<PAGE>
As filed with the Securities and Exchange Commission on January 15, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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Multex.com, Inc.
(Exact Name of Registrant as Specified in its Charter)
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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.com, 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. Philip P. Rossetti, 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
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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. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Title of Each Class of
Securities to be Proposed Maximum Amount of
Registered Aggregate Offering Price(1)(2) Registration Fee(2)
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<S> <C> <C>
Common Stock, par value
$.01 per share.......... $41,400,000 $11,510
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</TABLE>
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(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.
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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 said
Section 8(a), may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell securities, and we are not soliciting offers to buy these +
+securities, in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JANUARY 15, 1999
[LOGO] MULTEX
Shares
Common Stock
Multex.com, Inc. is offering shares of its common stock. This is
Multex's initial public offering, and no public market currently exists for its
shares. We have applied to have the shares we are offering approved for
quotation on the Nasdaq National Market under the symbol "MLTX." We anticipate
that the initial public offering price will be between $ and $ per
share.
--------------
Investing in our common stock involves risks.
See "Risk Factors" beginning on page 6.
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<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Public Offering Price....................................... $ $
Underwriting Discounts and Commissions...................... $ $
Proceeds to the Company..................................... $ $
</TABLE>
The Securities and Exchange Commission and state securities regulators have
not approved or disapproved these securities, or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal
offense.
Multex.com and certain of its stockholders have granted the underwriters a
30-day option to purchase up to an additional shares of common stock to
cover over-allotments. BancBoston Robertson Stephens Inc. expects to deliver
the shares of common stock to purchasers on , 1999.
--------------
BancBoston Robertson Stephens
CIBC Oppenheimer
Dain Rauscher Wessels
a division of Dain Rauscher Incorporated
The date of this Prospectus is , 1999.
<PAGE>
[Color Artwork to be Provided]
<PAGE>
You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus. In this prospectus, references to "Multex,"
"Multex.com" "our Company," the "Company," "we," "us" and "our" refer to
Multex.com, Inc. and its consolidated subsidiaries.
Until , 1999, all dealers that buy, sell or trade our common stock,
whether or not participating in this offering, may be required to deliver a
prospectus. This requirement is in addition to the dealers' obligation to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary.................................................................. 3
Risk Factors............................................................. 6
Certain Information...................................................... 17
Use of Proceeds.......................................................... 18
Dividend Policy.......................................................... 18
Capitalization........................................................... 19
Dilution................................................................. 20
Selected Consolidated Financial Data..................................... 21
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 22
Business................................................................. 32
Management............................................................... 46
Certain Transactions..................................................... 55
Principal Stockholders................................................... 57
Description of Capital Stock............................................. 59
Shares Eligible for Future Sale.......................................... 63
Underwriting............................................................. 65
Legal Matters............................................................ 67
Experts.................................................................. 67
Additional Information................................................... 67
Index to Consolidated Financial Statements............................... F-1
</TABLE>
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MultexNET(R) and the Multex logos are registered trademarks and service marks
of our company. MultexEXPRESS, Multex Research-On-Demand, Multex Investor
Network and the Multex logo are trademarks and service marks of our Company.
This prospectus contains other trade names, trademarks and service marks of our
Company and of other companies.
<PAGE>
SUMMARY
Because this is only a summary, it does not contain all the information that
may be important to you. You should read the entire prospectus, including "Risk
Factors" and the Consolidated Financial Statements and the Notes, before
deciding to invest in our common stock.
OUR COMPANY
Multex.com is a leading provider of online investment research and
information services designed to meet the needs of individual and institutional
investors, including investment banks, brokerage firms and corporations. Our
services enable timely online access to over 900,000 research reports and other
investment information on over 15,000 companies from more than 400 investment
banks, brokerage firms and third-party research providers worldwide. We offer
research reports from 18 of the 20 leading U.S. investment banks and brokerage
firms according to the Institutional Investor rankings, including Merrill
Lynch, Morgan Stanley Dean Witter, Goldman Sachs and Salomon Smith Barney. More
than 600,000 individual investors, institutional investors and financial
professionals, including mutual fund managers, portfolio managers, brokers and
their clients, have access to our services. In addition to making our services
available through our own Web sites, we have established a number of strategic
distribution relationships to reach both the individual investor market and the
institutional investor market, including relationships with ADP, America
Online, Bloomberg, Bridge, Dow Jones and Reuters.
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
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. 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.
The emergence of the Internet as a tool for communications and commerce is
rapidly changing the markets for financial transactions and information
services. Consequently, individuals are showing strong preferences for
transacting certain types of business, including trading securities, via the
Internet, rather than in person or over the telephone. Individual investors
have accepted and even welcomed self-directed online transactions because such
transactions can be faster, less expensive and more convenient than
transactions conducted through a human intermediary. As these individual
investors seek to independently manage their financial assets, they are
increasingly seeking investment research and other financial reports online.
Traditionally, investment research was mailed to investors, resulting in a
delay in the receipt of research and significant printing, duplicating and
mailing costs. 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. Investors needed a means of delivery that
provided rapid and efficient distribution of a wide variety of research to suit
their increasingly independent management of their financial assets.
Increasingly, both the providers and users of institutional research are
turning to Multex.com to address these challenges.
Our services facilitate the timely receipt and exchange of financial
information between individual and institutional investors and investment
banks, brokerage firms and third-party research providers worldwide. We
3
<PAGE>
provide access to the financial information necessary to make critical
investment decisions and enable research providers to target their research
more effectively. Key benefits offered by our services include:
. Internet access to an extensive research database of more than 900,000
research reports on over 15,000 companies from more than 400 investment
banks, brokerage firms and third-party research providers worldwide;
. efficient cost-effective research distribution on a real-time basis to
investors worldwide;
. comprehensive search capabilities enabling users to rapidly and easily
locate relevant research and create searchable customizable research
profiles and portfolios; and
. ease and efficiency of use for investors and contributors with a simple
graphical user interface and a convenient technology platform through
which contributors post their research to our database.
