multex, Adobe Systems Incorporated or Fulcrum
Technologies Inc. appearing in the display of Multex Technology.
(b) It is understood that Reuters will not be required to use Multex's
name in the name of the package of products and services offered to Reuter
Subscribers using the Multex Technology.
4.3 Pricing. The price charged to Reuter Subscribers for any Multex
Technology or Final Product, if any, shall be determined by Reuters in its sole
discretion. The price charged to Multex Subscribers for any Multex Technology
or Final Product, if any, shall be determined by Multex in its sole discretion.
4.4 Subscriber Agreements. Each party agrees that each of its respective
Subscribers will have entered into a Subscriber Agreement that, in substance,
complies with the requirements of Section 3.4, and except with respect to
liability for gross negligence or willful misconduct, or any other liability
(such as liability for death or personal injury) that under the laws of the
15
<PAGE>
relevant jurisdiction cannot be excluded, (x) provides that the other party
hereto will have no liability for loss and damage in connection with the
provision or failure to provide the Multex Technology or Final Product and (y)
includes a waiver by the Subscriber of all indirect, consequential and special
losses and damages. This Section shall survive the termination of this
Agreement for any reason.
4.5 Research Agreements. Each party agrees that each Financial Institution
supplying it with Research for purposes of producing Final Product licensed
hereunder or supplying it with Final Product licensed hereunder will have
entered into a Research Agreement that enables such party to grant the rights
and licenses it grants hereunder with respect to such Research or Final Product.
In addition, each such Research Agreement will, in substance, except as
otherwise agreed between the parties in a specific case and except with respect
to liability for gross negligence or willful misconduct, or any other liability
(such as liability for death or personal injury) that under the laws of the
relevant jurisdiction cannot be excluded, (x) provide that the other party
hereto will have no liability for loss and damage in connection with the
provision or failure to provide the Multex Technology or Final Product, (y)
provide that the other party will have no liability for providing any Final
Product to any Person not authorized to receive the same or for failing to
provide any Final Product to any Person authorized to receive the same and (z)
include a waiver by the Financial Institution of all indirect, consequential and
special losses and damages. This Section shall survive the termination of this
Agreement for any reason.
4.6 Certain Limitations on Input. Neither party will include in the Final
Product supplied hereunder or otherwise input to the Reuter Network or Multex's
network any of the following: (a) administrative (i.e., bulletin board)
messages; (b) defamatory or obscene material; (c) (except as approved in advance
in writing by Reuters) advertising material; (d) information the dissemination
of which is contrary to the law of any governmental body, stock or commodity
exchange rules or regulations, banking regulations or any other applicable
regulations or market conventions; (e) information inconsistent with the
standards maintained for the Reuter Network or any Reuter service (including any
"computer virus," "Trojan horse" or "bug"), which inconsistency Multex shall not
have remedied within a reasonable period of time after receipt of notice of such
inconsistency from Reuters; (f) information the dissemination of which would
breach an Intellectual Property Right or other proprietary right of any third
party; or (g) information that Reuters has specifically advised Multex not to
input to the Reuter Network. This Section shall survive the termination of this
Agreement for any reason until such time as the royalty-payment obligations
hereunder shall have ceased.
4.7 No Obligation to Market or Produce Final Product or to Market Multex
Technology. Nothing herein shall obligate either party to produce or market
Final Product or to enter into agreements with Financial Institutions relating
to the production of Final Product, and nothing herein shall obligate either
party to market the Multex Technology.
16
<PAGE>
4.8 Escrow Arrangements.
(a) Multex covenants and agrees that as promptly as practicable
following execution and delivery hereof, it will deposit a copy of the Multex
Technology Source Code in escrow with Data Securities International, Inc. (the
"Escrow Agent") pursuant to an escrow agreement among Multex, Reuters and the
Escrow Agent. Reuters will be responsible for the expenses of the Escrow Agent.
"Multex Technology Source Code" means the source code of the Multex
Technology (including each modification, upgrade or enhancement required to be
made thereto pursuant to the terms hereof), together with, to the extent in
existence, (x) any pertinent commentary or explanation that may be necessary to
render such source code understandable and usable by a trained computer-
programming expert, (y) such system documentation, statements of principles of
operation and schematics as are necessary or useful for the effective
understanding of such source code and (z) all devices, programming or
documentation (including compilers, workbenches, tools and higher-level or
proprietary languages) employed by Multex for the development, maintenance and
implementation of such source code.
(b) Multex agrees promptly to make subsequent deposits with the Escrow
Agent so that the Multex Technology Source Code held in escrow by the Escrow
Agent for the benefit of Reuters will at all times be the most current and up-
to-date version thereof relating to the Multex Technology required to be
delivered to Reuters hereunder.
(c) In the event that (x) Reuters has the right to terminate this
Agreement pursuant to Section 8.2(a)(iv) (whether or not Reuters exercises such
right) or, after the Term, Reuters would have had the right to terminate this
Agreement if the event giving rise to such right had occurred during the Term,
(y) Multex ceases to carry on business (except in connection with a merger,
business combination or disposition of assets with, to or in favor of a Person
who agrees in writing to be bound by Multex's obligations hereunder) or (z)
while in bankruptcy, liquidation, reorganization, winding-up, administration,
trusteeship, receivership or similar proceedings, Multex (or any trustee on
behalf of Multex) rejects any license of the Multex Technology granted
hereunder, and (in any case of (x), (y) or (z)) Reuters thereafter elects to
retain its rights hereunder, Reuters shall have the right to acquire a copy of
the Multex Technology Source Code for purposes of continuing the use and
enjoyment of the Multex Technology in accordance with the rights and licenses
granted under this Agreement.
(d) Multex will instruct the Escrow Agent (x) to deliver Reuters a
certificate stating that Reuters is entitled to receive the Multex Technology
Source Code in accordance with the terms of the above-referenced Escrow
Agreement and (y) from time to time upon Reuters request, to deliver to Reuters
a certificate confirming the Escrow Agent's receipt of the Multex Technology
Source Code and any subsequent deposits required hereunder relating thereto.
17
<PAGE>
(e) This Section shall survive the termination of this Agreement for
any reason until such time as Reuters royalty-payment obligation under Section
5.1(a) shall have ceased.
4.9 No Reverse Engineering; Etc. REUTERS Will NOT WITHOUT THE EXPRESS
WRITTEN PERMISSION OF MULTEX (I) MAKE ANY ALTERATION, CHANGE OR MODIFICATION TO
THE MULTEX TECHNOLOGY OR (II) RECOMPILE, DECOMPILE, DISASSEMBLE OR REVERSE
ENGINEER THE MULTEX TECHNOLOGY. The foregoing shall not apply to any use by
Reuters of any Third Party Technology licensed by the Reuter Group from any
Person other than Multex. Reuters will include in its Subscriber Agreements a
prohibition against modifying, decompiling or reverse engineering the software
provided to Reuter Subscribers.
4.10 Disclaimer. THE REPRESENTATIONS AND WARRANTIES EXPRESSED IN THIS
AGREEMENT (IF ANY) ARE THE ONLY REPRESENTATIONS AND WARRANTIES, EXPRESS OR
IMPLIED, MADE BY (I) MULTEX WITH RESPECT TO THE MULTEX TECHNOLOGY, ANY MULTEX
FINAL PRODUCT OR ANY SUPPORT SERVICES PROVIDED HEREUNDER AND (II) REUTERS WITH
RESPECT TO ANY REUTER FINAL PRODUCT. EXCEPT AS EXPRESSLY SET FORTH HEREIN, ANY
AND ALL OTHER REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE MULTEX
TECHNOLOGY, MULTEX FINAL PRODUCT OR REUTER FINAL PRODUCT, ORAL OR WRITTEN,
EXPRESS OR IMPLIED, INCLUDING SPECIFICALLY WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE, ARE EXPRESSLY EXCLUDED.
Article V
ROYALTIES AND RELATED MATTERS
5.1 Royalties.
(a) Multex Technology Royalty. In full consideration of the rights and
licenses granted by Multex under Article II, Reuters agrees to pay Multex, in
accordance with Section 5.2:
(i) for each Contract Month during the Term, a royalty of
[Confidential Portion Omitted] per Contract Month in respect of each Multex
Technology Keystation authorized by Reuters to operate at any time during
such Contract Month, and
(ii) for each calendar month after expiration of the Term
(without duplication of any amount paid under clause (i) in respect of a
single Keystation in an overlapping Contract Month), a royalty of
[Confidential Portion Omitted] per calendar month in respect of each Multex
Technology Keystation authorized by Reuters to operate at any time during
such calendar month (or, in lieu thereof, the amount agreed upon pursuant
to Section 5.5).
18
<PAGE>
(b) Multex Final Product Royalty. In full consideration of the rights
and licenses granted by Multex under Article III, Reuters agrees to pay Multex,
in accordance with Section 5.2:
(i) for each Contract Month during the Term, a royalty of
[Confidential Portion Omitted] per Contract Month in respect of each Multex
Final Product Keystation authorized by Reuters to operate at any time
during such Contract Month, and
(ii) for each calendar month after expiration of the Term
(without duplication of any amount paid under clause (i) in respect of a
single Keystation in an overlapping Contract Month), a royalty of
[Confidential Portion Omitted] per calendar month in respect of each Multex
Final Product Keystation authorized by Reuters (x) to operate at any time
during such calendar month and (y) to display Multex Final Product supplied
by Multex after expiration of the Term (or, in lieu thereof, the amount
agreed upon pursuant to Section 5.5).
(c) Reuter Final Product Royalty. In full consideration of the rights
and licenses granted by Reuters under Article III, Multex agrees to pay Reuters,
in accordance with Section 5.2:
(i) for each Contract Month during the Term, a royalty of
[Confidential Portion Omitted] per Contract Month in respect of each Reuter
Final Product Keystation authorized by Multex to operate at any time during
such Contract Month, and
(ii) for each calendar month after expiration of the Term
(without duplication of any amount paid under clause (i) in respect of a
single Keystation in an overlapping Contract Month), a royalty of
[Confidential Portion Omitted] per calendar month in respect of each Reuter
Final Product Keystation authorized by Multex (x) to operate at any time
during such calendar month and (y) to display Reuter Final Product supplied
by Reuters after expiration of the Term (or, in lieu thereof, the amount
agreed upon pursuant to Section 5.5).
(d) Potential Subscribers. Notwithstanding subsections (a), (b) and
(c), so long as Final Product or Multex Technology is provided to a Potential
Subscriber for 30 days or less at no charge, no Keystation used in providing the
same shall be included in the number of Keystations subject to the royalties set
forth in this Section.
(e) Open System Environment. Notwithstanding anything to the contrary
contained herein, for purposes of determining the number of Keystations
authorized to operate in accordance with subsections (a), (b) or (c) in any case
in which a Subscriber is charged for the Multex Technology or Final Product on
the basis of the number of permitted users thereof,
19
<PAGE>
rather than on the basis of the number of Keystations such Subscriber possesses
that are authorized to display the same, the relevant number of Keystations
shall be deemed to equal the relevant number of permitted users.
(f) Acknowledgment. Multex acknowledges that no royalty is payable
under subsection (a) in respect of any Third Party Technology licensed from any
Person and paid for by the Reuter Group regardless of the use of such Third
Party Technology .
5.2 Royalty Payment Procedures.
(a) Royalty payments owed under Section 5.1 in respect of the three
month period ended on each Payment Date shall be paid (in arrears) on or before
the next succeeding Payment Date (or, if such succeeding Payment Date is not a
Business Day, on or before the next succeeding Business Day). All payments shall
be made in US dollars.
(b) Any royalty payment required to be made hereunder will be made to
a party at its address for notices set forth in Section 10.3 or as otherwise
directed by such party in writing.
(c) Concurrently with any royalty payment required under Section 5.1
(a) or (b) (or in lieu thereof, if applicable) Reuters will notify Multex of the
details of any setoff being applied by Reuters pursuant to Section 2.4(b)(x) or
(y). No such setoff may be for an amount in excess of [Confidential Portion
Omitted] of the royalty payments otherwise due to Multex on the relevant Payment
Date and any additional amounts Reuters is entitled to off-set will be carried
forward (following expiration of the Term, if necessary) and off-set against
subsequent royalty payments (except that such [Confidential Portion Omitted]
limit shall not apply following expiration of the Term in respect of any setoff
relating to any Upgrade requested by Reuters during the first 3 years of the
Term that, for reasons other than those described in Section 6.8(f), was not
delivered to Reuters prior to expiration of the Term). Reuters acknowledges that
the setoff rights provided in this subsection are the exclusive means of
recouping from Multex any outlays in respect of the Upgrades.
(d) Royalty payments owed to a party under Section 5.1 may not be
netted against royalty payments owed by such party under Section 5.1 without the
advance written approval of the other party specifying the exact Payment Date to
which such netting will apply.
(e) Without limiting any other rights of the creditor party hereunder,
any royalty payment not paid when due under this Section will bear interest,
payable on demand, at the rate of [Confidential Portion Omitted] per annum from
the Payment Date when due until paid in full.
5.3 Auditing.
20
<PAGE>
(a) Each party will keep proper books of record and account in which
full, true and correct entries shall be made of all dealings and transactions
concerning the number of Keystations in respect of which a royalty is payable to
the other party pursuant to Section 5.1. Each party will produce such monthly
usage reports as are capable of being produced automatically by the Multex
Technology, and, upon request of the other party, will provide the 4 most recent
such reports to such other party. Such reports shall be deemed the Confidential
Information of the party that produced the same, and may not be used by the
requesting party for any purpose other than verification of the royalty amounts
owed it hereunder.
(b) At least once during each period of 12 consecutive months, each
party (in such capacity, the "Audited Party"), upon request of the other party
(in such capacity, the "Auditing Party"), will permit independent auditors
selected by the Auditing Party to make such investigation of the books of record
and account of the Audited Party referred to in subsection (a) as is deemed
necessary by such auditors to verify and confirm the amount of any royalty
payment required to be made by the Audited Party pursuant to Section 5.1 in
respect of the period of 36 consecutive months ended the second Payment Date
next preceding the date of such request (except to the extent that any such
month shall theretofore have fallen within the permitted scope of an audit
requested by the Auditing Party in accordance herewith). Such auditors shall,
upon request of the Audited Party, deliver a letter to the Audited Party
agreeing to abide by the restrictions set forth in Section 6.4 applicable to a
Receiving Party.
(c) The fees and expenses of the independent auditors referred to in
subsection (b) shall be borne by the relevant Auditing Party; provided, that if
such auditors determine that within any period of 12 consecutive months, the
amount of royalties payable to the Auditing Party in respect of such period
exceeded the amount actually paid to the Auditing Party in respect of such
period by more than (x) [Confidential Portion Omitted] of such amount actually
paid, where Reuters is the Auditing Party or (y) [Confidential Portion Omitted]
of such amount actually paid, where Multex is the Auditing Party, then, without
prejudice to any other rights of the Auditing Partly hereunder, the fees and
expenses of such auditors in respect of such audit shall be borne (or
reimbursed, if applicable) by the Audited Party.
5.4 Volume Discounts. Each party acknowledges that there may be certain
circumstances under which the other party will for sound commercial reasons
offer a "volume discount" to a Subscriber that is prepared to license Multex
Technology or Final Product for use in connection with an exceptionally large
number of Keystations. In order that both parties may benefit from such an
increase in the volume of Keystation to which a royalty under Section 5.1 would
apply, each party agrees to negotiate in good faith with the other so that the
volume discount offered to such a Subscriber is equitably reflected in a
reduction of the royalties payable under Section 5.1 in respect of the relevant
Keystations.
5.5 One Time Payment Following Term. Commencing with delivery of a
termination notice under Section 8.1, the parties agree to negotiate in good
faith in order to agree upon a one-time payment that Reuters may make to Multex,
and that Multex may make to Reuters, in
21
<PAGE>
lieu of making the periodic royalty payments required under Section 5.1(a)(ii),
Section 5.1(b)(ii) and Section 5.1(c)(ii) in respect of each calendar month
following expiration of the Term.
5.6 Survival. Except for Section 5.4, which shall expire upon expiration
of the Term, this Article shall survive termination of this Agreement for any
reason until the parties shall have made the required royalty payments in
respect of each Contract Month or calendar month, as applicable; provided, that
during the 12-month period following the last royalty payment required to be
made hereunder, either party may request an audit of the other party, who shall
thereupon comply with such request in accordance with Section 5.3.