Our objective is to become the leading provider of online investment research
services for the individual and institutional investment community. Key
elements of our strategy are to:
. continue to grow the size and quality of our investment research
database, as well as add distribution channels, in order to increase the
sales of MultexNET and Multex Research-On-Demand;
. leverage our proprietary technology platform in order to increase the
number of MultexEXPRESS installations;
. increase awareness of (i) the Multex brand among individual investors as
a means to grow membership of the Multex Investor Network, which will
drive the sale of sponsorships, advertising and generate pay-per-view
revenue, and (ii) the family of Multex.com branded and co-branded Web
sites; and
. utilize our existing proprietary technology to create additional revenue
sources from new products and services.
Our service offerings are designed to provide specific solutions to the
problems faced by individual and institutional investors. Our services include:
. MultexNET enables institutional investors to access commingled investment
research reports from multiple sources 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 selected
customers;
. Multex Research-On-Demand offers libraries, corporations, financial
institutions and advisors, other professional firms, as well as
institutional investors, the ability to access research reports and other
information from a majority of MultexNET research providers; and
. Multex Investor Network targets the rapidly growing online individual
investor market and offers its members access to over 250,000 research
reports from over 250 investment banks, brokerage firms and third-party
research providers.
--------------------
Except as otherwise noted, all information in this prospectus (i) reflects
the automatic conversion of all outstanding shares of the Company's preferred
stock into an aggregate of shares of common stock upon the
consummation of this offering; (ii) reflects the filing of a Second Amended and
Restated Certificate of Incorporation which, among other things, authorizes the
issuance of "blank check" preferred stock upon the consummation of this
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-[ ] reverse stock split of the common stock to be effected
immediately prior to the offering. See "Description of Capital Stock" and
"Underwriting."
--------------------
INFORMATION CONTAINED ON OUR WEB SITES SHOULD NOT BE CONSIDERED A PART OF THIS
PROSPECTUS.
4
<PAGE>
The Offering
Common stock offered by the Company..... [ ] shares
Common stock to be outstanding after [ ] shares (1)
this offering..........................
Use of proceeds......................... For expansion of our sales and mar-
keting efforts, expansion of our in-
ternational operations, capital ex-
penditures, general corporate pur-
poses and possible acquisitions. See
"Use of Proceeds."
Proposed Nasdaq National Market MLTX
symbol.................................
Summary Consolidated Financial Data
(in thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months
Year Ended December 31, Ended September 30,
------------------------- -------------------
1995 1996 1997 1997 1998
------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues..................... $ 1,005 $ 2,647 $ 6,014 $ 3,566 $ 9,321
Gross profit................. 601 1,837 4,782 2,738 7,191
Loss from operations......... (5,520) (6,470) (8,162) (6,432) (5,414)
Net loss..................... $(5,494) $(6,410) $(8,037) $(6,375) $(6,216)
Pro forma net loss per share
(2)(3)...................... $ (0.92) $ (0.68)
Pro forma weighted average
shares outstanding (2)(3)... 8,694 9,089
</TABLE>
<TABLE>
<CAPTION>
September 30, 1998
----------------------------------------
Actual Pro Forma(3) As Adjusted(3)(4)
-------- ------------ -----------------
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents, and marketable
securities.......................................... $ 5,307 $ 5,307 $
Working capital...................................... 3,077 3,077
Total assets......................................... 10,439 10,439
Deferred revenues.................................... 2,897 2,897
Convertible preferred stock.......................... 39,243 --
Total stockholders' equity (deficit)................. (33,879) 5,364
</TABLE>
- --------
(1) Based on the number of shares of common stock outstanding on September 30,
1998. Excludes [ ] shares of common stock issuable pursuant to stock
options outstanding as of September 30, 1998 (of which options to purchase
approximately [ ] shares were then exercisable) with a weighted
average price of $ per share. See "Management--1999 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 conversion of preferred stock; excludes (i) 80,000
shares of Series E preferred stock, $.01 par value, issued by the Company
in December 1998 and (ii) a warrant to purchase 212,033 shares of common
stock issued by the Company in October 1998. See Notes 3, 8 and 13 of Notes
to Consolidated Financial Statements.
(4) As adjusted to give effect to our sale of [ ] shares of common stock
in this offering at an assumed initial public offering price of $ per
share, after deducting the underwriting discount and the estimated offering
expenses payable by our Company, and the application of the estimated net
proceeds from this offering. See "Use of Proceeds" and "Capitalization."
5
<PAGE>
RISK FACTORS
Any investment in our common stock involves a high degree of risk. You should
consider carefully the following information about these risks, together with
the other information contained in this prospectus, before you decide to buy
our common stock. If any of the following risks actually occur, our business,
financial condition or results of operations would likely suffer. In such case,
the trading price of our common stock could decline, and you may lose all or
part of the money you paid to buy our common stock.
This prospectus contains certain "forward-looking statements." Such forward-
looking statements include, without limitation, statements about the market
opportunity for the distribution of investment research and other information
over the Internet, our strategy, competition and expected expense levels, and
the adequacy of our available cash resources. Our actual results could differ
materially from those expressed or implied by such forward-looking statements
as a result of certain factors, including the risk factors described below and
elsewhere in this prospectus. We undertake no obligation to update publicly any
forward-looking statements for any reason, even if new information becomes
available or other events occur in the future.
Risks Related to Our Operations
We Have a Limited Operating History
We commenced our operations in April 1993. Accordingly, we have a limited
operating history upon which you can evaluate our business. In order to be
successful, we must increase our revenues from subscription fees for MultexNET
and MultexEXPRESS, generate additional sales of investment research on a pay-
per-view basis through Multex Research-On-Demand and attract more users to
Multex Investor Network. However, as an early stage company in the new and
rapidly evolving market for the distribution of investment research and other
information over the Internet, we face numerous risks and uncertainties. Some
of these risks relate to our ability to:
. anticipate and adapt to the changing Internet market;
. attract more subscribers;
. continue to collect investment research and other financial information
from our research and information providers;
. implement our sales and marketing initiatives, both domestically and
internationally;
. attract, retain and motivate qualified personnel;
. respond to actions taken by our competitors;
. continue to build an infrastructure to effectively manage our growth and
handle any future increased usage; and
. integrate acquired businesses, technologies, products and services.