Article VI
CERTAIN ADDITIONAL COVENANTS
6.1 Ongoing Support.
(a) During the Term, Multex will supply staffing in order to train
Reuter employees in the use of the Multex Technology and to support the
implementation of the Multex Technology via the Reuter Network.
(b) During the Term, Multex will provide Reuters with ongoing
technical support relating to the operation of the Multex Technology, as and
when requested by Reuters (including enabling Reuters to establish additional
Multex Technology host stations).
(c) Reuters will reimburse Multex in accordance with section 6.8 for
its Time and Materials Expenses incurred in connection with Multex's obligations
under subsections (a) and (b).
(d) Multex's obligations under subsections (a) and (b) are in addition
to the other obligations of Multex under this Agreement, and, accordingly,
unless otherwise stated herein, Reuters is under no obligation to reimburse
Multex for any other of its costs and expenses incurred in performing under or
otherwise in connection with the administration of this Agreement.
(e) Following the Term, Multex will provide technical support to
Reuters relating to the operation of the Multex Technology, as and when
requested by Reuters, at reasonable rates, including reimbursement of any
related travel and lodging expenses, that (except where Reuters is in material
breach of its obligations hereunder) are at least as favorable as the rates
charged by Multex to any third party for similar services under similar terms,
circumstances and conditions.
(f) This Section shall survive termination of this Agreement for any
reason other than Reuters material breach of the terms hereof.
22
<PAGE>
6.2 Concerning the Third Party Technology.
(a) Multex represents that the current fees charged to Multex by the
licensers of the Third Party Technology for the use thereof as contemplated
hereby are set forth in Part I of Schedule 6.2. Reuters acknowledges that such
licensors may increase such fees over time, and Multex agrees to give Reuters
prompt written notice as soon as it is aware that any such increase may be
contemplated by such licensors. Upon presentation to Reuters of appropriate
documentation of such fees (or increased fees, subject to prior notice given in
accordance with the preceding sentence), Reuters will reimburse Multex in full
therefor.
(b) Reuters acknowledges that the terms of this Agreement (including
any representations or warranties made by Multex) are subject to the terms of
those agreements identified on Part II of Schedule 6.2 and attached hereto as
Exhibits 6.2A and 6.2B, respectively, as in effect on the date hereof, except to
the extent provided in any subsequent agreement reached between Reuters and any
licensor of Third Party Technology. Multex represents and warrants that Exhibits
6.2A and 6.2B are true, complete and correct copies of such agreements, and that
such agreements have not been amended or modified as of the date hereof. Except
as provided in subsection (a), until January 1, 1996, no amendment to or
modification of either of such agreements that could adversely affect any right
or interest of the Reuter Group or any Reuter Subscriber, or impose any further
obligation on the Reuter Group or any Reuter Subscriber, will apply to the
Reuter Group or any Reuter Subscriber unless Reuters shall have given its prior
written consent thereto (which shall not be unreasonably withheld or delayed).
On or after January l, 1996, Multex will consult with Reuters reasonably in
advance of agreeing to any such amendment or modification that could adversely
affect any right or interest of the Reuter Group or any Reuter Subscriber, or
impose any further obligation on the Reuter Group or any Reuter Subscriber, so
that Reuters may, if it chooses participate in the related discussions with the
applicable Third Party Licensor.
(c) Multex acknowledges that Reuters willingness and ability to deploy
the Multex Technology is dependent upon reaching understandings with the
licensors of the Third Party Technology identified in Part II of Schedule 6.2
(each, a "Third Party Licensor") that are satisfactory to Reuters in its sole
discretion, and that, in connection therewith, Reuters may elect to obtain a
direct license from the Third Party Licensors. Any such direct license may
provide that the fees in respect of the relevant Third Party Technology are to
be paid directly to the relevant Third Party Licensor instead of to Multex, in
which case Reuters will have no obligation to Multex under subsection (a) in
respect of such Third Party Technology. Multex agrees fully to cooperate with
and assist Reuters in any negotiations involving a Third Party Licensor (but
will not be required to bear any material expense in connection therewith).
(d) If Reuters has not reached understandings acceptable to it with
either Third Party Licensor prior to January 1, 1996 and Reuters nonetheless
elects to provide the Multex Technology to Reuter Subscribers, Reuters covenants
and agrees to abide by the provisions of the agreement with such Third Party
Licensor (as set forth in Exhibit 6.2A or 6.2B, as
23
<PAGE>
applicable) that are, by their terms, expressly applicable to Reuters as a
sublicensor or sublicensee of the rights granted thereunder.
6.3 Use of the Parties Names.
(a) Neither party shall use the name, logo, initials or other
designation of the other party or any of its Affiliates, or refer to the other
party or any of its Affiliates, directly or indirectly, in any press release,
advertisement, marketing or other promotional effort, other than (i) solely in
internal materials, (ii) with prior written approval from such other party,
which approval shall not be unreasonably withheld, conditioned or delayed, (iii)
in accordance with subsection (b) or (iv) in accordance with Section 6.4(c)(v).
(b) If a party proposes by notice to the other to use specific
advertising, marketing or other promotional materials that include the name of
or other reference to the other party or any of its Affiliates, and such other
party does not object thereto within 30 days of such notice, the notifying party
shall be permitted to use the specific advertising, marketing or other
promotional materials referred to in its notice. Advertising, marketing and
other promotional materials that are substantially identical to materials
previously approved need not be submitted for approval again.
(c) Upon execution and delivery hereof, the parties agree to issue a
press release in the form attached hereto as Exhibit 6.3.
(d) This Section shall survive the termination of this Agreement for
any reason until such time as the royalty-payment obligations under Section 5.1
shall have ceased.
6.4 Mutual Confidentiality Restrictions.
(a) The parties acknowledge that each party (in such capacity, a
"Disclosing Party") has disclosed or will disclose certain Confidential
Information to the other (in such capacity, a "Receiving Party"). For purposes
hereof, and subject to the provisions of subsection (c), the term "Confidential
Information" means (i) any information relating to the Disclosing Party or its
Affiliates and designated in writing as confidential, proprietary or marked with
words of like import and (ii) any information relating to the Disclosing Party
or its Affiliates that is orally conveyed, if the Disclosing Party provides
specific written notice that such oral communication shall be deemed
Confidential Information and delivers such writing to the Receiving Party within
10 days of the oral conveyance.
(b) The Receiving Party acknowledges the confidential and proprietary
nature of the Confidential Information and agrees not to reveal or disclose any
Confidential Information for any purpose (except as permitted by the immediately
succeeding sentence) to any other Person, or to use any Confidential Information
for any purpose other than as contemplated hereby, in each case, without the
prior written consent of the Disclosing Party. The Receiving
24
<PAGE>
Party agrees to maintain adequate security procedures and take reasonable
precautions (no less rigorous than the Receiving Party takes with respect to its
own comparable Confidential Information) to prevent misuse, unauthorized or
inadvertent disclosure or loss of the Confidential Information of the Disclosing
Party. In the event that a Receiving Party wishes to disclose Confidential
Information to one of its professional advisors, it may do so only if that
professional advisor agrees to abide by the terms of this Section.
(c) Notwithstanding anything contained herein to the contrary,
Confidential Information shall not include information which:
(i) at or prior to the time of disclosure by the Disclosing Party
was known to the Receiving Party except to the extent unlawfully
appropriated;
(ii) at or after the time of disclosure by the Disclosing Party
becomes generally available to the public through no act or omission on the
Receiving Party's part;
(iii) is developed by the Receiving Party independent of any
Confidential Information it receives from the Disclosing Party;
(iv) the Receiving Party receives from a third party free to make
such disclosure without breach of any legal obligation; or
(v) is required to be disclosed pursuant to any statute,
regulation, order, subpoena or document discovery request, provided that
prior written notice of such disclosure is furnished to the Disclosing
Party as soon as practicable in order to afford the Disclosing Party an
opportunity to seek a protective order (it being agreed that if the
Disclosing Party is unable to obtain or does not seek a protective order
and the Receiving Party is legally compelled to disclose such information,
disclosure of such information may be made without liability).
(d) The Receiving Party agrees that it shall, at the election of the
Disclosing Party:
(i) promptly return all Confidential Information held or used by
the Receiving Party in note, memorandum, print, letter, report or other
written form to the Disclosing Party, including all copies thereof, or
(ii) promptly destroy all such Confidential Information,
including such copies thereof.
25
<PAGE>
In either case, the Receiving Party shall deliver a certificate signed by an
appropriate officer of the Receiving Party stating that the Receiving Party
complied in full with the terms of this subsection (d).
(e) The Receiving Party shall notify the Disclosing Party immediately
upon discovery of any prohibited use or disclosure of the Confidential
Information, or any other breach of this Section by the Receiving Party, and
shall fully cooperate with the Disclosing Party to help the Disclosing Party
regain possession of the Confidential Information and prevent the further
prohibited use or disclosure of the Confidential Information.
(f) The Receiving Party agrees that it will not remove any statutory
copyright notice or evidence of confidentiality contained on or included in the
Confidential Information. The Receiving Party will reproduce any such notice or
evidence on any reproduction of all or any part of the Confidential Information,
and, if requested by the Disclosing Party, will, at the election of the
Receiving Party, either attach such a notice or evidence on any Confidential
Information inadvertently provided without such a notice or evidence, or return
or destroy such Confidential Information in accordance with subsection (d).
(g) This Section shall survive until the third anniversary of the
termination of this Agreement in accordance with Article VIII.
(h) The terms of this Agreement (but, subject to Section 6.3, not the
fact hereof) shall be deemed to be Confidential Information of both parties.
(i) This Agreement shall supersede and replace any previous agreement
or understanding between the parties with respect to the confidential or
proprietary information of either party, with effect from the first date of
disclosure of such information.
6.5 Other Products and Services.
(a) Nothing contained in this Agreement shall be deemed to preclude or
in any way limit the ability and right of the Reuter Group to develop or exploit
any technology or data or other product or service other than the Multex
Technology, the Research or the Final Product, whether or not competitive with,
similar to or exploited in conjunction with the Multex Technology, the Research
or the Final Product or any product or service embodying the Multex Technology,
the Research or the Final Product (it being understood that this subsection
shall not confer any right in the Reuter Group to take any action with respect
to the Multex Property in violation of Section 4.1 (a)).
(b) Except to the extent necessary to fulfill Multex's
representations, warranties, covenants and agreements hereunder, nothing
contained herein shall be deemed to preclude or in any way limit the ability and
right of Multex to develop or exploit any technology or data or other product or
service, including the Multex Technology, the Research or the Final
26
<PAGE>
Product, whether or not competitive with, similar to or exploited in conjunction
with the Multex Technology, the Research or the Final Product or any product or
service embodying the Multex Technology, the Research or the Final Product.
6.6 Sale of Business. As a condition to the sale, transfer, lease,
assignment or other disposition by Multex, to or in favor of a Person who is not
a member of the Multex Group, of all or more than a de minimis portion of
Multex's businesses or assets relating to Multex's performance hereunder, Multex
shall procure that such Person execute an instrument agreeing to be bound by the
provisions of this Agreement as and to the extent of Multex. This Section shall
survive the termination of this Agreement for any reason until such time as the
royalty-payment obligations under Section 5.1 shall have ceased.
6.7 Use of Multex Host.
(a) Multex agrees to make available to Reuters Multex's host system
and operating environment for purposes of enabling Reuters to supply Reuter
Subscribers with Multex Technology and Final Product until such time as Reuters
has established its own host system and operating environment capable of
providing the same to Reuter Subscribers.
(b) Reuters will reimburse Multex in accordance with Section 6.8 for
its Time and Materials Expenses incurred in connection with any modification or
upgrade to its host system and operating environment, and any support or
maintenance of any such modification or upgrade, that Multex would not have
incurred except for its obligation under subsection (a).
(c) For the use of Multex's host system and operating environment,
subject to the next sentence, Multex will charge Reuters a fee of [Confidential
Portion Omitted] per Reuter Subscriber client site server per year, and a flat
fee of [Confidential Portion Omitted] per year in exchange for the dedication of
onehalf of the time of the three shifts of Multex personnel responsible for
central site operation support. The fees referred to in the preceding sentence
will apply from and after such time as the first Reuter Subscriber client site
server is installed, will be prorated for any fraction of a year, if applicable,
and are subject to renegotiation (upwards or downwards) on reasonable terms in
respect of any period commencing after June 1, 1996.
6.8 Concerning Reimbursable Expenses.
(a) Prior to incurring any reimbursable expense for a given project or
request made by Reuters hereunder, Multex will provide Reuters with a written
good faith estimate of the expenses for such project or request, broken down
into reasonable detail (provided that Reuters may, with Multex's consent, issue
a letter of authorization in the form of Exhibit 6.8).
(b) If Multex becomes aware that the reimbursable expenses relating to
such project or request are likely to be more than [Confidential Portion
Omitted] in excess of the latest estimate thereof supplied to Reuters, and in
any event upon expending [Confidential
27
<PAGE>
Portion Omitted] of the amount of any expenses estimated in accordance with
subsection (a), Multex will again provide Reuters with a written good faith
estimate of the amount of expense required to complete the relevant project or
comply with the relevant request, broken down into reasonable detail.
(c) Reuters will respond to each estimate delivered in accordance with
subsection (a) or (b) within 30 days. If Reuters notifies Multex that it
disagrees with or otherwise objects to any such estimate on any grounds, and the
parties are not subsequently able to reach agreement, or if Reuters fails to
respond to Multex within the required time, Multex will not be under an
obligation to proceed with the relevant project or request. Reuters may however
subsequently renew its request that Multex proceed with the relevant project or
request, in which case the provisions of this Section shall again be applicable.
(d) If Multex proceeds with any project or request despite the fact
that it is not under an obligation to do so, Reuters will not be under an
obligation to reimburse Multex for any of the related expenses subsequently
incurred.
(e) Reuters shall not be entitled to offset against future royalties
any expenses reimbursed hereunder in relation to a requested Upgrade that is not
functional due to Reuters failure or refusal to reimburse expenses under this
Section.
(f) If Multex is delayed in performing any project or complying with
any request of Reuters hereunder and such delay comes as a result of or is
caused by, on one occasion or on multiple occasions, Reuters (i) unreasonable
interference with or delaying of Multex's performance, (ii) unreasonable delay
in approving or unreasonable failure to approve or agree to any specifications
or (iii) materially adding to the relevant specifications, then Multex's time to
complete such work will be extended accordingly and Reuters will reimburse
Multex for any and all costs incurred or paid by Multex as a result of such
delay.
6.9 Concerning Installation Services. If Reuters should request Multex to
install the Multex Technology at any location, Reuters will provide Multex with
(i) any necessary floor plans and specifications for the relevant location, (ii)
information concerning the type of operating environment in which the Multex
Technology will be installed (including network system, configuration and
version, and applicable telecommunications network), (iii) the type of hardware
to be used and (iv) access to the location. It is understood that Multex will
not be under any obligation to obtain installation permits. Except for liability
for gross negligence or willful misconduct, Multex will have no liability to
Reuters arising out of its installation services. Multex will be under no
obligation to install the Multex Technology on the premises of any Reuter
Subscriber if such Subscriber refuses to execute Multex's standard installation
contract.
Article VII
REPRESENTATIONS AND WARRANTIES
28
<PAGE>
7.1 Representations and Warranties of Reuters. In addition to the other
representations and warranties of Reuters contained elsewhere in this Agreement,
Reuters represents and warrants to Multex that:
(a) Reuters has the full corporate power and authority to execute,
deliver and perform this Agreement.
(b) This Agreement has been duly and validly authorized, executed and
delivered by Reuters and (assuming the due authorization, execution and delivery
by Multex) constitutes a valid and binding obligation of Reuters
(c) The execution, delivery and performance by Reuters of this
Agreement as contemplated hereby will not (i) conflict with the certificate of
incorporation or bylaws of Reuters, (ii) conflict with, or result in the breach
or termination of, or constitute a default under, any lease, agreement,
commitment or other agreement or instrument, or any order, judgment or decree,
to which Reuters is a party or by which Reuters or its properties are bound,
except for such conflicts, breaches or defaults as would not, in the aggregate,
have a material adverse effect on the ability of Reuters to perform its
obligations under this Agreement or (iii) constitute a violation by Reuters of
any applicable law or regulation of any Governmental Body, or any rule or
written policy of any industry association of competent jurisdiction, or require
Reuters to obtain or make any consent. waiver. approval, order. permit or
authorization of, or designation, declaration or filing with, or notification
to, any Person or any Governmental Body. or any industry association the
sanctions of which are enforced by law.