We also depend on the growing use of the Internet for the dissemination of
investment research and other financial information, and on general economic
conditions. The number of Internet users may not continue to grow and/or the
use of the Internet may not become more widespread. If we are unsuccessful in
addressing these risks or in executing our business strategy, our business,
results of operations and financial condition will be materially adversely
effected. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
We Have a History of Losses and Anticipate Continuing Losses
Since our incorporation, we have not been profitable on an annual or
quarterly basis. We 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
$6.4 million and $6.2 million for the nine months ended September 30, 1997 and
1998, respectively. We expect operating losses and negative cash flows to
continue for the foreseeable future as we continue to incur significant
operating expenses and to make capital investments in our business. We may not
6
<PAGE>
ever generate sufficient revenues to achieve profitability. Even if we do
achieve profitability, we may not sustain or increase profitability on a
quarterly or annual basis in the future. At September 30, 1998, we had an
accumulated deficit of $28.6 million. See "Selected Consolidated Financial
Data" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
Our Quarterly Operating Results Fluctuate Significantly
Our quarterly revenues, margins and operating results have fluctuated
significantly in the past and are expected to continue to fluctuate
significantly in the future due to a variety of factors, many of which are
outside of our control. These factors include:
.demand for our services;
.the size and timing of both new and renewal subscriptions;
.the number, timing and significance of new services introduced by us and
our competitors;
.our ability 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 our sales incentive strategy;
.sharp declines in the volume of securities transactions or the prices of
securities generally; and
.general economic factors.
Our cost of revenues consists principally of distribution fees and royalties
which fluctuate depending upon the demand for our services, and fixed
telecommunications costs. In addition, a substantial portion of our 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. Our operating expense levels are based, in significant part, on our
expectations of future revenues on a quarterly basis. If actual revenues on a
quarterly basis are below management's expectations, or if our expenses precede
increased revenues, both gross margins and results of operations are likely to
be materially and adversely affected because a relatively small amount of our
costs and expenses varies with our revenues in the short term.
Due to all of the foregoing factors and the other risks discussed in this
section, you should not rely on quarter-to-quarter comparisons of our results
of operations as an indication of future performance. It is possible that in
some future periods our results of operations may be below the expectations of
public market analysts and investors. In this event, the price of our common
stock is likely to fall. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Selected Unaudited Quarterly Results of
Operations."
We are Dependent on Research and Information Providers
We are 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 our over 400
information providers permit us 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 us for subscribers. None of our providers of research
reports and other information have arrangements to provide such research or
information exclusively to us. The loss of one or more significant information
provider agreements would decrease the research and other information which we
can offer our users and could have a
material adverse effect on our business, results of operations and financial
condition. Royalties payable to our
7
<PAGE>
information providers to obtain distribution rights to research reports
included in Multex Research-On-Demand constitute a significant portion of our
cost of revenues. If we are required to increase the royalties payable to such
information providers, such increased royalty payments would have a material
adverse effect on our 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 our
competitors, including First Call Corporation and The Investext Group (both of
which are subsidiaries of Thomson Financial Services, Inc., a leading worldwide
provider of financial information services). Consequently, we cannot provide
our users with the investment research and other information provided by such
investment banks, brokerage firms and third-party research providers, which may
put us 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 we are hindered in our ability to
offer our own services due to the lack of content from such investment banks,
brokerage firms and third-party research providers, our business, results of
operations and financial condition would be materially and adversely affected.
See "Business--Strategy" and "--Services."
Our proprietary software technology enables us 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.
In particular, approximately 40% of our information providers currently supply
us with research reports and other financial information that is available only
to the customers of that information provider. We might inadvertently
distribute a particular report to a user who is not so authorized or entitled,
which could subject us to a claim for damages by the provider of the report or
which could harm our reputation in the marketplace, either of which could have
a material adverse effect on our business, results of operations and financial
condition.
We are Dependent on Continued Growth of the Emerging Market for Online
Investment Research
The market for the distribution of investment research and other information
over the Internet 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.
Because the market for our services is new and rapidly evolving, it is
difficult to predict with any assurance the growth rate, if any, and the
ultimate size of this market. We cannot assure you that the market for our
services will develop or that our services will ever achieve market acceptance.
If the market fails to develop, develops more slowly than expected, or becomes
saturated with competitors, if our services do not achieve market acceptance,
or if pricing becomes subject to significant competitive pressures, our
business, results of operations and financial condition would be materially and
adversely affected.
Our future results of operations will depend, in substantial part, on our
ability to increase the market acceptance of our services. The future viability
of MultexNET will depend upon, among other factors, our ability to expand our
direct and indirect sales and marketing channels, to attract and retain high-
quality research providers and to deliver our services across multiple delivery
platforms. The future viability of MultexEXPRESS will depend upon, among other
factors, 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 upon,
among other factors, the acceptance of the Internet as a medium for the
purchase and distribution of investment research, as well as on our ability to
build a direct and indirect sales force to sell our services, to attract and
retain high-quality information providers, and to develop and increase our base
of users. The future viability of Multex Investor Network will depend upon,
among other factors, the acceptance of the Internet as a medium for the
distribution and sale of investment research to individual investors, and our
ability to attract and retain advertisers and sponsors, new members and
additional distribution partners. In addition, in order to download research
reports and other information from Multex
8
<PAGE>
Investor Network, users are required to first download the Adobe Acrobat
reader, which may be difficult for some users to accomplish. If we are unable
to increase the number of users of MultexNET, MultexEXPRESS, Multex Research-
On-Demand and Multex Investor Network, or to attract and retain investment
research providers, our business, results of operations and financial condition
would be materially and adversely affected. See "Business--Strategy" and "--
Services."
We are Dependent on Strategic Distribution Relationships
We have distribution arrangements for our services with a number of third-
party distributors, including America Online, Inc., Automatic Data Processing,
Inc., Bloomberg L.P., Dow Jones & Co. Inc. and Reuters Limited, all of which
are currently generating revenues for us, and with Bridge Information Systems,
Inc., which is not currently generating revenues for us. We are dependent on
our strategic relationships for the marketing and distribution of investment
research reports and other information. Our future results of operations will
be affected by the extent to which customers of these third-party distributors
choose to subscribe to our various services. We cannot assure you that the
customers of these third-party distributors will continue to subscribe to our
services or that such third-party distributors will continue to actively market
our services. If we are unable to retain and increase the utilization of our
services by such customers, our business, results of operations and financial
condition would be materially and adversely affected. See "Business--Strategy"
and "--Services."