(d) Reuters holds all permits, registrations, licenses, variances,
exemptions, orders and approvals from Governmental Bodies which are material to
the performance by Reuters of its obligations under this Agreement in the
jurisdictions in which Reuters proposes to perform such obligations
(collectively, the "Reuter Permits"). Reuters is in compliance with the terms of
all Reuter Permits, except where any such non-compliance would not, in the
aggregate, have a material adverse effect on the ability of Reuters to perform
its obligations under this Agreement. Reuters is in compliance with all federal,
state, local and foreign laws, ordinances, codes, regulations, orders,
requirements, standards and Procedures which are applicable to its businesses
except where any such non-compliance would not, in the aggregate, (x) have a
material adverse effect on the ability of Reuters to perform its obligations
under this agreement, (y) cause Multex to become subject to or in violation of
any such federal, state or foreign law, ordinance, code, regulation, order,
requirement, standard or procedure or (z) subject Multex to any increase cost or
penalty.
7.2 Representations and Warranties of Multex. In addition to the other
representations and warranties of Multex contained elsewhere in this Agreement,
Multex represents and warrants to Reuters as follows:
29
<PAGE>
(a) Multex has the full corporate power and authority to execute,
deliver and perform this Agreement
(b) This Agreement has been duly and validly authorized, executed and
delivered by Multex and (assuming the due authorization, execution and delivery
by Reuters) constitutes a valid and binding obligation of Multex.
(c) The execution, delivery and performance by Multex of this
Agreement as contemplated hereby will not (i) conflict with the certificate of
incorporation or by-laws of Multex, (ii) conflict with, or result in the breach
or termination of, or constitute a default under, any lease, agreement,
commitment or other agreement or instrument, or any order, judgment or decree,
to which Multex is a party or by which Multex or any of its properties are
bound, except for such conflicts, breaches or defaults as would not, in the
aggregate, have a material adverse effect on the ability of Multex to perform
its obligations under this Agreement or (iii) constitute a violation by Multex
of any applicable law or regulation of any Governmental Body, or any rule or
written policy of any industry association of competent jurisdiction, or require
Multex to obtain or make any consent, waiver, approval, order, permit or
authorization of, or designation, declaration or filing with, or notification
to, any Person or Governmental Body, or any industry association the sanctions
of which are enforced by law.
(d) Multex holds all permits, registrations, licenses, variances,
exemptions, orders and approvals from Governmental Bodies which are material to
(i) the operation of the business of Multex or (ii) the performance by Multex of
its obligations under this Agreement (collectively, the "Multex Permits") Multex
is in compliance with the terms of all Multex Permits, except where any such
non-compliance would not, in the aggregate, have a material adverse effect on
the ability of Multex to perform its obligations under this Agreement. Multex
is in compliance with all federal, states, local and foreign laws, ordinances,
codes, regulations, orders, requirements, standards and procedures which are
applicable to its business except where any such non-compliance would not, in
the aggregate, (i) have a material adverse effect on the ability of Multex to
perform its obligations under this Agreement, (ii) cause Reuters to become
subject to or in violation of any such federal, state, local or foreign law,
ordinance, code, regulation, order, requirement, standard or procedure or (iii)
subject Reuters to any increased cost or penalty.
Article VIII
TERM OF AGREEMENT; TERMINATION
8.1 Term of Agreement. The term of this Agreement (the "Term") will
commence on the Commencement Date and, unless earlier terminated by a party in
accordance with Section 8.2, will expire on June 30, 1999, or on any even-
numbered anniversary of June 30, 1999 beginning with June 30, 2001 (in either
case, the "Termination Date"); provided, in either case, that the party electing
to terminate shall have delivered notice to the other party specifying the
applicable date of the Termination Date no earlier than one year and no later
than 180 days prior to the date so specified.
30
<PAGE>
8.2 Early Termination.
(a) Either party (in such capacity, the "Terminating Party"; the other
party being referred to as the "Other Party") may terminate this Agreement:
(i) if the Other Party shall fail or be unable to perform its
material obligations under this Agreement (after observing the provisions
of Section 2.5, if applicable) and the resulting breach shall not have been
remedied within 30 days after notice thereof to the Other Party from the
Terminating Party (which 30-day period shall be extended to 120 days if and
to the extent that such breach cannot reasonably be remedied during such
30-day period, and the Other Party demonstrates to the Terminating Party
that it is diligently pursuing the remedy of such breach throughout such
120-day period);
(ii) if the Other Party shall fail to make any royalty payment
required under Section 5.1 and such failure shall not have been remedied
within 15 days after notice thereof to the Other Party from the Terminating
Party;
(iii) if the Other Party shall assign this Agreement or any of
its rights or obligations hereunder in violation of Section 10.11 (subject
to subsection (c)) or shall fail to comply with the provisions of Section
6.6 in connection with any sale, transfer, lease, assignment or other
disposition referred to therein; or
(iv)(x) if the Other Party shall generally fail to pay its debts
in the ordinary course of its business, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors or any proceeding shall be instituted by or
against the Other Party seeking to adjudicate it a bankrupt or insolvent,
or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any
law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of
a receiver, trustee, or other similar official for it or for any
substantial part of its property, and in the case of any proceeding
instituted against the Other Party, such proceeding shall not be stayed or
dismissed within 30 days from the date of institution thereof or (y) the
Other Party shall take any corporate action to authorize any of the actions
set forth in clause (x).
(b) Reuters may terminate this Agreement immediately if the
representations and warranties of Multex set forth in Section 2.2 or Section 2.3
shall fail to be true and correct in all material respects, or "Multex shall
have failed to observe in all material respects its covenants and agreements set
forth in Section 2.2 or Section 2.3, and the resulting breach shall not have
been remedied by Multex within 30 days after notice thereof to Multex by Reuters
(which 30-day period shall be extended to 120 days if and to the extent that
such breach cannot reasonably be cured within such 30-day period, and Multex
demonstrates to Reuters that it is diligently pursuing the remedy of such breach
throughout such 120-day period).
31
<PAGE>
(c) The exercise of a termination right pursuant to this Section will
not constitute an election of remedies by the Terminating Party; provided, that
if the Terminating Party elects to terminate this Agreement solely as a result
of an assignment by the Other Party in breach of its obligations under Section
10.11, and the assignee is willing and able to perform the obligations of the
Other Party hereunder, the Other Party shall not be liable to the Terminating
Party for any Damages arising solely from such breach (but will continue to be
liable in accordance with Article IX for any other Damages arising hereunder).
8.3 No Further Obligations. Except as otherwise specifically provided
herein (including with respect to any perpetual grant of rights and licenses
herein, any continuing royalty payments provided for herein and the continued
supply of Final Product after expiration of the Term), upon expiration of the
Term, neither party shall have any further obligations under this Agreement;
provided, that termination hereof shall not affect or impair any right or
obligation of a party hereto arising prior to termination.
Article IX
INDEMNIFICATION AND REMEDIES
9.1 Indemnification.
(a) Indemnification by Reuters. Subject to the terms and conditions of
this Article, Reuters hereby agrees to indemnify and hold Multex harmless from
and against any and all liabilities, obligations, damages, deficiencies, losses,
claims and expenses, including reasonable attorneys' fees and other expenses
incurred in the investigation and defense of claims and actions (collectively,
"Damages"), resulting from or arising out of:
(i) any misrepresentation, breach of representation or warranty
or non-fulfillment of any covenant or agreement on the part of Reuters
under the terms of this Agreement (subject to Section 8.2(c)); and
(ii) the infringement (or alleged infringement) by any Reuter
Final Product of any Intellectual Property Right or other property or
proprietary right of any third party.
(b) Indemnification by Multex. Subject to the terms and conditions of
this Article, Multex hereby agrees to indemnify and hold the Reuter Group
harmless from and against any and all Damages resulting from or arising out of:
(i) any misrepresentation, breach of representation or warranty
or non-fulfillment of any covenant or agreement on the part of Multex under
the terms of this Agreement (subject to Section 8.2(c)); and
32
<PAGE>
(ii) the infringement (or alleged infringement) by the Multex
Technology or any Multex Final Product of any Intellectual Property Right
or other property or proprietary right of any third party.
(c) Limitation. Notwithstanding subsections (a) and (b), no Person
shall be entitled to indemnification hereunder for Damages to the extent
attributable to such Person's gross negligence or willful misconduct.
9.2 Notice of Asserted Liability. Promptly after receipt by any party (the
"Indemnitee") of notice of any claim or the commencement of any action against
it in respect of which indemnity or reimbursement may be sought hereunder (an
"Assertion"), such Indemnitee shall promptly give written notice of the
Assertion (the "Claims Notice") to any other party (or parties) obligated to
provide indemnification pursuant to this Article (the "Indemnitor"), but the
failure to so notify any Indemnitor shall not relieve any Indemnitor of any
liability it may have to the Indemnitee except to the extent such Indemnitor has
been materially prejudiced thereby. The Indemnitor shall have the right to
assume the defense of such Assertion, at its own expense, with counsel chosen by
the Indemnitor and reasonably satisfactory to the Indemnitee. Notwithstanding
that the Indemnitor may elect to assume the defense of any Assertion, the
Indemnitee shall have the right to participate in the investigation and defense
thereof, with separate counsel chosen by such Indemnitee, but in such event the
fees and expenses of such counsel shall be paid by such Indemnitee unless (a)
the Indemnitor shall have agreed to pay such fees and expenses, (b) the
Indemnitor shall have failed to assume the defense of such Assertion with
counsel reasonably satisfactory to such Indemnitee or (c) in the reasonable
judgment of such Indemnitee based upon the written advice of its counsel, a
conflict of interest exists between the Indemnitor and such Indemnitee with
respect to such Assertion (in which case, if such Indemnitee notifies the
Indemnitor that such Indemnitee elects to employ separate counsel, the
Indemnitor shall not assume the defense of such Assertion on behalf of such
Indemnitee and shall be obligated to pay the reasonable fees and expenses of
such separate counsel). Notwithstanding anything to the contrary in this
Section, the Indemnitor shall not, without the written consent of such
Indemnitee (which consent shall not be unreasonably withheld or delayed), settle
or compromise any action in any manner that, in the reasonable judgment of such
Indemnitee or its counsel, may adversely affect such Indemnitee: provided,
however, that the Indemnitor may, without the written consent of the Indemnitee,
settle or compromise any action or consent to the entering of any judgment which
is for money damages only and includes as an unconditional term thereof the
delivery by the claimant or plaintiff to such Indemnitee of a duly executed
written release of such Indemnitee from all liability in respect of such
Assertion, which release shall be satisfactory in form and substance to counsel
to such Indemnitee.
9.3 Certain Limitations on Remedies.
(a) Neither Reuters nor Multex shall be entitled to assert any claim
for breach of any warranty, representation, covenant or agreement, including
indemnification pursuant to Section 9.1, except to the extent that the aggregate
amount of Damages relating to such claim and any other claim or claims of
Reuters or Multex, as the case may be, for breach of warranty,
33
<PAGE>
representation, covenant or agreement exceeds [Confidential Portion Omitted] in
the aggregate (in which case Reuters or Multex, as the case may be, shall be
entitled to the full amount of its provable Damages less the full amount of
Damages, if any, proven by the other party by way of counterclaim or setoff);
provided that the foregoing shall not limit, restrict or impair any claim by
Reuters or Multex against the other for indemnification pursuant to Section 9.1
relating to or arising out of any third-party claim against a party hereto in
respect of which the other party hereto is obligated to provide indemnification
pursuant to Section 9.1.
(b) In view of the difficulty in predicting the amount of damages a
party would incur as a result of a breach by the other party of its obligations
under this Agreement, the parties agree that in the event of any such a breach,
the breaching party shall not be liable to the other party pursuant to this
Agreement or otherwise, including for indemnification pursuant to Section 9.1,
for any amount in excess of [Confidential Portion Omitted] in the aggregate;
provided that
(x) the foregoing shall not limit, restrict or impair any claim
by one party against the other for indemnification relating to or
arising out of a third-party claim pursuant to Section 9.1, and
(y) the foregoing will not apply
(1) to a claim by Multex against Reuters under Section
5.1(a) or (b), and
(2) to a claim by Reuters against Multex under Section 5.1
(c),
provided, however, that it is expressly understood and agreed by both
parties that the above language applies only to claims where the
alleged obligor does not dispute that the Keystation or other device
in question is a Multex Technology Keystation or Multex Final Product
Keystation, as applicable (where Reuters is the alleged obligor) or a
Reuter Final Product Keystation (where Multex is the alleged obligor)
(and any such dispute, where Reuters is the alleged obligor, is based
upon an investigation by an individual who reports directly to a
member of Reuters executive committee, and where Multex is the alleged
obligor, is based upon an investigation by the Multex board of
directors), and that therefore the provisions of this clause (y) do
not exclude from the [Confidential Portion Omitted] limit on Damages
any claim, including any claim of infringement or misappropriation of
Intellectual Property Rights, and also including any such claim that
is upheld by a court of competent jurisdiction, (A) by Multex against
Reuters alleging that a Keystation or other device constitutes a
Multex Technology Keystation or a Multex Final Product Keystation
where Reuters disputes any such allegation (based upon an
investigation as aforesaid) or (B) by Reuters against Multex alleging
that a Keystation or other device constitutes a Reuter Final Product
Keystation where Multex disputes any such allegation (based upon an
investigation as aforesaid); instead, any such a claim involving such
a disputed allegation (regardless of any
34
<PAGE>
judicial or other resolution thereof), aggregated with all other
claims subject to such [Confidential Portion Omitted] limit on
Damages, shall be subject to such [Confidential Portion Omitted] limit
on Damages; and the parties acknowledge and agree that the provisions
of this subsection constitute a reasonable allocation between
themselves of the risk that they will disagree over whether a
particular Keystation or other device constitutes a Multex Technology
Keystation, a Multex Final Product Keystation or a Reuter Final
Product Keystation.
The parties acknowledge that the provisions of this subsection set a limit on
the amount of Damages payable as a result of a breach hereof, and are not
intended to establish liquidated damages.
(c) REUTERS AND MULTEX FURTHER AGREE THAT (1) THE PROVISIONS OF THIS
ARTICLE ARE THE SOLE AND EXCLUSIVE REMEDIES AGAINST THE OTHER FOR DAMAGES
RESULTING FROM OR ARISING UNDER THIS AGREEMENT (WHETHER SOUNDING IN CONTRACT OR
TORT) AND (II) UNDER NO CIRCUMSTANCES WILL REUTERS OR MULTEX HAVE ANY OBLIGATION
TO THE OTHER FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL
DAMAGES, INCLUDING LOST PROFITS, WITH RESPECT TO ANY MATTER RESULTING FROM OR
ARISING OUT OF THIS AGREEMENT, OR ANY LIABILITY TO THE OTHER FOR ANY DAMAGE TO
TANGIBLE PROPERTY (REAL OR PERSONAL) RESULTING FROM OR ARISING OUT OF THIS
AGREEMENT; PROVIDED THAT THE FOREGOING SHALL NOT LIMIT, RESTRICT OR IMPAIR ANY
CLAIM BY ONE PARTY AGAINST THE OTHER FOR INDEMNIFICATION RELATING TO OR ARISING
OUT OF A THIRD-PARTY CLAIM PURSUANT TO SECTION 9.1.
(d) IN NO EVENT WILL THE LIABILITY OF EITHER PARTY EXTEND TO THE
INDIVIDUAL OFFICERS, DIRECTORS OR SHAREHOLDERS OF SUCH PARTY OR ITS AFFILIATES.
(e) Nothing in this Section shall be deemed to limit a party's
entitlement to injunctive relief in an appropriate case.
9.4 Exculpation. While Multex will make every reasonable effort to develop
the Multex Technology so that it will operate without error, Reuters recognizes
that the Multex Technology will not be error free, and Reuters will look to the
error-correction procedures set forth herein to address any errors in the Multex
Technology that may arise. In view of the foregoing, each party agrees that,
except in the case of the gross negligence or willful misconduct of the other
party and except for any third-party claim arising under Section 9.1 in respect
of which such other party is obligated to provide indemnification, such other
party will have no monetary liability to it relating to or arising out of (i)
the interruption, delay or failure in, or error in, the Multex Technology or
Final Product, or in connecting, transmitting, routing, delivering,
distributing, furnishing, processing, disseminating or displaying the same, (ii)
the accuracy of the Final Product (including securities, commodities or pricing
information contained therein), or the accuracy of the same as
35
<PAGE>
it may be displayed, carried or furnished by or through the Multex Technology,
(iii) the erroneous delivery of Final Product to a Person not entitled to
receive the same, or the failure to deliver Final Product to a Person entitled
to receive the same, (iv) the act or omission of any Financial Institution
(including terminating or failing to perform under a Research Agreement) or (v)
any failure or delay in performing an obligation hereunder due to a cause beyond
such other party's control, including industrial disputes of whatever nature,
acts of God, acts of a public enemy, acts of government, network, software or
telecommunications failure, fire or other casualty.
9.5 Survival. This Article shall survive the termination of this Agreement
for any reason. Notwithstanding the foregoing, Reuters or Multex, as the case
may be, will be prohibited from bringing any indemnification claim against the
other (except with respect to a claim for indemnification relating to or arising
out of any third-party claim against a party hereto in respect of which the
other party hereto is obligated to provide indemnification pursuant to this
Article) unless a Claims Notice is provided to the Indemnitor within one year
after the Indemnitee has actual knowledge of such claim.
Article X
MISCELLANEOUS
10.1 Taxes.
(a) Multex will be responsible for paying, as and when due, any sales
tax required to be paid in connection with the royalties payable to it under
Section 5.1.
(b) Reuters will be responsible for paying, as and when due, any sales
tax required to be paid in connection with the royalties payable to it under
Section 5.1.
(c) Each party agrees to rely upon any appropriately completed resale
certificate provided by the other party that relates to the transactions
contemplated hereby.
(d) This Section shall survive the termination of this Agreement for
any reason until such time as the royalty-payment obligations under Section 5.1
shall have ceased.
10.2 Waiver of Compliance. Any failure of either party to comply with any
obligation hereunder may be expressly waived in writing by the other party, but
such waiver or failure to insist upon strict compliance with such obligation
shall not operate as a waiver of, or estoppel with respect to, any subsequent
failure.
10.3 Notices. Any notice or other communication required or permitted
hereunder shall be in writing, and shall have been sufficiently given if hand
delivered, signature required, if sent by certified or registered mail, return
receipt required, if sent by overnight delivery service, signature required, or
if sent by telecopy and promptly confirmed by dispatching the hard copy by
another permitted method of giving notice. Notice given by hand delivery,
certified or registered mail or overnight delivery service shall be effective
upon receipt of signature, and notice
36
<PAGE>
first given by telecopy shall be effective upon telephonic confirmation of
receipt of the appropriate number of pages and dispatch of the hard copy.
Notices or other communications shall be delivered or telecopied to the address
or telecopy number set forth below (or to such other address or telecopy number
as a party by notice to the other may provide):
If to Reuters, to:
Reuters Limited
8S Fleet Street
London EC4P 4AJ
England
Telecopy: (44-171) 542-7966
Voice number for confirmation: (44-171) 542-8995
Attention: International Marketing Manager - Equities
with a copy to.
Reuters America Inc.
1700 Broadway
New York, New York 10019
Telecopy: 212-307-9378
Voice number for confirmation: 212-603-3524
Attention: General Counsel
If to Multex, to:
Multex Systems, Inc.
2 Journal Square Plaza
4th Floor
Jersey City, New Jersey 07306
Telecopy: 201-714-8697
Voice number for confirmation: 201-714-3986
Attention: President
10.4 Consent to Jurisdiction. Each party consents specifically to the non-
exclusive jurisdiction of the federal courts of the United States sitting in the
Southern District of New York and the courts of the State of New York sitting in
the County of New York (and any court to which an appeal therefrom may be taken)
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby, and each party irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum. Each party irrevocably waives its right to a
trial by jury and consents that service of process may be effected
37
<PAGE>
by mail in accordance with the notice provisions contained in Section 10.3. This
Section shall survive the termination of this Agreement for any reason.
10.5 Captions. The Article and Section captions in this Agreement are
inserted for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof.
10.6 Complete Agreement; Amendments. This Agreement (including the Exhibits
and Schedules) contains, and is intended as, a complete statement of the
arrangements between the parties with respect to its subject matter and
supersedes all prior agreements between the parties with respect to those
matters. Except for Schedule 1.1. which may be amended by Reuters with notice to
Multex but without the necessity of obtaining Multex's consent, this Agreement
may not be amended, supplemented or modified except by written agreement
executed by both parties.
10.7 Expenses. Each of Reuters and Multex shall pay its own expenses in
connection with negotiation and preparation of this Agreement and, except as
otherwise expressly provided herein, in the implementation of and performance of
its respective obligations under this Agreement.
10.8 Severability. If any term or clause of this Agreement is held to be
illegal, invalid or unenforceable, the validity or enforceability of the
remainder of this Agreement shall not be affected thereby. If any Governmental
Body construes any term or clause of this Agreement to be unreasonable because
of the duration of such term or clause, such Governmental Body shall have the
power to reduce the duration of such term or clauses and to enforce such term or
clause as so reduced.
10.9 Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart shall be an original instrument, and all
such counterparts shall together constitute the same agreement.
10.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to the
principles of conflicts of laws thereof.
10.11 Binding Elect; No Third-Party Beneficiaries; Assignment. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. Nothing in this Agreement
shall create or be deemed to create any rights in any Person other than Multex
or members of the Reuter Group. No party may assign any of its rights or
delegate any of its duties under this Agreement without the prior written
consent of the other (not to be unreasonably withheld or delayed), provided that
Reuters may assign any of its rights and delegate any of its duties hereunder,
in whole or in part, to any member of the Reuter Group without the necessity of
obtaining consent.
38
<PAGE>
10.12 Relationship of the Parties. There is no joint venture, partnership,
agency or fiduciary relationship existing between the parties and the parties do
not intend to create any such relationship by this Agreement. This Section shall
survive the termination of this Agreement for any reason.
10.13 No Brokers or Finders. Each of Reuters and Multex represents and
warrants that it has not employed or utilized the services of any broker or
finder in connection with this Agreement or the transactions contemplated
hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
REUTERS LIMITED
By: /s/ Jeremy Penn
----------------------------------------------
Name: Jeremy Penn
Title: International Marketing Director, Equities
MULTEX SYSTEMS, Inc.
By: /s/ Isaak Karaev
----------------------------------------------
Name: Isaak Karaev
Title: President, CEO
39
<PAGE>
SCHEDULE 1.1
AUTHORIZED DISTRIBUTORS
Name of Authorized Distributor Area of Distribution
Australian Associated Press Australia, Fiji
Information Services Pty. Vanuatu, Papua New
Ltd. (AAP) Guinea
Siemar Brazil
Iranian News Agency Iran
Antara News Agency Indonesia
Pertubuhan Berita Nasional Malaysia
Malaysia (Bernama)
Central News Agency Taiwan
Tanjug Yugoslavia
(including Bosnia-
Herzegovina and
Croatia)
Farmland Industries Inc. Selected areas in the
United States
<PAGE>
EXHIBIT 2.4
UPGRADES AT REUTERS ELECTION
A. Upgrades Funded by Reuters and Recouped from Royalty Payments
1. Permissioning Upgrade. Developing a working software solution for
permissioning individual Keystations to use the Multex Technology.
2. Additional Hosts. All expenses of developing, coding and testing
software in order to establish additional Multex Technology host
servers at locations designated by Reuters capable of interacting with
the existing Multex network.
B. Upgrades at Reuters Cost and Expense
1. Session Server Work-Around. Modifying the Multex Technology network
communications (TCP/IP FTP) to work in conjunction with Reuters
session server technology.
2. UNIX Upgrade. Modifying the Multex Technology so that it is capable of
running on the version of the UNIX operating system specified by
Reuters.
3. Additional Hosts. All hardware costs, and costs of installing (but not
developing, coding and testing) software, incurred in connection with
establishing additional Multex Technology host servers at locations
designated by Reuters capable of interacting with the existing Multex
network.
<PAGE>
EXHIBIT 2.6
SUBSTANTIAL ENHANCEMENTS
1. News processing (in document and text formats)
2. HTML and SGML support relating to non-Adobe-based systems
3. SNMP management of Multex Publisher applications
4. Fax and e-mail serving capabilities
5. Multex real-time profile server (involving a replacement of Fulcrum
technology)
6. Attachments (including, for example, spreadsheets or multimedia) to
research documents
<PAGE>
SCHEDULE 6.2
I. THIRD PARTY TECHNOLOGY EXPENSES
1. Adobe Acrobat Exchange LE 2.0. Each copy of the Multex Technology
incorporates a copy of Adobe Acrobat Exchange LE 2.0. Once-off, per-copy pricing
for Adobe Acrobat Exchange LE 2.0 depends upon the number of copies ordered
annually, and decreases incrementally as breakpoints are passed, as set forth
below:
Annual No. of Copies Per-Copy Price
1-5,000 [Confidential Portion Omitted]
5,001-10,000 [Confidential Portion Omitted]
10,001-20,000 [Confidential Portion Omitted]
20,001-50,000 [Confidential Portion Omitted]
50,001-100,000 [Confidential Portion Omitted]
100,001 and above [Confidential Portion Omitted]
In any year, to the extent that Multex makes a non-refundable advance
against royalties equal to the applicable per-copy price set forth above
times the lowest number of copies in a given range set forth above, in
accordance with Paragraph E.2. of Appendix No. 3 to the agreement
identified in II. 1. below, that per-copy price will apply to all copies
ordered.
2. Fulcrum Basic Runtime Software. Each copy of the Multex Technology
incorporates a copy of Fulcrum Basic Runtime software. Once-off, per-copy
pricing for Fulcrum Basic Runtime software is as set forth below:
For each copy licensed to a
North American Reuter Subscriber: [Confidential Portion Omitted]
For each copy licensed to a Reuter
Subscriber outside of North America: [Confidential Portion Omitted]
Each price set forth above is subject to a decrease of [Confidential
Portion Omitted] to the extent that certain annual volume targets are met,
as set forth in Schedule E to the agreement identified in II.2. below.
<PAGE>
II. THIRD PARTY TECHNOLOGY LICENSES
1. Acrobat Software Two Tier Reproduction and License Agreement, effective as
of February 10, 1994, between Multex Systems, Inc. and Adobe Systems
Incorporated.
2. Software Development and Distribution License Agreement, dated as of
September 30, 1993, between Fulcrum Technologies Inc. and Multex Systems. Inc.
2
<PAGE>
EXHIBIT 6.3
FORM OF PRESS RELEASE
<PAGE>
CONFIDENTIAL
AMENDMENT NO. 1 TO
SOFTWARE AND RECIPROCAL DATA LICENSE AGREEMENT
AMENDMENT NO. 1, dated as of September 1, 1996, to that certain Software
and Reciprocal Data License Agreement (as amended, the "Agreement"), dated as of
June 1, 1995, by and between REUTERS LIMITED, an English company with its
principal offices at 85 Fleet Street, London EC4P 4AJ England ("Reuters"), and
MULTEX SYSTEMS, INC., a Delaware corporation with its principal offices at 33
Maiden Lane, New York, New York 10038 ("Multex").
WHEREAS, the parties hereto desire to amend the Agreement on the terms set
forth below:
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Definitions: References. Unless otherwise specifically defined
herein, each term used herein that is defined in the Agreement shall have the
meaning assigned to that term in the Agreement. Each reference to "hereof",
"hereunder", "herein", and "hereby" and each other similar reference and each
reference to "this Agreement" and each other similar reference contained in the
Agreement shall from and after the date hereof refer to the Agreement as amended
hereby.
2. Amendment of Section 1.1 of the Agreement. Section 1.1 of the
Agreement is hereby amended by adding thereto the following definitions:
"Buy-Side Client" means any Reuter Subscriber that is not a Sell-Side
Client.
"Buy-Side Multex Technology Keystation" means a Multex Technology
Keystation that is provided by the Reuter Group or an Authorized
Distributor to a Buy-Side Client.
"Sell-Side Client" means any Reuter Subscriber that supplies Reuter
Research for inclusion in Reuter Final Product, or that is Affiliated with
a Person that supplies Reuter Research for inclusion in Reuter Final
Product.
"Sell-Side Multex Technology Keystation" means a Multex Technology
Keystation that is provided by the Reuter Group or an Authorized
Distributor to a Sell-Side Client.
"Service Fee" means the actual service fee charged to a Sell-Side
Client by the Reuter Group or an Authorized Distributor for use of a Sell-
Side Multex Technology Keystation, as applicable, without giving affect to
any discount made available to the Sell-Side Client in question, and
exclusive of (x) any income payable by that Sell-Side Client, (y) any
installation, maintenance, communications, pass-through or third party
charges that are payable by that Sell-Side Client, and (z) any service fees
or other charges for services
<PAGE>
in addition to the services embodying Multex Technology or Multex Final
Product that are payable by that Sell-Side Client.
3. Amendment of Section 5.1(a) of the Agreement. Section 5.1(a) of the
Agreement is hereby amended and restated in its entirety as follows:
5.1 Royalties. (a) Multex Technology royalty, in full consideration
of the rights and licenses granted by Multex under Article II, Reuters
agrees to pay Multex, in accordance with Section 5.2:
(i) for each Contract Month during the Term and thereafter for
each calendar month after expiration of the Term, a royalty of
[Confidential Portion Omitted] per month in respect of each Buy-Side
Multex Technology Keystation authorized by Reuters to operate at any
time during such month (or, in lieu thereof, the amount agreed upon
pursuant to Section 5.5), and
(ii) for such Contract Month during the Term and thereafter for
each calendar month after expiration of the Term, a royalty in respect
of such Sell-Side Multex Technology Keystation authorized by Reuters
to operate at any time during such month, equal to the greater of:
(x) [Confidential Portion Omitted] for such Keystation for
such month, and
(y) [Confidential Portion Omitted] of the amount of Service
Fee charged by the Reuter Group or an Authorized Distributor to
the Sell-Side Client in question in respect of such Keystation
for such month,
or, in lieu thereof, the amount agreed upon pursuant to Section 5.5.
4. Governing Law. This Amendment shall be governed by the laws of the
State of New York without giving effect to the principles of conflicts of laws
thereof.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
REUTERS LIMITED MULTEX SYSTEMS, INC.
By: /s/ Frank Rose By: /s/ I. Karaev
---------------------- ----------------------
Name: Name:
Title: Title:
2
<PAGE>
CONFIDENTIAL
AMENDMENT NO. 2 TO
SOFTWARE AND RECIPROCAL DATA LICENSE AGREEMENT
AMENDMENT NO. 2, dated as of November 14, 1996, to that certain Software
and Reciprocal Data License Agreement (as amended, the "Agreement"), dated as of
June 1, 1995, by and between REUTERS LIMITED, an English company with its
principal offices at 85 Fleet Street, London EC4P 4AJ England ("Reuters"), and
MULTEX SYSTEMS, INC., a Delaware corporation with its principal offices at 33
Maiden Lane, New York, New York 10038 ("Multex").
WHEREAS, the parties hereto desire to amend the Agreement on the terms set
forth below;
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Definitions; References. Unless otherwise specifically defined
herein, each term used herein that is defined in the Agreement shall have the
meaning assigned to that term in the Agreement. Each reference to "hereof",
"hereunder", "herein", and "hereby" and each other similar reference and each
reference to "this Agreement" and each other similar reference contained in the
Agreement shall from and after the date hereof refer to the Agreement as amended
hereby.
2. Definition. The following new definitions are added to Section 1.1(a)
as follows:
"Contributor Server" means a computer server of a Reuter Subscriber
which is permissioned to receive Multex Technology or Final Product primarily as
a means for such Reuter Subscriber to check on its own contributed Reuter
Research and is not permissioned for more than two internal Keystation accesses.