We cannot assure you that we will be successful in entering into additional
strategic relationships, or that any additional relationships, if entered into,
will be on terms favorable to us. Our receipt of revenues from our strategic
relationships is directly affected by the levels of effort of these
distributors. We cannot assure you that our strategic distributors will devote
the necessary resources necessary to successfully market our services. Each of
these distributors offers services, either of their own or from our
competitors, which are in one or more respects competitive with our service
offerings. In addition, our strategic distributors have the right to terminate
their agreements with us under certain circumstances, in some circumstances on
short notice. Furthermore, we cannot assure you that we will be able to renew
such agreements when they expire on acceptable terms, if at all. If we are
unable to maintain our existing strategic relationships or to enter into new
strategic relationships, our business, results of operations and financial
condition could be materially and adversely affected. See "Business--Strategic
Distribution Relationships."
We Must Establish a Brand Identity for Multex Investor Network
The future success of Multex Investor Network will depend, in part, on our
ability to increase its brand awareness. In order to build our brand awareness,
we must succeed in our marketing efforts, provide high-quality services and
increase traffic to Multex Investor Network. We intend to increase our
marketing budget substantially as part of our brand-building efforts. Our
ability to increase advertising and sponsorship revenue from Multex Investor
Network will depend in part on our ability to increase the number of users of
the Company's Web sites. If our marketing efforts are unsuccessful or if we
cannot increase our brand awareness, our business, financial condition and
results of operations would be materially and adversely affected.
Our Market is Highly Competitive
The market for the distribution of investment research and other information
over the Internet is intensely competitive. We expect such competition to
continue to increase because our market poses no substantial barriers to entry.
Competition may also increase as a result of industry consolidation. Increased
competition could result in price reductions, reduced gross margins and loss of
market share, any of which would have a material adverse effect on our
business, results of operations and financial condition.
We face direct and indirect competition for both providers of investment
research and other reports, and for subscribers with the following types of
companies and media:
. 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.;
9
<PAGE>
. companies that provide investment research, including investment banks
and brokerage firms that have their own Web sites;
. other Internet providers of either free or subscription research
services;
. services provided by certain of our strategic distributors which are
competitive in one or more respects with our service offerings;
. numerous prospective competitors, such as Standard & Poor's, Market
Guide, Moody's, Zacks Investment Research and others, that offer
investment research-based services;
. various written publications, including traditional media, investment
newsletters, personal financial magazines and certain industry research
appearing in financial periodicals;
. extensive company-specific information, as well as general investment
research relating to particular industries, may be obtained, frequently
without charge, from public sources, including annual reports, Standard &
Poor's company-specific reports and Value Line investment research
reports, all of which are available from public libraries and from the
companies to which such reports relate; and
. services provided by in-house management information services personnel
and independent systems integrators.
We believe that our ability to compete depends upon many factors, many of
which are outside of our control. These factors include our ability to sustain
our relationships with leading providers of investment research, the timing and
market acceptance of new services and enhancements to existing services
developed by us and our competitors, ease of use, performance, price,
reliability, customer service and support, and sales and marketing efforts. Our
competitors vary in size and in the scope and breadth of services offered.
Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories, greater name recognition, larger
customer bases and significantly greater financial, technical and marketing
resources than we do. This may enable them 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
we can. 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. Our competitors may develop services that are
equal or superior to the services then offered by us or that achieve greater
market acceptance than our services do. 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 our existing and prospective customers. As a result, it is possible that new
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. Competitive pressures may materially and adversely affect
our business, results of operations or financial condition. See "Business--
Competition."
We Have a High Level of Customer Concentration
Historically, a few of our subscribers and distributors have accounted for a
substantial majority of our revenues. Specifically, in the years ended December
31, 1995, 1996 and 1997, 70%, 75% and 68%, respectively, of our revenues were
generated by Bloomberg, Reuters, Merrill Lynch & Co. and Gruntal & Co., each of
which individually generated 10% or more of our consolidated revenues during
certain of such periods. In addition, approximately 450,000 of the 500,000 end-
users of MultexEXPRESS are generated from one MultexEXPRESS installation. The
loss of any major subscriber or distributor, or any reduction or delay in
subscriptions by any such subscriber or distributor, or our failure to
successfully market our services to new subscribers or distributors could have
a material adverse effect on our business, results of operations and financial
condition. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Overview" and Note 12 of Notes to the Consolidated
Financial Statements.
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<PAGE>
We are Dependent on the Financial Services Industry
We are dependent upon the continued demand for the distribution of investment
research and other information over the Internet, making our 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 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 our
subscribers for such reports and other information. In addition, U.S. financial
institutions are continuing to consolidate, increasing the leverage of our
information providers to negotiate price and decreasing the overall potential
market for certain of our services. These factors, as well as other changes
occurring in the financial services industry, could have a material adverse
effect on our business, financial condition and results of operations.
We Need to Manage Our Expanding Operations
We have experienced rapid growth in our operations. At December 31, 1998, we
had a total of 149 employees, as compared to 106 employees at December 31, 1997
and 79 employees at December 31, 1996. We expect that the number of our
employees will continue to increase for the foreseeable future. This rapid
growth has placed, and our anticipated future growth will continue to place, a
significant strain on our managerial, operational and financial resources. As a
result, we will need to continue to improve our operational and financial
systems and managerial controls and procedures. In addition, our future success
will also depend on our ability to expand, train and manage our workforce, in
particular our sales and marketing organization, both domestically and
internationally. We will also have to maintain close coordination among our
technical, accounting, finance, marketing, sales and editorial organizations.