"Entitlement Reports" means reports generated by Multex as
specifically described in the RBR Entitlement Reports Specification attached
hereto as Annex 1.
"Readership Reports" means reports generated by Multex as specifically
described in the RBR Readership Statistics Specification attached hereto as
Annex 2.
3. Amendment of Section 3.4 of the Agreement. Section 3.4 of the
Agreement is hereby amended by replacing it in its entirety with the following:
"3.4 Third-Party Distribution of Final Product. Either party may
provide Reuter Final Product or Multex Final Product, as the case may be, to a
Multex Subscriber or a Reuter Subscriber or an information distributor for the
purpose of the redistribution thereof to Persons who are not Affiliated with
such Multex Subscriber, Reuter Subscriber or information distributor, provided,
that in the event that any Research Agreement in respect of Reuter Research
contains
<PAGE>
a provision (i) requesting that such Reuter Research is distributed or
redistributed to a defined Person or group of Persons, or (ii) requesting that
such Reuter Research is not distributed or redistributed to a defined Person or
---
group of Persons, Multex shall, immediately following notice thereof from
Reuters, ensure that such provision is complied with through selective
permissioning of the Multex Technology and that such Reuter Research is or is
not distributed or redistributed to such Person or Persons, as the case may be."
4. Amendment of Section 5.1(c)(i) of the Agreement. Section 5.1(c)(i) of
the Agreement is hereby amended by replacing it in its entirety with the
following:
"(i) for each Contract Month during the Term following such time that
(a) there exists on any calendar day at least [Confidential Portion Omitted]
Persons contributing Reuter Research to Multex and (b) over any consecutive 5
calendar day period, [Confidential Portion Omitted] distinct Reuter Research
reports are contributed to Multex, a royalty of [Confidential Portion Omitted]
per Contract Month in respect of each Reuter Final Product Keystation authorized
by Multex to operate at any time during such Contract Month; and"
5. Amendment of Section 6.7(c) of the Agreement. Section 6.7(c) of the
Agreement is hereby amended by replacing it in its entirety with the following:
"(c) For the use of Multex's host system and operating environment,
subject to the next sentence, Multex will charge Reuters a fee of [Confidential
Portion Omitted] per year for each Reuter Subscriber client site server other
than a Contributor Server, and a flat fee of [Confidential Portion Omitted] per
year in exchange for the dedication of one-half of the time of the three shifts
of Multex personnel responsible for central site operation support. The fees
referred to in the preceding sentence will apply from and after such time as the
first Reuter Subscriber client site server is installed, will be prorated for
any fraction of a year, if applicable."
6. Amendment of Section 9.1(b). Section 9.1(b) of the Agreement is
hereby amended by replacing it in its entirety with the following:
"(b) Indemnification by Multex. Subject to the terms and conditions
of this Article, Multex hereby agrees to indemnify and hold the Reuter Group
harmless from and against any and all Damages resulting from or arising out of:
(i) any misrepresentation, breach of representation or warranty
or non-fulfillment of any covenant or agreement on the part of Multex
under the terms of this Agreement (subject to Section 8.2(c));
(ii) the infringement (or alleged infringement) by the Multex
Technology or any Multex Final Product of any Intellectual Property
Right or other property or proprietary right of any third party; and
2
<PAGE>
(iii) any breach of Multex's obligations regarding distribution
or non-distribution of Reuter Research as set forth in Section 3.4."
7. Addition of Section 6.10. A new Section 6.10 is hereby added to the
Agreement as follows:
"6.10 Concerning Entitlement Reports and Readership Reports. Multex
shall provide to Reuters during the Term Entitlement Reports and Readership
Reports in accordance with the procedures set forth in the RBR Entitlement
Reports Specification dated 30 May 1996 and the RBR Readership Statistics
Specification dated 3 June 1996, respectively (copies of which are attached
hereto as Annex 1 and Annex 2)." Reuters shall bear the cost of such reports,
which cost will be negotiated in good faith by the parties hereto and shall not
exceed [Confidential Portion Omitted] per individual report.
8. Amendment of Section 9.3(b)(x). Section 9.3(b)(x) of the Agreement is
hereby amended by replacing it in its entirety with the following:
"(x) the foregoing shall not limit, restrict or impair any claim by
one party against the other for indemnification relating to or arising out of a
third-party claim pursuant to Section 9.1 other than any claims for breach of
Multex's obligations of distribution or non-distribution as set forth in Section
3.4 which claims, whenever occurring aggregated with all other such claims of
distribution or non-distribution shall be covered by and not exceed the $150,000
limitation of liability set forth above."
9. Governing Law. This Amendment shall be governed by the laws of the
State of New York without giving effect to the principles of conflicts of laws
thereof.
3
<PAGE>
AMENDMENT NO. 3 TO
SOFTWARE AND RECIPROCAL DATA LICENSE AGREEMENT
AMENDMENT NO. 3 dated as of December __, 1997, to that certain Software and
Reciprocal Data license Agreement (as amended, the "Agreement"), dated as of
June 1, 1995, by and between REUTERS LIMITED, a company with its principal
offices at 85 Fleet Street, London, England ("Reuters"), and MULTEX SYSTEMS,
INC., a Delaware corporation with its principal offices at 33 Maiden Lane, New
York, New York 10038 ("Multex").
WHEREAS, the parties hereto have amended the Agreement by Amendment No. 1
dated as of September 1, 1996 and Amendment No. 2 dated as of November 14, 1996;
WHEREAS, in accordance with Section 6.7 of the Agreement, Reuters has
developed a new distribution system known as the Reuters Web as defined below
capable of supplying Reuters Subscribers with the Multex Technology and Final
Product;
WHEREAS, on or about January 1, 1998, the parties hereto intend to cease
using the Multex server-based distribution system for the transmission of the
Multex Technology and Final Product to New Subscribers and to commence the
migration of Existing Subscribers from the Multex server-based distribution
system to the Reuters Web;
WHEREAS, effective as of January 1, 1998, the parties hereto intend to
discontinue the Multex Final Product Royalty and Reuters Final Product Royalty
payments, and to amend the Multex Technology payments payable to Multex under
the Agreement;
WHEREAS, effective as of January 1, 1998, Multex intends to grant to
Reuters a Global Bundle License as defined hereafter to grant to Reuters
Subscribers worldwide access to a version of MultexNet, as defined below, which
shall be available over the Reuters Web;
WHEREAS, effective as of January 1, 1998, Multex and Reuters intend to
agree that Reuters may sell Multex Research-On-Demand as defined below subject
to the terms and conditions and sharing of revenue as provided herein;
NOW, THEREFORE, in consideration for the mutual promises contained herein,
the parties hereto, intending to be legally bound, hereby agree as follows:
1. Unless otherwise specifically defined herein, each term used herein that is
defined
in the Agreement shall have the meaning assigned to that term in the Agreement.
Each reference to "hereof", "hereunder", "herein", and "hereby" and each other
similar reference and each reference to "this Agreement" and each similar
reference contained in the Agreement shall from and after the date hereof refer
to the Agreement as amended hereby. Except as modified by this Amendment, all
other terms and conditions of the Agreement continue in full force and effect.
<PAGE>
2. The following new definitions are added to Section l.l(a) as follows:
"Earnings Estimate Data" means company earnings per share forecasted
and supplied by Financial Institutions, and either reported as individual
company earnings or aggregated on a regional or global basis.
"Existing Subscriber" means any Person who shall have been a Reuters
Subscriber prior to January 1, 1998 and continues to be a Reuters
Subscriber after such date.
"Global Bundle License" means the Prior License granted to Reuters and
its affiliates under the Agreement, to receive, store, use, sell, market
and distribute the Multex Research as part of the Final Product through the
Multex Technology; (i) expanded to allow delivery via the Reuters Web; (ii)
limited to [Confidential Portion Omitted] Reuters Subscribers as of
December 31, 1998. In granting the foregoing License, Multex shall have to
perform the following Services:
(a) Collect Research on a worldwide basis and make part of the Final
Product as defined in the Agreement as previously amended.
(b) Process and store said Multex Research on the Multex database.
(c) Distribute said Research as part of the Final Product through the
Multex Technology.
"MultexNet" means the Multex service which provides access to the
Multex Final Product or the Reuters Final Product as defined in the
Agreement as previously amended.
"Multex Research-On-Demand" means the Multex service which makes
available for sale on a "pay per view" basis selected historical investment
research, business, economic and financial news and related information
contained in the Multex database.
"New Subscriber" means any Person who becomes a Reuters Subscriber on
or after January 1, 1998.
"Prior License" means the Multex Technology License and the Multex
Final Product License granted by Multex to Reuters under the Agreement.
"Reuters Web" means the Reuters' service which provides access to the
Multex Final Product or the Reuters Final Product as defined in the
Agreement as previously amended.
"Subscriber Site Server Fee" means the annual client site server fee
of [Confidential Portion Omitted] per annum payable per Subscriber Site
Server pursuant to Section 6.7(c) of the Agreement.
2
<PAGE>
3. Subscriber Site Server Fees shall be payable with respect to any Existing
Subscribers and/or new Subscribers who use the Multex Server-based
distribution system.
4. It is Reuters' intention to migrate all Existing Subscribers from the
Multex server-based distribution system to the Reuters Web commencing
effective as of January l, 1998. The Subscriber Site Server Fees shall not
be payable with respect to any Existing Subscriber from and after the date
on which such Subscriber is migrated to the Reuters Web. Any Subscriber
Site Server Fees that have been pre-paid for the period after migration
shall be credited to Reuters.
5. The annual support fee of [Confidential Portion Omitted] referenced in
Section 6.7(c) of the Agreement shall continue to be payable by Reuters
during the term.
6. References in the Agreement to "royalties" and "royalty payment
obligations", are hereby deleted and are replaced with "payments" and
"payment obligations" respectively, except as applicable to the revenue
sharing with regard to Multex Research-On-Demand and fees for customization
of the Multex Technology.
7. As inducement to Multex agreeing to amend this Agreement, it is hereby
expressly agreed that as of December 31, 1997, Reuters waives all of its
rights, interest and any claim it may now and forever have to offset sums
of money against the Multex Technology Payment as set forth in Section
2.4(b)(x) and (y) of the Agreement, up to the maximum amount of
[Confidential Portion Omitted].
8. As of January l, 1998, Multex hereby grants to Reuters and Reuters accepts
the Global Bundle License in addition to the rights and licenses granted by
Multex under Article II of the Agreement subject to the following
conditions and limitations:
(a) Reuters may only offer the Services provided pursuant to the
Global Bundle License to paying or prospective Reuters
Subscribers in conjunction with other Reuters' Services, and for
Reuters own internal users.
(b) Although the parties expect Reuters Subscribers as at December 31
1998 to be comprised of no more than ten thousand subscribers on
the Buyside and the balance on the Sellside, it will not be a
binding obligation upon Reuters to so limit the composition of
Reuters Subscribers.
(c) Multex shall be granted brand attribution as part of the license
herein, such as acknowledgement to the Reuters Subscribers that
the services are "Powered by Multex", the precise form of
acknowledgement to be mutually agreed upon.
(d) The Research incorporated with the Global Bundle License may not
be distributed to the public Internet.
3
<PAGE>
(e) If a Reuters Subscriber using the Multex Technology requests
customization of the Multex Technology, then (i) all such work
shall be performed at the discretion of Multex, and, if so
performed, shall be attributed directly to Multex. Reuters shall
have no liability for the same; (ii) all fees and charges arising
from such customization work shall be payable to Multex alone;
(iii) Multex shall pay to Reuters within 45 days of the end of
each calendar quarter during the Term an amount equal to
[Confidential Portion Omitted] of Gross Revenue invoiced to the
Subscribers requesting the customization of the Multex
Technology. For the purposes of this section, Gross Revenue means
all sums invoiced net of taxes in connection with the
customization of the Multex Technology, and payments due under
this section are subject to the record keeping and auditing
provisions of section 11 (e) below.
9. Effective as of January 1, 1998, Article V of the Agreement (including but
not limited to Amendment No. 2 dated November 14, 1996) is hereby amended
by replacing it in its entirety with the following:
5.1 Payments
(a) MULTEX TECHNOLOGY PAYMENTS. In full consideration of the rights
and licenses granted by Multex under Article II, Reuters hereby
agrees to pay Multex a fee of [Confidential Portion Omitted],
payable quarterly in advance, beginning January 1, 1998 in
installments of [Confidential Portion Omitted] per quarter.
(b) PAYMENT PROCEDURES. All payments required under this Agreement
will be made to a party at its address for notices set forth in
Section 10.3 or as otherwise directed by such party in writing.
All payments shall be made in US Dollars.
(c) Multex and Reuters agree to engage in good faith negotiations to
agree to a new Multex Technology Payment for the balance of the
term from January 1, 1999 to June 30, 1999. If the parties are
unable to so agree on or before December 31, 1998, either party
may terminate this Amendment by written notice to the other.
5.2 Auditing.
(a) Reuters will keep proper records during the Term supporting the
aggregate Subscriber Site Server Fees due and owing to Multex (if
any) hereunder. Such records shall be deemed the Confidential
Information of Reuters and may not be used by Multex for any
purpose other than verification of the amounts owed it hereunder.
4
<PAGE>
(b) Not more than once during each period of 12 consecutive months,
Reuters (in such capacity, the "Audited party"), will upon the
request of Multex (in such capacity, the "Auditing Party") permit
independent auditors selected by the Auditing Party to make such
investigation of the records referred to in subsection (a) as is
deemed necessary by such auditors to verify and confirm the
amount of Subscriber Site Server Fees required to be paid by the
Audited Party (if any) pursuant hereto in respect of the period
of 12 consecutive months preceding the date of such request. Such
auditors shall, upon request of the Audited party, deliver a
letter to the Audited party agreeing to abide by the restrictions
set forth in Section 6.4 applicable to a Receiving Party."
10. The reference to "payment in accordance with Section 5.1(b) and 5.1(c)" is
hereby deleted from Section 3.1 and 3.2 respectively. The references to
Sections 5.1 (b) and 5.1 (c) contained in Section 3.5 are hereby deleted.
The references in Section 9.3(b)(y) to Section 5.1(b) and 5.1(c) are hereby
deleted. Section 6.2 of the Agreement is hereby deleted.
11. Commencing January 1, 1998 for the balance of the Term, Multex hereby
grants to Reuters a non-exclusive, worldwide license to receive, store,
use, sell, market and distribute Multex Research-On-Demand on its behalf.
Reuters in its discretion shall have the right to exercise this license
with respect to Multex Research On-Demand which consists of the Research
Services set forth on Exhibit "A" annexed hereto in order to market and
sell Multex Research On-Demand to Reuters Subscribers on the following
terms and conditions:
(a) Multex shall be solely responsible for (i) determining the
pricing of the Multex Research-On Demand, (ii) billing and
collecting all appropriate fees and charges from all Subscribers
and (iii) remitting to Reuters its share of the revenue as set
forth below. Multex may, from time to time, change its Suggested
List Prices and/or terms as set forth in Exhibit "B" as annexed
hereto and made a part hereof by notifying Reuters in writing of
such changes and such revised List shall be incorporated herein
by reference. If Reuters receives payment from a Reuters
Subscriber, Reuters will promptly remit such payment to Multex
along with a statement identifying the Subscriber and other
pertinent information.
(b) Reuters acknowledges that the marketing by Reuters of Multex
Research-On-Demand to its Subscribers shall be subject to such
restrictions, moratoria, and/or limitations which are now or may
in the future be imposed by contributors to the Multex Research,
including the right of contributors to discontinue providing
and/or distributing the Multex Research. Multex shall promptly
communicate such restrictions, moratoria and/or limitations to
Reuters for its Subscribers. The essential purpose of this
provision is to comply with the varied restrictions, moratoria,
and/or limitations required by contributors of Research to
Multex, and not to alter
5
<PAGE>
the content or availability of Research other content or
availability of Multex Research-On-Demand.
(c) Reuters acknowledges that Multex shall have the right to
distribute and license the distribution of Multex Research-On-
Demand to third parties in any manner whatsoever, and that
nothing set forth herein shall restrict Multex from entering into
any contract or arrangement with any third party (including,
without limitation, any competitor of Reuters) in connection with
Multex Research-On-Demand.