If we are unable to accomplish any of these objectives, our business, results
of operations and financial condition could be materially and adversely
affected. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
We are Dependent on our Key Personnel
Our future success depends, in significant part, on the continued service of
our senior management, including Mr. Isaak Karaev, our Chairman, President and
Chief Executive Officer, and key technical and sales personnel, none of whom
has entered into an employment agreement with us other than a non-
competition/non-disclosure agreement. We maintain a key person life insurance
policy in the amount of $3.0 million on the life of Isaak Karaev. The loss of
the services of one or more of our key personnel could have a material adverse
effect on our business, results of operations and financial condition. Our
future success also depends on our continuing ability to attract, retain and
motivate 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
we cannot assure you that we will be able to retain our key personnel or that
we can attract, assimilate or retain other highly qualified personnel in the
future. We have from time to time in the past experienced, and we expect to
continue to experience in the future, difficulty in hiring and retaining highly
skilled employees with appropriate qualifications. See "Management."
We Face Certain Risks Associated with International Operations
We have recently commenced operations in a number of international markets
and a key component of our strategy is to continue to expand our international
operations. To date, we have only 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 our services internationally. We cannot assure you that we will be
able to successfully market, sell and deliver our services in these markets. In
certain markets, including Hong Kong, we intend to rely on the sales and
marketing efforts of independent representatives. The failure of such
independent representatives to successfully solicit information providers or
market our services in such markets could have a material adverse effect on our
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
11
<PAGE>
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 and certain
other parts of the world, any of which could have a material adverse effect on
the success of our international operations and, consequently, on our business,
results of operations and financial condition. Furthermore, we cannot assure
you that governmental regulatory agencies in one or more foreign countries will
not determine that the services provided by us constitute the provision of
investment advice, which could result in our having to register in such
countries as an investment advisor or in our having to cease selling our
services in such countries, either of which could have a material adverse
effect on our business, results of operations or financial condition. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
There are Certain Risks Associated with Potential Acquisitions
We may, from time to time, pursue acquisitions of businesses, customer bases,
products or technologies that complement or expand our existing business. We
evaluate 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
our business, results of operations or financial condition, 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 using the
purchase method of accounting 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 our results of operations or financial condition. We cannot assure you 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 other adverse effects.
We Face Certain Risks Associated with Technological Change
The market in which we operate is characterized by rapidly changing
technology, evolving industry standards, frequent new service announcements,
introductions and enhancements, and evolving customer demands. These market
characteristics are exacerbated by the emerging nature of the Internet and the
electronic distribution of investment research. Accordingly, our future success
will depend on our ability to adapt to rapidly changing technologies and
industry standards, and our ability to continually improve the performance,
features and reliability of our services in response to both evolving customer
demands and competitive service offerings. Our inability to successfully adapt
to such changes in a timely manner could have a material adverse effect on our
business, results of operations and financial condition. Furthermore, we cannot
assure you that we 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 our current and prospective customers and achieve any
degree of significant market acceptance. If we are 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 our services or enhancements contain
defects or do not achieve a significant degree of market acceptance, our
business, results of operations and financial condition would be materially and
adversely affected.
We Face Risks of System Failure, Security Breaches or Other Damage to Our
Systems
Our electronic distribution of investment research utilizes proprietary
technology which resides principally on one computer system. The continuing and
uninterrupted performance of such computer system is critical to our success.
Any system failure that causes interruptions in our ability of service our
customers, including failures that affect our ability to collect research from
our contributors or provide electronic investment research to our subscribers,
could reduce customer satisfaction and, if sustained or repeated, would reduce
the attractiveness of our services. An increase in the volume of research
reports handled by our computer system,
12
<PAGE>
or in the rate of requests for such research, could strain the capacity of our
software or hardware, which could lead to slower response times or system
failures. Furthermore, we face the risk of a security breach of our computer
system which could disrupt the distribution of research and other reports. Our
business could be adversely affected if our system were affected by any of
these occurrences.
Our operations are dependent on our ability to protect our computer system
against damage from computer viruses, fire, power loss, telecommunications
failures, vandalism and other malicious acts, and similar unexpected adverse
events. In addition, a failure of our telecommunications providers to provide
the data communications capacity in the time frame required by us for any
reason could cause interruptions in the delivery of our services. Despite
precautions we have taken, unanticipated problems affecting our systems have
from time to time in the past caused, and in the future could cause, delays and
interruptions in the delivery of our services. Although we carry general
liability insurance, our insurance may not cover any claims by dissatisfied
providers or subscribers or may not be adequate to indemnify us for any
liability that may be imposed in the event that a claim were brought against
us. Our business, results of operations and financial condition could be
materially and adversely affected by any system failure, security breach or
other damage that interrupts or delays our operations.
WE ARE DEPENDENT ON INTELLECTUAL PROPERTY AND FACE A RISK OF INFRINGEMENT
CLAIMS
Our future success will be dependent, in significant part, on our proprietary
technologies. We seek to protect our proprietary rights, but these actions may
be inadequate to protect the rights covered by our patents, patent
applications, trademarks or other proprietary rights or to prevent others from
claiming violations of their proprietary rights. Our proprietary rights may not
be viable or of value in the future since the validity, enforceability and
scope of protection of proprietary rights in Internet-related industries is
uncertain and still evolving.
Furthermore, we cannot assure you that third parties will not claim that we
have infringed on their patents or other proprietary rights. From time to time
we have been, and we expect to continue to be, subject to claims in the
ordinary course of our business, including claims of alleged infringement of
the trademarks and other intellectual property rights of third parties by us.
Although there has not been any litigation relating to such claims to date,
such claims and any resultant litigation, should it occur, could subject us to
significant liability for damages and could result in the invalidation of our
proprietary rights. In addition, even if we prevail, such litigation could be
time-consuming and expensive to defend, and could result in the diversion of
our time and attention, any of which could materially and adversely affect our
business, results of operations and financial condition. Any claims or
litigation from third parties may also result in limitations on our ability to
use the trademarks and other intellectual property subject to such claims or
litigation unless we enter into agreements with the third parties responsible
for such claims or litigation which may be unavailable on commercially
reasonable terms.
We generally enter into confidentiality agreements with our employees,
consultants and strategic partners, and generally control access to and
distribution of our proprietary information. Despite our efforts to protect our
proprietary rights from unauthorized use or disclosure, parties may attempt to
disclose, obtain or use our proprietary information. The steps we have taken
may not prevent misappropriation of our proprietary information.
WE FACE YEAR 2000 RISKS
We have made a preliminary assessment of our Year 2000 readiness. We plan to
perform a Year 2000 simulation on our software during the first half of 1999.
We are also in the process of contacting certain third-party vendors, licensors
and providers of software, hardware and services regarding their Year 2000
readiness. Following this testing and after contacting these vendors and
licensors, we will be better able to make a complete evaluation of our Year
2000 readiness to determine what costs will be necessary to be Year 2000
compliant, and to determine whether contingency plans need to be developed.
Efforts to comply with Year 2000 requirements may disrupt or delay our ability
to continue developing and marketing our services. We may also incur certain
unexpected costs in connection with Year 2000 compliance. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Impact of the Year 2000" for information on our state of readiness, potential
risks and contingency plans regarding the Year 2000 issue.
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<PAGE>
Risks Related to the Internet Industry
We are Dependent on the Continued Growth of the Internet
The Internet is relatively new and is rapidly evolving. Our business would be
adversely affected if Internet usage does not continue to grow. Internet usage
may be inhibited for a number of reasons, such as:
. the Internet infrastructure may not be able to support the demands placed
on it or its performance and reliability may decline as usage grows;
. security and authentication concerns with respect to transmission over
the Internet of confidential information, such as credit card numbers,
and attempts by unauthorized computer users to penetrate our network
security; and
. privacy concerns, such as those related to the placement by Web sites of
certain information on a user's hard drive without the user's knowledge
or consent in order to gather user information.
Our market is characterized by rapidly changing technologies, evolving
industry standards, frequent new product and service introductions, and
changing customer demands. To be successful, we must adapt to our rapidly
changing market by continually enhancing our existing services and adding new
services to address our customers' changing demands. We could incur substantial
costs if we need to modify our services or infrastructure in order to adapt to
these changes. Our business could be adversely affected if we incurred
significant costs without generating related revenues or if we cannot adapt
rapidly to these changes.
We are Dependent on the Internet Infrastructure
Our future success will depend, in significant part, upon the maintenance of
the Internet 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 reliability and timely
Internet access and services. To the extent that the Internet continues to
experience increased numbers of users, frequency of use or increased bandwidth
requirements of users, we cannot assure you that the Internet infrastructure
will continue to be able to support the demands placed on it or that the
performance or reliability of the Internet will not be adversely affected.
Furthermore, the Internet has experienced a variety of outages and other delays
as a results of damage to portions of its infrastructure or otherwise, and such
outages or delays could adversely affect the Web sites of our contributors,
subscribers or distributors. In addition, the Internet could lose its viability
as a form of media due to delays in the development or adoption of new
standards and protocols that can handle increased levels of activity. We cannot
assure you that the infrastructure and complementary products and services
necessary to maintain the Internet as a viable commercial medium will be
developed or maintained. Moreover, critical issues concerning the commercial
use 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 effect both the growth of the
Internet generally and our business, results of operations and financial
condition in particular.
We May Face Certain Liability for Internet Content
As a publisher and distributor of online content, we face 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 that we publish. For example, by distributing a
negative investment research report, we may find ourselves subject to
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, we may be required to engage in protracted and
expensive litigation, which could have the effect of diverting management's
attention and require us to expend significant financial resources. Our general
liability insurance may not necessarily cover any of these claims or may not be
adequate to protect us against all liability that may be imposed. Any such
claims or resulting litigation could have a material adverse effect on our
business, results of operations and financial condition.
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We may be Subject to Government Regulation and Legal Uncertainties
The laws governing the Internet remain largely unsettled, even in areas where
there has been some legislative action. It may take years to determine whether
and how existing laws such as those governing intellectual property, privacy,
libel and taxation apply to the Internet generally and the electronic
distribution of investment research in particular. Such legislation could
dampen the growth in use of the Internet generally and decrease the acceptance
of the Internet as a communications and commercial medium, which could have a
material adverse effect on our business, results of operations and financial
condition. In addition, because the growing popularity and use of the Internet
has burdened the existing telecommunications infrastructure and many areas with
high Internet usage have begun to experience interruptions in phone service,
certain local telephone carriers have petitioned governmental agencies 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 that they
seek is granted, the costs of communicating on the Internet could increase
substantially, potentially adversely affecting the growth in the use of the
Internet. Further, due to the global nature of the Internet, it is possible
that, although transmissions relating to our services originate in the State of
New York, governments of other states or foreign countries might attempt to
regulate our services or levy sales or other taxes on our activities. We cannot
assure you that violations of local or other laws will not be alleged or
charged by local, state or foreign governments, that we might not
unintentionally violate such laws or that such laws will not be modified, or
new laws enacted, in the future. Any of these developments could have a
material adverse effect on our business, results of operations and financial
condition. See "Business--Government Regulation."
Risks Related to the Offering
There has been No Prior Public Market for our Common Stock; Our Shares May
Experience Extreme Price and Volume Fluctuations
Prior to this offering, there has been no public market for our common stock.
We cannot predict the extent to which investor interest in our common stock
will lead to the development of an active trading market or how liquid that
market might become. The market price of the common stock may decline below the
initial public offering price. The initial public offering price for the shares
will be determined by negotiations between us and the representatives of the
underwriters and may not be indicative of prices that will prevail in the
trading market. See "Underwriting."
The market price of our common stock could be subject to significant
fluctuations due to a variety of factors, including:
. public announcements concerning us or our competitors;
. quarterly fluctuations in operating results;
. a downturn in the financial services industry generally or the market for
securities trading in particular;
. introductions of new products or services by us or our competitors;
. changes in analysts' earnings estimates; and
. announcements of technological innovations.
The stock market has, from time to time, experienced extreme price and volume
fluctuations. The market prices of the securities of Internet-related companies
have been especially volatile, including fluctuations that are often unrelated
to the operating performance of the affected companies. Broad market
fluctuations of this type may adversely affect the market price of our common
stock. In the past, companies that have experienced volatility in the market
price of their stock have been the object of securities class action
litigation. If we were the object of securities class action litigation, it
could result in substantial costs and a diversion of our management's attention
and resources.