(d) On or prior to the 45th day after the end of each calendar
quarter during the Term (each a "Payment Date"), Multex shall (i)
make payment to Reuters of an amount equal to [Confidential
Portion Omitted] of the Gross Revenues invoiced by Multex from
Subscribers who have retrieved research from Multex Research-On-
Demand by means of Reuters Web and (ii) in the event of the
termination of this Agreement, Reuters shall not be entitled to
any further payments except to the extent such payments were
earned through the date of termination. For purposes of this
Section, "Gross Revenue" shall mean all sums invoiced to
Subscribers in connection with Multex Research-On-Demand, net of
all taxes paid or incurred by Multex in connection therewith.
(e) Multex will keep proper records during the Term supporting the
payments due and owing to Reuters (if any) hereunder. Such
records shall be deemed the Confidential Information of Multex
and may not be used by Reuters for any purpose other than the
verification of the amounts owed it hereunder. Not more than once
during each period of 12 consecutive months, Multex (in such
capacity, the "Audited Party"), will upon the request of Reuters
(in such capacity, the "Auditing Party" permit independent
auditors selected by the Auditing Party to make such
investigation of the records referred to above as is deemed
necessary by such auditors to verify and confirm the amount of
payments to be paid by the Audited Party (if any) pursuant hereto
in respect of the period of 12 consecutive months preceding the
date of such request. Such auditors shall upon request of the
Audited Party, deliver a letter to the Audited Party agreeing to
abide by the restrictions set forth in Section 6.4 applicable to
a Receiving Party.
12. The parties agree to commence negotiations to finalize details on these
further projects:
(a) Earnings Estimate Data
(b) Business Administration Site
(c) Redundancy Testing
6
<PAGE>
It is estimated that the fee payable by Reuters to Multex for all of the
above will not exceed in the aggregate the sum of [Confidential Portion
Omitted].
13. Multex represents and warrants that it has the full right to grant Reuters
the foregoing licenses with respect to Multex Research-On-Demand and the
Global Bundle License and hereby agrees to indemnify and hold harmless
Reuters and its affiliates from any claim, loss and/or damage arising out
of the inaccuracy of the foregoing representation and warranty.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
REUTERS LIMITED
By /s/ John Parcell
-------------------------------
Name: John Parcell
Title: Executive Director
MULTEX SYSTEMS, INC.
By: /s/ P. Callaghan
-------------------------------
Name: P. Callaghan
Title: CFO
7
<PAGE>
EXHIBIT 10.7(a)
THIRD AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
-----------------------------
As of July 24, 1997
To the several persons named
at the foot hereof:
Dear Sirs:
For clarity of reference, the Second Amended and Restated Registration
Rights Agreement dated as of June 5, 1996, among Multex Systems, Inc., a
Delaware corporation (the "Company"), and the several persons named therein, is
hereby amended and restated in its entirety as follows:
Euclid Partners III, L.P. ("Euclid III") is the owner of an aggregate
of 20,000 shares of Preferred Stock, $.01 par value, of the Company, consisting
of 10,000 shares of Series A Convertible Preferred Stock acquired in November
1993, 5,000 shares of Series B Convertible Preferred Stock acquired in November
1994, and 5,000 shares of Series C Convertible Preferred Stock acquired in
February 1996; 77 Capital Partners, L.P. is the owner of an aggregate of 20,000
shares of Preferred Stock consisting of 10,000 shares of Series A Convertible
Preferred Stock acquired in March 1994, 5,000 shares of Series B Convertible
Preferred Stock acquired in November 1994, and 5,000 shares of Series C
Convertible Preferred Stock acquired in February 1996; ADP Financial Information
Services, Inc. ("ADP") is the owner of 13,333 shares of Series B Convertible
Preferred Stock acquired in November 1994; AT&T Venture Company, L.P. ("AT&T")
is the owner of an aggregate of 18,333 shares of Preferred Stock consisting of
13,333 shares of Series B Convertible Preferred Stock acquired in November 1994
and 5,000 shares of Series C Convertible Preferred Stock acquired in February
1996; Massachusetts Mutual Life Insurance Company ("Massachusetts Mutual") is
the owner of an aggregate of 6,667 shares of Series C Convertible Preferred
Stock acquired in February 1996; Alce Partners, L.P. ("Alce") is the owner of an
aggregate of 3,333 shares of Preferred Stock consisting of 1,667 shares of
Series C Convertible Preferred Stock acquired in April 1996 and 1,666 shares of
Series C Convertible Preferred Stock acquired in June 1996; Euclid Partners IV,
L.P. ("Euclid IV") is the owner of an aggregate of 16,805.56 shares of Preferred
Stock, consisting of 1,250 shares of Series A Convertible Preferred Stock it
acquired from Morton I. Zeidman ("Zeidman") in April 1997, 10,000 shares of
Series C Convertible Preferred Stock acquired in June 1996 and 5,555.56 shares
-1-
<PAGE>
EXHIBIT 10.7(a)
of Series D Convertible Preferred Stock acquired concurrently herewith; Reuters
America Inc. ("Reuters") is the owner of an aggregate of 38,888.89 shares of
Preferred Stock, consisting of 16,666.67 shares of Series C Convertible
Preferred Stock acquired in June 1996 and 22,222.22 shares of Series D
Convertible Preferred Stock acquired concurrently herewith; Chase Venture
Capital Associates, L.P. ("Chase") is the owner of an aggregate of 42,708.34
shares of Preferred Stock, consisting of 26,666.67 shares of Series C
Convertible Preferred Stock acquired in June 1996 and 16,041.67 shares of Series
D Convertible Preferred Stock acquired concurrently herewith; SOFTBANK Ventures
Inc. ("SOFTBANK") is the owner of an aggregate of 21,666.67 shares of Series C
Convertible Preferred Stock acquired in June 1996; The fl@tiron Fund LLC
("fl@tiron") is the owner of an aggregate of 1,875 shares of Preferred Stock,
consisting of 1,250 shares of Series A Convertible Preferred Stock that it
acquired from Zeidman in April 1997, and 625 shares of Series D Convertible
Preferred Stock acquired concurrently herewith; (Euclid III, 77 Capital, ADP,
AT&T, Massachusetts Mutual, Alce, Euclid IV, Reuters, fl@tiron, Chase, SOFTBANK
are referred to collectively as the "Investors"); Isaak Karaev ("Karaev") is the
owner of an aggregate of 2,500 shares of Series A Convertible Preferred Stock
acquired in November 1993, and Karaev and Zeidman are parties to a letter
agreement (as amended, the "Founders Letter Agreement") with the Company dated
June 5, 1996 pursuant to which the Company has granted to Messrs. Karaev and
Zeidman the right to exchange shares of Series A Convertible Preferred Stock for
up to 3,334 shares of Series C Convertible Preferred Stock (of which Zeidman, in
April 1997, assigned his rights to purchase an aggregate of 1,667 shares of
Series C Convertible Preferred Stock to each of Euclid and fl@tiron, each of
which is entitled, pursuant to such assignment, to exchange such shares of
Series A Convertible Preferred Stock for up to 833.50 shares of Series C
Convertible Preferred Stock), and Isaak Karaev, Zeidman, Yefim Karayev, Jane
Gavronsky and Daniel Zeidman (collectively, the "Founders") are the owners of an
aggregate of 2,570,000 shares of the Common Stock of the Company (the "Founders
Stock"). In consideration of the agreement of the foregoing parties to accept
the provisions of this Third Amended and Restated Registration Rights Agreement,
and in order to induce the Investors to enter into an agreement dated as of the
date hereof with the Company with respect to the acquisition concurrently
herewith of shares of Series D Convertible Preferred Stock by Euclid IV, Reuters
and Chase, the Company hereby covenants and agrees with each of you and with
each subsequent holder of Restricted Securities (as such term is defined herein)
as follows:
1. Certain Definitions. As used herein, the following terms shall
-------------------
have the following respective meanings:Certain Definitions. As used herein, the
-------------------
following terms shall have the following respective meanings
"Commission" shall mean the Securities and Exchange Commission,
----------
or any other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Common Stock, $.01 par value, of
------------
the Company, as constituted as of the date of this Agreement.
"Conversion Shares" shall mean the shares of Common Stock issued
-----------------
upon conversion of the Preferred Shares.
-2-
<PAGE>
EXHIBIT 10.7(a)
"Exchange Act" shall mean the Securities Exchange Act of 1934 or
------------
any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Founders' Stock" shall have the meaning set forth in the
---------------
preamble paragraph of this Agreement.
"Preferred Shares" shall mean Series A Convertible Preferred
----------------
Stock, par value $.01, Series B Convertible Preferred Stock, par value
$.01, Series C Convertible Preferred Stock, par value $.01, and Series D
Convertible Preferred Stock, par value $.01.
"Registrable Securities" shall mean Restricted Securities and
----------------------
Founders Stock.
"Registration Expenses" shall mean the expenses so described in
---------------------
Section 8 hereof.
"Restricted Securities" shall mean any securities of the Company,
---------------------
the certificates for which are required to bear the legend set forth in
Section 2 hereof, except Founders Stock.
"Securities Act" shall mean the Securities Act of 1933 or any
--------------
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean the expenses so described in
----------------
Section 8 hereof.
2. Restrictive Legend. Each certificate representing the Preferred
------------------
Shares, each certificate representing the Founders Stock, each certificate
issued upon exchange or transfer of any Preferred Shares, each certificate
representing Conversion Shares and, except as otherwise provided in Section 3
hereof, each certificate issued upon exchange or transfer of any Conversion
Shares or Founders Stock, as the case may be, shall be stamped or otherwise
imprinted with a legend substantially in the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS THEY HAVE BEEN REGISTERED UNDER THAT ACT
OR UNLESS IN THE OPINION OF COUNSEL FOR THE CORPORATION AN EXEMPTION
FROM REGISTRATION IS AVAILABLE."
-3-
<PAGE>
EXHIBIT 10.7(a)
3. Notice of Proposed Transfer.
---------------------------
(a) Prior to any proposed transfer of any Registrable
Securities(other than under the circumstances described in Section 4, 5 or 6
hereof), the holder thereof shall give written notice to the Company of its
intention to effect such transfer. Each such notice shall describe the manner of
the proposed transfer and, if requested by the Company, shall be accompanied at
the expense of such holder by an opinion of counsel in form, scope and substance
reasonably satisfactory to the Company to the effect that the proposed transfer
of the Registrable Securities may be effected without registration under the
Securities Act, whereupon the holder of such Registrable Securities shall be
entitled to transfer such Registrable Securities in accordance with the terms of
its notice; provided, however, that no such opinion or other documentation shall
-------- -------
be required if such notice shall cover a transfer by any Investor that is a
partnership to its partners or a transfer by any Investor to any of its
affiliates so long as such transferee acknowledges in a writing reasonably
satisfactory to the Company that such Registrable Securities shall remain
subject to this Section 3 and so long as the Company is reasonably satisfied
that such transfer will not violate applicable securities laws. Each certificate
for Registrable Securities transferred as above provided shall bear the legend
set forth in Section 2, unless (i) such transfer is in accordance with the
provisions of Rule 144 (or any other rule permitting public sale without
registration under the Securities Act) or (ii) the opinion of counsel referred
to above is to the further effect that the transferee and any subsequent
transferee (other than an affiliate of the Company) would be entitled to
transfer such securities in a public sale without registration under the
Securities Act.
(b) The foregoing restrictions on transferability of Registrable
Securities shall terminate as to any particular Registrable Securities when such
securities shall have been effectively registered under the Securities Act and
sold or otherwise disposed of in accordance with the intended method of
disposition by the seller or sellers thereof set forth in the registration
statement concerning such securities. Whenever a holder of Registrable
Securities is able to demonstrate to the Company (and its counsel) that the
provisions of Rule 144(k) of the Securities Act are available to such holder
without limitation, such holder of Registrable Securities shall be entitled to
receive from the Company, without expense, a new certificate not bearing the
restrictive legend set forth in Section 2.
4. Required Registration.
---------------------
(a) At any time, the holders of Restricted Securities (i)
constituting at least 33% of the total Restricted Securities outstanding at such
time (treating for the purpose of such computation the holders of Preferred
Shares as the holders of the Common Stock then issuable upon conversion or
exercise of such Preferred Shares) or (ii) who propose to register Restricted
Securities having a gross market value of at least $15,000,000 at the time of
any request for registration thereof, may request the Company to register under
the Securities Act all or any portion (or, if registration is requested pursuant
to clause (ii) hereof, then Restricted Securities having a gross market value of
not less than $15,000,000) of the Restricted Securities held by such requesting
holder or holders for sale in the manner specified in such notice,
-4-
<PAGE>
EXHIBIT 10.7(a)
provided, however, that the only securities which the Company shall be required
- -------- -------
to register pursuant hereto shall be shares of Common Stock.
(b) Promptly following receipt of any notice under Section 4(a), the
Company shall immediately notify any holders of Registrable Securities from whom
notice has not been received and shall use its best efforts to promptly register
under the Securities Act, for public sale in accordance with the method of
disposition specified in such notice from requesting holders of Restricted
Securities, the number of Restricted Securities specified in such notice (and in
any notices received from other holders and holders of Founders Stock within 20
days after their receipt of such notice from the Company). If such method of
disposition shall be an underwritten public offering, (i) the Company may
designate the managing underwriter of such offering, subject to the approval of
the selling holders of Restricted Securities, which approval shall not be
unreasonably withheld, and (ii) as and to the extent that, in the opinion of the
managing underwriter, the inclusion of all Registrable Securities so requested
to be registered would adversely affect the marketing of such Registrable
Securities, then the number of shares of Registrable Securities so included
shall be reduced, pro rata, in proportion to the number of shares requested to
--- ----
be registered by each holder thereof. The Company shall be obligated to
register Restricted Securities and, if applicable, Founders Stock, pursuant to
Section 4(a) on two occasions only. Notwithstanding anything to the contrary
contained herein, the obligation of the Company under this Section 4 shall be
deemed satisfied only when a registration statement covering all shares of
Restricted Securities specified in notices received as aforesaid (including any
shares removed from any offering at the request of the underwriter, as
hereinafter provided), for sale in accordance with the method of disposition
specified by the requesting holder, shall have become effective and, if such
method of disposition is a firm commitment underwritten public offering, all
such shares (excluding any over-allotment shares) shall have been sold pursuant
thereto.
(c) The Company shall be entitled to include in any registration
statement referred to in this Section 4, for sale in accordance with the method
of disposition specified by the requesting holders, shares of Common Stock to be
sold by the Company for its own account, except as and to the extent that, in
the opinion of the managing underwriter (if such method of disposition shall be
an underwritten public offering), such inclusion would adversely affect the
marketing of the Registrable Securities to be sold, in which case the number of
shares to be registered shall be reduced first, by the holders of capital stock
of the Company not entitled to participate in such registration under the terms
of this Section 4, pro rata in proportion to the number of shares for which each
--- ----
such holder has requested registration, second, by the Company, and, third, by
the holders of Registrable Securities, pro rata in proportion to the
--- ----
-5-
<PAGE>
EXHIBIT 10.7(a)
number of shares for which each holder has requested registration; provided that
if any such registration statement shall be for the purpose of effecting the
first underwritten public offering of Common Stock by the Company, then if, in
the opinion of the managing underwriter, the inclusion of shares of Common Stock
to be sold other than by the Company for its own account would adversely affect
the marketing of the Common Stock to be sold by the Company, then the number of
shares to be registered shall be reduced first, by the holders of capital stock
of the Company not entitled to participate in such registration under the terms
of this Section 4, pro rata in proportion to the number of shares for which each
--- ----
such holder has requested registration, and second, by the holders of
Registrable Securities, pro rata in proportion to the number of shares for which
--- ----
each such holder has requested registration, provided that there shall be no
--------
such reductions in the number of shares to be registered if such underwritten
public offering shall not have been consummated. Except as provided in this
paragraph (c), the Company will not effect any other registration of its Common
Stock, whether for its own account or that of other holders, from the date of
receipt of a notice from requesting holders pursuant to this Section 4 until the
completion of the period of distribution of the registration contemplated
thereby.
5. Form S-3 Registration.
---------------------
(a) If the Company shall receive, at any time after it shall have
consummated the first underwritten public offering of its Common Stock, a
written request or requests from the holders of Restricted Securities
constituting (i) at least 10% of the total Restricted Securities outstanding at
such time (treating for the purpose of such computation the holders of Preferred
Shares as the holders of the Conversion Shares then issuable upon conversion of
such Preferred Shares), or (ii) who will seek registration of Registered
Securities with a gross market value of at least $1,000,000 (calculated by
multiplying the number of Restricted Securities sought to be sold by the last
sale or closing price on the date preceding the request or requests) that the
Company effect a registration on Form S-3 and any related qualification or
compliance with respect to Restricted Securities owned by such holder or
holders, the Company will:
(i) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all
other holders of Restricted Securities from whom notice has not been
received and to holders of Founders Stock; and
(ii) as soon as practicable, use its best efforts to effect
such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate
qualifications under applicable blue sky or other state securities
laws and appropriate compliance with applicable regulations issued
under the Securities Act and any other government requirements or
regulations) as may be so requested and as would permit or facilitate
the sale and distribution of all or such portion of such holder's or
holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any
holder or holders thereof joining in such request as are specified in
a written request given within thirty (30) days after receipt of such
written notice from the Company, provided that the number of shares of
--------
Registrable Securities to be included in such registration may be
reduced (pro rata among the holders requesting registration thereof
--- ----
based upon the number of shares requested to be registered) if and to
the extent that the managing underwriter (if the method of disposition
shall be an underwritten public offering) shall be of the opinion that
the inclusion of all Registrable Securities requested to
-6-
<PAGE>
EXHIBIT 10.7(a)
be included in such offering would adversely affect the marketing of
the Registrable Securities to be sold in such offering. Subject to the
foregoing, the Company shall file a registration statement covering
the Registrable Securities so requested to be registered as soon as
practicable after receipt of the request or requests of the holders of
the Registrable Securities.
(b) The Company shall be obligated to register the Registrable
Securities pursuant to Section 5(a) not more than three times per calendar year.
Registrations effected pursuant to this Section 5 shall not be counted as
requests for registration effected pursuant to Section 4.
6. Incidental Registration. If the Company at any time (other than
-----------------------
pursuant to Section 4(a) or Section 5(a) hereof) proposes to register any of its
Common Stock under the Securities Act for sale to the public, whether for its
own account or for the account of other security holders or both (except with
respect to registration statements on Form S-4 or S-8 or another form not
available for registering the Restricted Securities or Founders Stock for sale
to the public), it will give written notice at such time to all holders of
outstanding Registrable Securities of its intention to do so. Upon the written
request of any such holder, given within 20 days after receipt of any such
notice by the Company, to register any of its Registrable Securities (which
request shall state the intended method of disposition thereof), the Company
will use its best efforts to cause the Registrable Securities as to which
registration shall have been so requested to be included in the securities to be
covered by the registration statement proposed to be filed by the Company, all
to the extent requisite to permit the sale or other disposition by the holder
(in accordance with its written request) of such Registrable Securities so
registered. In the event that any registration pursuant to this Section 6 shall
be, in whole or in part, an underwritten public offering of Common Stock, any
request by a holder pursuant to this Section 6 to register Registrable
Securities shall specify that either (i) such Registrable Securities are to be
included in the underwriting on the same terms and conditions as the shares of
Common Stock otherwise being sold through underwriters under such registration
or (ii) subject to the approval of the underwriters, such Registrable Securities
are to be sold in the open market without any underwriting, on terms and
conditions comparable to those normally applicable to offerings of common stock
in reasonably similar circumstances. The number of shares of Registrable
Securities to be included in such an underwriting may be reduced (pro rata among
--- ----
the requesting holders based upon the number of shares so requested to be
registered) if and to the extent that the managing underwriter shall be of the
opinion that such inclusion would adversely affect the marketing of the
securities to be sold by the Company therein, provided, however, that such
-------- -------
number of shares to be registered shall be reduced, pro rata, among the
--- ----
requesting holders of Registrable Securities, provided further, however, that
---------------- -------
such number of shares of Registrable Securities shall not be reduced if any
shares are to be included in such underwriting for the account of any person
other than the Company or other than a holder of Registrable Securities.
7. Registration Procedures. If and whenever the Company is required
-----------------------
by the provisions of Section 4, 5 or 6 hereof to use its best efforts to effect
the registration of any of the Registrable Securities under the Securities Act,
the Company will, as expeditiously as possible:
-7-
<PAGE>
EXHIBIT 10.7(a)
(a) prepare and file with the Commission a registration statement
(which, in the case of an underwritten public offering pursuant to Section 4
hereof, shall be on Form S-1 or other form of general applicability satisfactory
to the managing underwriter selected as therein provided) with respect to such
securities and use its best efforts to cause such registration statement to
become and remain effective for the period of the distribution contemplated
thereby (determined as hereinafter provided);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period specified in paragraph (a) above and as shall comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement in accordance with
the sellers' intended method of disposition set forth in such registration
statement for such period;
(c) furnish, at least five business days before filing a registration
statement that registers such Registrable Securities, a prospectus relating
thereto or any amendments or supplements relating to such a registration
statement or prospectus, to one counsel selected by the Investors (the
"Investors' Counsel"), copies of all such documents proposed to be filed (it
being understood that such five-business-day period need not apply to successive
drafts of the same document proposed to be filed so long as such successive
drafts are supplied to the Investors' Counsel in advance of the proposed filing
by a period of time that is customary and reasonable under the circumstances);
(d) notify in writing the Investors' Counsel promptly (i) of the
receipt by the Company of any notification with respect to any comments by the
Commission with respect to such registration statement or prospectus or any
amendment or supplement thereto or any request by the Commission for the
amending or supplementing thereof or for additional information with respect
thereto, (ii) of the receipt by the Company of any notification with respect to
the issuance by the Commission of any stop order suspending the effectiveness of
such registration statement or prospectus or any amendment or supplement thereto
or the initiation or threatening of any proceeding for that purpose, and (iii)
of the receipt by the Company of any notification with respect to the suspension
of the qualification of such Registrable Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purposes;
(e) furnish to each seller and to each underwriter such number of
copies of the registration statement and the prospectus included therein
(including each preliminary prospectus) as such persons may reasonably request
in order to facilitate the public sale or other disposition of the Registrable
Securities covered by such registration statement;
(f) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under the securities or blue
sky laws of such jurisdictions as the sellers of Registrable Securities or, in
the case of an underwritten public offering, the managing underwriter, shall
reasonably request;
-8-
<PAGE>
EXHIBIT 10.7(a)
(g) immediately notify each seller under such registration statement
and each underwriter, at any time when a prospectus relating thereto is required
to be delivered under the Securities Act, of the happening of any event as a
result of which the prospectus contained in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing and, at
the request of the Investors, prepare and furnish to such Investors a reasonable
number of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the offeree of such shares, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
(h) use its best efforts (if the offering is underwritten) to furnish,
at the request of any seller, on the date that Registrable Securities are
delivered to the underwriters for sale pursuant to such registration: (i) an
opinion dated such date of counsel representing the Company for the purposes of
such registration, addressed to the underwriters and to such seller, stating
that such registration statement has become effective under the Securities Act
and that (A) to the best knowledge of such counsel, no stop order suspending the
effectiveness thereof has been issued and no proceedings for that purpose have
been instituted or are pending or contemplated under the Securities Act, (B) the
registration statement, the related prospectus, and each amendment or supplement
thereof, comply as to form in all material respects with the requirements of the
Securities Act and the applicable rules and regulations of the Commission
thereunder (except that such counsel need express no opinion as to financial
statements contained therein) and (C) to such other effects as may reasonably be
requested by counsel for the underwriters or by such seller or its counsel, and
(ii) a letter dated such date from the independent public accountants retained
by the Company, addressed to the underwriters and to such seller, stating that
they are independent public accountants within the meaning of the Securities Act
and that, in the opinion of such accountants, the financial statements of the
Company included in the registration statement or the prospectus, or any
amendment or supplement thereof, comply as to form in all material respects with
the applicable accounting requirements of the Securities Act, and such letter
shall additionally cover such other financial matters (including information as
to the period ending no more than five business days prior to the date of such
letter) with respect to the registration in respect of which such letter is
being given as such underwriters or seller may reasonably request;
(i) make available for inspection by each seller, any underwriter
participating in any distribution pursuant to such registration statement, and
any attorney, accountant or other agent retained by such seller or underwriter,
all financial and other records, pertinent corporate documents and properties of
the Company, and cause the Company's officers, directors and employees to supply
all information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(j) list such Restricted Securities on any national securities
exchange on which any shares of the Common Stock are listed or, if the Common
Stock is not listed on a
-9-
<PAGE>
EXHIBIT 10.7(a)
national securities exchange, use its best efforts to qualify such Restricted
Securities for inclusion on the automated quotation system of the National
Association of Securities Dealers, Inc. (the "NASD"), or such other national
securities exchange as the holders of a majority of such Restricted Securities
to be so registered shall reasonably request;
(k) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission and make available to its securityholders, as
soon as reasonably practicable, earnings statements (which need not be audited)
covering a period of 12 months beginning within three months after the effective
date of the registration statement, which earnings statements shall satisfy the
provisions of Section 11(a) of the Securities Act; and
(l) use its best efforts to take all other steps necessary to effect
the registration of such Restricted Securities contemplated hereby.
For purposes of paragraphs (a), (b) and (c) above and of Section 4(c)
hereof, the period of distribution of Registrable Securities in a firm
commitment underwritten public offering shall be deemed to extend until each
underwriter has completed the distribution of all securities purchased by it,
and the period of distribution of Registrable Securities in any other
registration shall be deemed to extend until the earlier of the sale of all
Registrable Securities covered thereby or six months after the effective date
thereof.
In connection with each registration hereunder, the selling holders of
Registrable Securities will furnish to the Company in writing such information
with respect to themselves and the proposed distribution by them as shall be
reasonably necessary in order to assure compliance with federal and applicable
state securities laws.
In connection with each registration pursuant to Sections 4 and 5
hereof covering an underwritten public offering, the Company agrees to enter
into a written agreement with the managing underwriter selected in the manner
herein provided in such form and containing such provisions as are customary in
the securities business for such an arrangement between major underwriters and
companies of the Company's size and investment stature, provided that such
agreement shall not contain any such provision applicable to the Company which
is inconsistent with the provisions hereof and provided, further, that the time
and place of the closing under said agreement shall be as mutually agreed upon
between the Company and such managing underwriter.
8. Expenses.
--------
(a) All expenses incurred by the Company in complying with
Sections 4, 5 and 6 hereof, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses of complying
with securities and Blue Sky laws, fees of the National Association of
Securities Dealers, Inc., transfer taxes, fees of transfer agents and
registrars, costs of insurance and reasonable fees and expenses of one counsel
for all sellers of Registrable Securities but excluding any Selling Expenses,
are herein called "Registration Expenses". All underwriting
-10-
<PAGE>
EXHIBIT 10.7(a)
discounts and selling commissions applicable to the sale of Registrable
Securities are herein called "Selling Expenses"
(b) The Company will pay all Registration Expenses in connection with
each registration statement filed pursuant to Section 4, 5 or 6 hereof. All
Selling Expenses in connection with any registration statement filed pursuant to
Section 4, 5 or 6 hereof shall be borne by the participating sellers in
proportion to the number of shares sold by each, or by such persons other than
the Company (except to the extent the Company shall be a seller) as they may
agree.
9. Indemnification.
---------------
(a) In the event of a registration of any of the Registrable
Securities under the Securities Act pursuant to Section 4, 5 or 6 hereof, to the
extent permitted by law, the Company will indemnify and hold harmless each
seller of such Restricted Securities or Founders Stock, as the case may be,
thereunder and each underwriter of Registrable Securities thereunder and each
other person, if any, who controls such seller or underwriter within the meaning
of the Securities Act against any losses, claims, damages or liabilities, joint
or several (or actions in respect thereof), to which such seller or underwriter
or controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which such Registrable Securities were registered under the Securities Act
pursuant to Section 4, 5 or 6, any preliminary prospectus or final prospectus
contained therein or otherwise filed with the Commission, or any amendment or
supplement thereof, or any document incident to registration or qualification of
any Restricted Securities, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or with respect to
any prospectus, necessary to make the statements therein in light of the
circumstances under which they were made not misleading, or any violation by the
Company of the Securities Act or state securities or Blue Sky laws applicable to
the Company and relating to action or inaction required by the Company in
connection with such registration or qualification under such state securities
or Blue Sky laws, and will reimburse each such seller, each such underwriter and
each such controlling person for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
-------- -------
liable in any such case if and to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by such seller, such underwriter or such controlling
person in writing specifically for use in such registration statement or
prospectus.
(b) In the event of a registration of any of the Registrable
Securities under the Securities Act pursuant to Section 4, 5 or 6 hereof, to the
extent permitted by law, each seller of such Registrable Securities thereunder,
severally and not jointly, will indemnify and
-11-
<PAGE>
EXHIBIT 10.7(a)
hold harmless the Company and each person, if any, who controls the Company
within the meaning of the Securities Act, each officer of the Company who signs
the registration statement, each director of the Company, each underwriter and
each person who controls any underwriter within the meaning of the Securities
Act, against all losses, claims, damages or liabilities, joint or several, to
which the Company or such officer or director or underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement under which such
Registrable Securities were registered under the Securities Act pursuant to
Section 4, 5 or 6, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that such seller will be liable
-------- -------
hereunder in any such case if and only to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with information pertaining to such seller, as such, furnished
in writing to the Company by such seller specifically for use in such
registration statement or prospectus; provided, further, however, that the
-------- ------- -------
liability of each seller hereunder shall be limited to the proportion of any
such loss, claim, damage, liability or expense which is equal to the proportion
that the public offering price of shares sold by such seller under such
registration statement bears to the total public offering price of all
securities sold thereunder, but not to exceed the proceeds received by such
seller from the sale of Registrable Securities covered by such registration
statement.
(c) Promptly after receipt by an indemnified party hereunder of notice
of the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party other than under this Section 9. In case any such action
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel reasonably satisfactory to such
indemnified party (it being understood that the following counsel shall be
deemed to be satisfactory: Sullivan & Cromwell; O'Sullivan, Graev & Karabell,
LLP; Reboul, MacMurray, Hewitt, Maynard & Kristol; and Robinson Brog Leinwand
Greene Genovese & Gluck P.C.) and, after notice from the indemnifying party to
such indemnified party of its election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under this Section 9 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected; provided,
--------
however, that, if the defendants in any such action include both the indemnified
- -------
party and the indemnifying party and
-12-
<PAGE>
EXHIBIT 10.7(a)
the indemnified party shall have reasonably concluded that there may be
reasonable defenses available to it which are different from or additional to
those available to the indemnifying party, or if the interests of the
indemnified party reasonably may be deemed to conflict with the interests of the
indemnifying party, the indemnified party shall have the right to select a
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the expenses and fees of such separate
counsel and other expenses related to such participation to be reimbursed by the
indemnifying party as incurred.
(d) Notwithstanding the foregoing, any indemnified party shall have
the right to retain its own counsel in any such action, but the fees and
disbursements of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party shall have failed to retain counsel for the
indemnified person as aforesaid or (ii) the indemnifying party and such
indemnified party shall have mutually agreed to the retention of such counsel.
It is understood that the indemnifying party shall not, in connection with any
action or related actions in the same jurisdiction, be liable for the fees and
disbursements of more than one separate firm qualified in such jurisdiction to
act as counsel for the indemnified parties hereunder. The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(e) If the indemnification provided for in the first two paragraphs of
this Section 9 is unavailable or insufficient to hold harmless an indemnified
party under such paragraphs in respect of any losses, claims, damages or
liabilities or actions in respect thereof referred to therein, then each
applicable indemnifying party shall in lieu of indemnifying such indemnified
party contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or actions in such
proportion as appropriate to reflect the relative fault of the Company, on the
one hand, and the sellers of such Registrable Securities on the other, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or actions as well as any other relevant equitable
considerations, including the failure to give any notice under the third
paragraph of this Section 9. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact relates to information supplied by the Company, on the one
hand, or the sellers of such Registrable Securities on the other, and to the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and each of the
persons named at the foot hereof agree that it would not be just and equitable
if contributions pursuant to this paragraph were determined by pro rata
--- ----
allocation (even if all of the sellers of such Registrable Securities were
treated as one entity for such purpose) or by any other method of allocation
which did not take account of the equitable considerations referred to above in
this paragraph. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages, liabilities or action in respect thereof,
referred to above in this paragraph, shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this paragraph, the sellers
-13-
<PAGE>
EXHIBIT 10.7(a)
of such Registrable Securities shall not be required to contribute any amount in
excess of the amount, if any, by which the total price at which the Common Stock
sold by each of them was offered to the public exceeds the amount of any damages
which they would have otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission. No person guilty of fraudulent
misrepresentations (within the meaning of Section 11(f) of the Securities Act),
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation.