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Control by Officers, Directors and Existing Stockholders
We anticipate that the directors, officers and stockholders who owned greater
than 5% of the outstanding common stock prior to this offering and their
affiliates will, in the aggregate, beneficially own approximately % of our
outstanding common stock following the completion of this offering ( % 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
approval by our stockholders, including the election of directors and approval
of significant corporate transactions. This concentration of ownership may also
have the effect of delaying or preventing a change in control of the company.
See "Management" and "Principal Stockholders."
We Currently have No Specific Use for a Substantial Portion of the Net Proceeds
We currently have no specific uses for a substantial portion of the net
proceeds of this offering. Accordingly, investors in this offering will be
relying on management's judgment with only limited information about our
specific intentions regarding the use of proceeds. We may spend most of the net
proceeds from this offering in ways with which you may not agree. Our failure
to apply such funds effectively could have a material adverse effect on our
business, results of operations and financial condition. See "Use of Proceeds."
Anti-Takeover Provisions
Certain provisions of our Certificate of Incorporation, our Bylaws and
Delaware law could make it more difficult for a third party to acquire us, even
if doing so might be beneficial to our stockholders. See "Description of
Capital Stock."
Shares Eligible for Future Sale
If our stockholders sell substantial amounts of our common stock (including
shares issued upon the exercise of outstanding options and warrants) in the
public market following this offering, the market price of our common stock
could fall. Such sales also might make it more difficult for us to sell equity
securities in the future at a time and price that we deem appropriate. After
this offering, we will have outstanding [ ] shares of common stock. Of these
shares, the [ ] shares being offered hereby are freely tradeable. This leaves
[ ] shares eligible for sale in the public market as follows:
<TABLE>
<CAPTION>
Number of Shares Date
---------------- ---------------------------------------------------------
<C> <S>
[ ] After the date of this prospectus
[ ] Upon the filing of a registration statement to register
for resale shares of common stock issuable upon the
exercise of options granted under the 1999 Stock Option
Plan
[ ] At various times after 90 days from the date of this
prospectus
[ ] After 180 days from the date of this prospectus (subject,
in some cases, to volume limitations)
[ ] At various times after 180 days from the date of this
prospectus
</TABLE>
Our directors and officers and substantially all of our stockholders have
agreed that they will not sell, directly or indirectly, any common stock
without the prior written consent of BancBoston Robertson Stephens Inc. for a
period of 180 days from the date of this prospectus.
Upon the closing of this offering, we intend to file a registration statement
to register for resale the [ ] shares of common stock reserved for issuance
under our 1999 Stock Option Plan (the "1999 Plan"). We expect such registration
to become effective immediately upon filing. As of December 31, 1998, options
to
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<PAGE>
purchase a total of [ ] shares of common stock were outstanding, of which [
] shares will be immediately exercisable upon the closing of this offering.
Upon exercise, these shares and shares subject to options granted after the
date hereof will be covered by that registration and will be eligible for
resale in the public market from time to time subject to vesting and, in the
case of certain options, the expiration of lock-up agreements. These stock
options generally have exercise prices significantly below the assumed initial
public offering of our common stock. The possible sale of a significant number
of these shares may cause the price of our common stock to fall.
Certain stockholders, representing approximately [ ] shares of common
stock, have the right, subject to conditions, to include their shares in
certain registration statements relating to our securities. By exercising their
registration rights and causing a large number of shares to be registered and
sold in the public market, these holders may cause the price of the common
stock to fall. In addition, any demand to include such shares in our
registration statements could have an adverse effect on our ability to raise
needed capital. See "Management--1999 Stock Option Plan," "Principal
Stockholders," "Description of Capital Stock--Registration Rights," "Shares
Eligible for Future Sale" and "Underwriting."
Immediate and Substantial Dilution
Investors purchasing shares in this offering will incur immediate and
substantial dilution in net tangible book value per share. To the extent
outstanding options and warrants to purchase common stock are exercised, there
will be further dilution. See "Dilution."
No Dividends
We have not declared or paid any cash dividends on our common stock and do
not intend to pay any cash dividends on our common stock in the foreseeable
future. We currently intend to retain our future earnings, if any, to fund the
development and growth of our business. Future dividends, if any, will be
determined by our Board of Directors. See "Dividend Policy."
CERTAIN INFORMATION
We were incorporated in Delaware in 1993. Our principal executive offices are
located at 33 Maiden Lane, 5th Floor, New York, New York 10038, and our
telephone number at that address is (212) 859-9800.
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USE OF PROCEEDS
The net proceeds we will receive from the sale of the shares of common
stock offered by us are estimated to be $ million ($ if the underwriters'
over-allotment option is exercised in full) after deducting the estimated
underwriting discounts and commissions and offering expenses payable by us and
assuming a public offering price of $ per share (the mid-point of the range
set forth on the cover page of this prospectus). We will not receive any
proceeds from the sale of shares by the over-allotment selling stockholders.
We currently intend to use the net proceeds of this offering as follows:
. expansion of our sales and marketing efforts;
. expansion of our international operations;
. general corporate purposes, including working capital; and
. possible acquisitions of or investments in businesses, products and
technologies that are complementary to those of our 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
We have not declared or paid any cash dividends on our common stock and do
not intend to pay any cash dividends on our common stock in the foreseeable
future. We currently intend to retain future earnings, if any, to fund the
development and growth of our business. Future dividends, if any, will be
determined by our Board of Directors.
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CAPITALIZATION
The following table sets forth, as of September 30, 1998, the capitalization
of the Company (i) on an actual basis, (ii) on a pro forma basis to reflect the
conversion of preferred stock, 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 from this offering. 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>
September 30, 1998
--------------------------------
Actual Pro Forma As Adjusted
-------- --------- -----------
(in thousands)
<S> <C> <C> <C>
Convertible 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(1)........ $ 39,243 --
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; 2,022,417 shares issued
and outstanding on an actual basis;
9,263,158 shares issued and outstanding on a
pro forma basis; and shares issued and
outstanding on an as adjusted
basis(1)(2)(3).............................. 20 93
Additional paid-in capital................... (3,662) 35,508
Accumulated deficit.......................... (28,611) (28,611)
Deferred compensation........................ (1,605) (1,605)
Translation adjustment....................... (21) (21)
-------- -------- ----
Total stockholders' equity (deficit)........ (33,879) 5,364
-------- -------- ----
Total capitalization....................... $ 5,364 $ 5,364 $
======== ======== ====
</TABLE>
- --------
(1) Does not reflect the issuance by the Company of 80,000 shares of Series E
preferred stock, $.01 par value, in December 1998.