(f) The indemnification of underwriters provided for in this Section 9
shall be on such other terms and conditions as are at the time customary and
reasonably required by such underwriters. In the event that such
indemnification of underwriters is on such other terms and conditions, the
indemnification of the sellers of Restricted Securities in such underwriting
shall, at the sellers' request, be modified to conform to such terms and
conditions.
10. S-8 Rights. Contemporaneously with the registration of the
----------
Company's securities pursuant to the Exchange Act, the Company shall file with
the Commission a registration statement on Form S-8, including any successor
form (the "Form S-8") with respect to the Company's 1993 Stock Incentive Plan,
as amended (the "Plan"),and will keep the Form S-8 current until such time as
the shares issuable pursuant to the Plan (the "Plan Securities") have been
publicly distributed. The term "Form S-8" as used herein shall include any re-
offer prospectus requested by any holder of Plan Securities.
11. Changes in Common Stock. If, and as often as, there are any
-----------------------
changes in the Common Stock by way of stock split, stock dividend, combination
or reclassification, or through merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions hereof, as may be required, so that the rights and privileges
granted hereby shall continue with respect to the Common Stock as so changed.
12. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to you as follows:
(a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other agency of
government, the Certificate of Incorporation or By-laws of the Company, or any
provision of any indenture, agreement or other instrument to which it or any of
its properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the properties or assets of the Company.
-14-
<PAGE>
EXHIBIT 10.7(a)
(b) This Agreement has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
13. Rule 144 Reporting. The Company agrees with you as follows:
------------------
(a) The Company shall use its best efforts to make and keep public
information available, as those terms are understood and defined in Rule 144
under the Securities Act, at all times from and after 90 days following the
effective date of the first registration by the Company under the Securities Act
of an offering of its securities to the general public.
(b) The Company shall file with the Commission in a timely manner all
reports and other documents as the Commission may prescribe under Section 13(a)
or 15(d) of the Exchange Act at any time after the Company has become subject to
such reporting requirements of the Exchange Act.
(c) The Company shall furnish to each holder of Restricted Securities
forthwith upon request (i) a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 (at any time from and
after 90 days following the effective date of the first registration statement
by the Company for an offering of its securities to the general public), and of
the Securities Act and the Exchange Act (at any time after it has become subject
to such reporting requirements), (ii) a copy of the most recent annual or
quarterly report of the Company, and (iii) such other reports and documents so
filed as a holder may reasonably request to avail itself of any rule or
regulation of the Commission allowing a holder of Restricted Securities to sell
any such securities without registration.
14. Miscellaneous.
-------------
(a) All covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. Without limiting the generality of the foregoing, the registration rights
conferred herein on the holders of Registrable Securities shall inure to the
benefit of any and all subsequent holders from time to time of the Restricted
Securities or of Founders Stock for so long as the certificates representing the
Restricted Securities or Founders Stock shall be required to bear the legend
specified in Section 2 hereof. The Company shall not, after the date hereof,
grant any registration rights which conflict with, impair or are senior to the
registration rights granted hereunder.
(b) All notices, requests, consents and other communications hereunder
shall be in writing and shall be mailed by first-class registered mail, postage
prepaid, addressed as follows:
-15-
<PAGE>
EXHIBIT 10.7(a)
if to the Company, to it at Multex Systems, Inc., 33 Maiden Lane,
New York, New York 10038, Attention: Isaak Karaev, with a copy to Marshall
E. Bernstein, Esq., Robinson Brog Leinwand Greene Genovese & Gluck P.C.,
1345 Avenue of the Americas, New York, New York 10105-0143;
if to the Founders, at their addresses as set forth in Annex I
hereto, with a copy to Marshall E. Bernstein, Esq., Robinson Brog Leinwand
Greene Genovese & Gluck P.C., 1345 Avenue of the Americas, New York, New
York 10105-0143;
if to the Investors, at their addresses as set forth in Annex I
hereto; and
if to any subsequent holder of Registrable Securities to it at
such address as may have been furnished to the Company in writing by such
holder;
or, in any case, at such other address or addresses as shall have been furnished
in writing to the Company (in the case of a holder of Restricted Securities or
Founders Stock) or to the holders of Restricted Securities or Founders Stock (in
the case of the Company). Any notice or other communication pursuant to this
Agreement shall be deemed to have been duly given or made and to have become
effective when delivered in hand to the party to which directed or if sent by
first-class registered mail, postage prepaid and properly addressed as set forth
above, at the earlier of (i) the time when received by the addressee or (ii) the
fifth business day following the dispatch thereof.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
(d) This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and may not be modified or amended
except by a writing executed by (i) the Company, (ii) holders of at least 66-
2/3% of the shares of Series C Convertible Preferred Stock and Series D
Convertible Preferred Stock, voting together as a single class, (iii) holders of
a majority of the shares of Series A Convertible Preferred Stock and Series B
Convertible preferred Stock, voting together as a single class and (iv) holders
of a majority of the Founders Stock then outstanding (calculated in each of
cases [ii], [iii] and [iv] on a fully diluted basis), provided, however, that no
-------- -------
modification or amendment with a disproportionate adverse effect on any party
hereto shall be effective against such party without the consent of such party.
(e) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
-16-
<PAGE>
EXHIBIT 10.7(a)
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this letter, whereupon this letter (herein
sometimes called "this Agreement") shall be a binding agreement between the
Company and you.
Very truly yours,
MULTEX SYSTEMS, INC.
By: /s/ Isaak Karaev
----------------------
Isaak Karaev
AGREED TO AND ACCEPTED
as of the date first
above written:
/s/ Isaak Karaev /s/ Jane Gavronsky
- -------------------------------- ---------------------------
Isaak Karaev, Individually Jane Gavronsky
/s/ Morton I. Zeidman /s/ Yefim Karayev
- --------------------- ---------------------------
Morton I. Zeidman Yefim Karayev
/s/ Daniel Zeidman
---------------------------
Daniel Zeidman
-17-
<PAGE>
EXHIBIT 10.7(b)
================================================================================
SUPPLEMENT TO THIRD AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
================================================================================
As of August 14, 1997
FGIC Services, Inc.
115 Broadway
New York, New York 10006
Gentlemen:
Reference is made to the Third Amended and Restated Registration
Rights Agreement dated as of July 24, 1997 (the "Agreement"), by and among
Multex Systems, Inc., a Delaware corporation (the "Company"), and the several
persons named therein. FGIC Services, Inc. ("FGIC") has, as of August 14, 1997,
acquired an aggregate of 11,111.11 shares of the Series D Convertible Preferred
Stock of the Company (the "FGIC Shares") and desires to become a party to the
Agreement. Accordingly, it is agreed as follows:
1. Defined terms used herein shall have the same meanings as ascribed
to them in the Agreement, except as specifically provided herein.
2. FGIC is hereby deemed to be a party to the Agreement and shall be
entitled to all of the benefits and be subject to all of the obligations of an
Investor under the Agreement. Without limitation of the foregoing, (i) FGIC
shall be deemed to be included within the definition of Investors, (ii) the FGIC
Shares shall be deemed to be Restricted Securities, and (iii) FGIC shall be
entitled to the benefits of the representations and warranties set forth in
Section 12 and the covenants set forth in Section 13 of the Agreement.
3. In the event FGIC shall acquire from the Company any additional
shares of Series D Convertible Preferred Stock, the provisions of this
Supplement to Third Amended and Restated Registration Rights Agreement shall
apply to such additional shares.
Page 1 of 3
<PAGE>
EXHIBIT 10.7(b)
4. The address for notices with respect to FGIC shall be as follows:
c/o General Electric Capital, 120 Long Ridge Road, Stamford, Connecticut 06927.
5. In all other respects, the Agreement is hereby ratified, adopted
and confirmed.
Very truly yours,
MULTEX SYSTEMS, INC.
By: /s/ Isaak Karaev
--------------------------
Name: Isaak Karaev
Office:
AGREED TO AND ACCEPTED as of the
date first above written:
/s/ Isaak Karaev
------------------------------
FGIC SERVICES, INC. Isaak Karaev
By: /s/ Ann C. Stern /s/ Morton I. Zeidman
---------------- ------------------------------
Name: Ann C. Stern Morton I. Zeidman
Office: Chairman and President
/s/ Jane Gavronsky /s/ Yefim Karayev
- ------------------ ------------------------------
Jane Gavronsky Yefim Karayev
/s/ Daniel Zeidman
------------------------------
Daniel Zeidman
ADP FINANCIAL INFORMATION ALCE PARTNERS, L.P.
SERVICES, INC.
By: /s/ Frederick J. Koczwara By: /s/ Douglas G. DeVivo
------------------------- --------------------------
Name: Frederick J. Koczwara Name: Douglas G. DeVivo
Office: Senior Vice President Office: General Partner
Page 2 of 3
<PAGE>
EXHIBIT 10.7(b)
AT&T VENTURE COMPANY, L.P. CHASE VENTURE CAPITAL
ASSOCIATES, L.P.
By: Chase Capital Partners, its general\
partner
By: /s/ Brad Burnham By: /s/ George E. Keltsi
------------------------------- ------------------------------------
Name: Brad Burnham Name: George E. Keltsi
Office: General Partner Office: Managing Director
EUCLID PARTNERS III EUCLID PARTNERS IV
By: EUCLID ASSOCIATES III, L.P. By: EUCLID ASSOCIATES IV, L.P.
By: /s/ Milton J. Pappas By: /s/ Milton J. Pappas
------------------------------- ------------------------------------
Name: Milton J. Pappas Name: Milton J. Pappas
Office: Office:
77 CAPITAL PARTNERS, L.P. THE fl@tiron FUND, LLC
By: 77 Capital Corporation, its general
partner
By: /s/ Christopher Heivly By: /s/ Frederick Wilson
------------------------------- ------------------------------------
Name: Christopher Heivly Name: Frederick Wilson
Office: Vice President Office: Managing Member
REUTERS AMERICA INC. SOFTBANK VENTURES INC.
By: /s/ Devin N. Weinberg By: /s/ Charles R. Lax
------------------------------ -----------------------------------
Name: Devin N. Weinberg Name: Charles R. Lax
Office: Senior Vice President Office:
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Michael L. Klofas
------------------------------
Name: Michael L. Klofas
Office: Managing Director
Page 3 of 3
<PAGE>
EXHIBIT 11.1
MULTEX SYSTEMS, INC.
COMPUTATION OF BASIC AND DILUTED NET LOSS PER SHARE
<TABLE>
<CAPTION>
NET LOSS BASIC AND
PERIOD AVAILABLE DILUTED LOSS
SHARES OUTSTANDING WEIGHTED TO COMMON PER COMMON
DATE OUTSTANDING IN DAYS AVG. SHARES STOCKHOLDERS' SHARE
-------- ----------- ----------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Common Stock............ 1/1/95 1,305,833 365 1,305,833
Exercise of options..... 2/6/95 1,250 329 1,127
9/13/95 833 110 251
10/30/95 1,250 63 216
--------- ---------
December 31, 1995....... 1,309,166 1,307,427 (6,133,707) (4.69)
========= =========
Common Stock............ 1/1/96 1,309,166 365 1,309,166
Exercise of options..... 1/1/96 12,500 365 12,500
4/11/96 833 265 605
4/18/96 2,083 258 1,472
4/19/96 1,667 257 1,174
4/30/96 2,500 246 1,685
5/1/96 11,667 245 7,831
6/1/96 1,667 214 977
7/8/96 417 177 202
7/31/96 25,000 154 10,548
9/1/96 1,667 122 557
11/19/96 10,416 43 1,227
--------- ---------
December 31, 1996....... 1,379,583 1,347,944 (7,812,593) (5.80)
========= =========
Common Stock............ 1/1/97 1,379,583 365 1,379,583
Exercise of options..... 1/1/97 2,500 90 616
1/2/97 1,250 89 305
1/6/97 8,333 85 1,941
1/28/97 2,083 63 360
3/11/97 3,750 21 216
3/21/97 833 11 25
--------- ---------
March 31, 1997.......... 1,398,332 1,383,046 (2,676,304) (1.94)
========= =========
Common Stock............ 1/1/97 1,379,583 365 1,379,583
Exercise of options..... 1/1/97 2,500 365 2,500
1/2/97 1,250 364 1,247
1/6/97 8,333 360 8,219
1/28/97 2,083 338 1,929
3/11/97 3,750 296 3,041
3/21/97 833 286 653
7/25/97 20,833 160 9,132
8/25/97 3,750 129 1.325
10/9/97 95,835 84 22,055
10/21/97 1,667 72 329
10/30/97 33,333 63 5,753
11/5/97 417 57 65
11/12/97 2,083 50 285
12/7/97 417 25 29
12/31/97 50,000 1 137
Stock issued for servic-
es..................... 4/17/97 23,333 259 16,557
--------- ---------
December 31, 1997....... 1,630,000 1,452,839 (10,218,648) (7.03)
========= =========
Common Stock............ 1/1/98 1,630,000 365 1,630,000
Exercise of options..... 1/2/98 1,667 88 402
1/20/98 8,333 70 1,598
3/9/98 8,333 22 502
3/27/98 50,000 4 548
--------- ---------
March 31, 1998.......... 1,698,333 1,633,050 (2,294,683) (1.41)
========= =========
</TABLE>
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
Multex Systems International, Inc. (Delaware)
RDG-Multex, Inc. (Delaware)
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 4, 1998 except for Note 13, as to which the
date is June , 1998, in the Registration Statement (Form S-1 No. 333- )
and related Prospectus of Multex Systems, Inc. for the registration of 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 Note 13 to the financial
statements.
/s/ Ernst & Young LLP
New York, New York
May 29, 1998
1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 2,533
<SECURITIES> 7,664
<RECEIVABLES> 2,054
<ALLOWANCES> 240
<INVENTORY> 0
<CURRENT-ASSETS> 12,270
<PP&E> 5,437
<DEPRECIATION> 3,275
<TOTAL-ASSETS> 14,733
<CURRENT-LIABILITIES> 4,249
<BONDS> 0
37,234
0
<COMMON> 16
<OTHER-SE> (25,905)
<TOTAL-LIABILITY-AND-EQUITY> (14,733)
<SALES> 6,014
<TOTAL-REVENUES> 6,014
<CGS> 1,232
<TOTAL-COSTS> 1,232
<OTHER-EXPENSES> 12,944
<LOSS-PROVISION> 168
<INTEREST-EXPENSE> 310
<INCOME-PRETAX> (8,037)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,037)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,037)
<EPS-PRIMARY> (.92)
<EPS-DILUTED> (.92)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,912
<SECURITIES> 4,932
<RECEIVABLES> 3,044
<ALLOWANCES> 244
<INVENTORY> 0
<CURRENT-ASSETS> 12,202
<PP&E> 5,642
<DEPRECIATION> 3,361
<TOTAL-ASSETS> 14,613
<CURRENT-LIABILITIES> 4,545
<BONDS> 0
37,896
0
<COMMON> 17
<OTHER-SE> (27,375)
<TOTAL-LIABILITY-AND-EQUITY> (14,613)
<SALES> 2,714
<TOTAL-REVENUES> 2,714
<CGS> 694
<TOTAL-COSTS> 694
<OTHER-EXPENSES> 3,593
<LOSS-PROVISION> 35
<INTEREST-EXPENSE> 311
<INCOME-PRETAX> (1,644)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,644)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,644)
<EPS-PRIMARY> (.19)
<EPS-DILUTED> (.19)
</TABLE>