(2) Does not reflect the issuance by the Company of a warrant to purchase
212,033 shares of common stock in October 1998.
(3) Excludes shares of Common Stock issuable pursuant to stock options
outstanding as of September 30, 1998 (of which options to purchase
approximately shares were then exercisable) with a weighted average
price of $ per share. See "Management--1999 Stock Option Plan" and
"Description of Capital Stock--Options."
19
<PAGE>
DILUTION
The pro forma net tangible book value of the Company as of September 30,
1998, after giving effect to the conversion of preferred stock, was $
million, 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 and total liabilities), divided by the number of
shares of common stock outstanding as of September 30, 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 from this offering, the pro forma net tangible book
value of the Company as of September 30, 1998 would have been $ million, 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 September 30,
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 September 30,
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>
Existing stockholders
(1).................... % $ % $
New investors........... $
------- --------- --------- ---------
Total................. 100.0% $ 100.0%
======= ========= ========= =========
</TABLE>
- --------
(1) If the underwriters' over-allotment option is exercised in full, the number
of shares of common stock held by existing stockholders will be reduced to
, or % of the total number of shares of common stock to be
outstanding after this offering, and will increase the number of shares of
common stock held by the new investors to shares, or % of the
total number of shares of common stock to be outstanding immediately after
this offering. See "Principal Stockholders."
The foregoing tables and calculations assume no exercise of outstanding
options and excludes (i) 80,000 shares of Series E preferred stock, $.01 par
value, issued by the Company in December 1998 and (ii) a warrant to purchase
212,033 shares of common stock issued by the Company in October 1998. At
September 30, 1998, there were shares of common stock reserved for
issuance upon exercise of outstanding options at a weighted average exercise
price of $ per share. To the extent that these options are exercised, there
will be further dilution to new investors. See "Management--1999 Stock Option
Plan."
20
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data 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. The consolidated
statement of operations data for the nine months ended September 30, 1997 and
1998 and the consolidated balance sheet data as of September 30, 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 have been prepared on substantially the same
basis as the audited Consolidated Financial Statements and, in the opinion of
management, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the Company's consolidated
financial position and the consolidated results of its operations for those
periods. Results of operations for the nine months ended September 30, 1998 are
not necessarily indicative of the results that may be expected for the entire
year or for any future period.
<TABLE>
<CAPTION>
Nine Months
ended
Year Ended December 31, September 30,
------------------------------------------ ----------------
1993 1994 1995 1996 1997 1997 1998
------ ------- ------- ------- ------- ------- -------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenues................ $2,026 $ 2,155 $ 1,005 $ 2,647 $ 6,014 $ 3,566 $ 9,321
Cost of revenues........ 565 752 404 810 1,232 828 2,130
------ ------- ------- ------- ------- ------- -------
Gross profit............ 1,461 1,403 601 1,837 4,782 2,738 7,191
Operating expenses:
Sales and marketing... 145 943 1,892 2,339 3,507 2,328 4,317
Research and
development.......... 620 975 1,520 1,415 1,601 1,186 1,526
General and
administrative....... 1,149 1,553 2,709 4,553 7,836 5,656 6,762
------ ------- ------- ------- ------- ------- -------
Total operating
expenses........... 1,914 3,471 6,121 8,307 12,944 9,170 12,605
------ ------- ------- ------- ------- ------- -------
Loss from operations.... (453) (2,068) (5,520) (6,470) (8,162) (6,432) (5,414)
Net interest income
(expense).............. 5 52 26 60 125 57 (86)
Other income (expense).. (23) 23 -- -- -- -- (716)
------ ------- ------- ------- ------- ------- -------
Net loss................ $ (471) $(1,993) $(5,494) $(6,410) $(8,037) $(6,375) $(6,216)
====== ======= ======= ======= ======= ======= =======
Basic and diluted loss
per common share $(2.16) $ (1.77) $ (4.69) $ (5.80) $ (7.03) $ (5.63) $ (4.43)
====== ======= ======= ======= ======= ======= =======
Pro forma net loss per
share (1)(2)........... $ (0.92) $ (0.68)
======= =======
Pro forma weighted
average shares
outstanding(1)(2)...... 8,694 9,089
======= =======
</TABLE>
<TABLE>
<CAPTION>
December 31,
-------------------------------------------- September 30,
1993 1994 1995 1996 1997 1998
------ ------- ------- -------- -------- -------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents, and
marketable securities.. $1,323 $ 4,975 $ 255 $ 8,730 $ 10,197 $ 5,307
Working capital
(deficit).............. 960 4,803 (1,487) 7,249 8,021 3,077
Total assets............ 1,416 6,295 2,799 12,548 14,733 10,439
Deferred revenues....... 167 -- 286 1,085 1,447 2,897
Long-term debt.......... -- 340 717 1,384 1,053 --
Convertible preferred
stock.................. 1,463 8,146 8,798 25,066 37,234 39,243
Total stockholders'
equity (deficit)....... (437) (2,657) (8,791) (16,601) (26,750) (33,879)
</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 conversion of preferred stock and excludes
(i) 80,000 shares of Series E preferred stock, $.01 par value, issued by
the Company in December 1998 and (ii) a warrant to purchase 212,033 shares
of common stock issued by the Company in October 1998.
21
<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.com is a leading provider of online investment research and
information services designed to meet the needs of individual and institutional
investors, including investment banks, brokerage firms and corporations. The
Company's services enable timely online access to over 900,000 research reports
and other investment information on over 15,000 companies. These reports are
published by more than 400 investment banks, brokerage firms and third-party
research providers worldwide. In the United States, the Company offers research
reports from 18 out of the 20 leading investment banks and brokerage firms,
according to the Institutional Investor rankings, including Merrill Lynch,
Morgan Stanley Dean Witter, Goldman Sachs and Salomon Smith Barney. In Europe,
the Company offers research reports from 18 out of the 20 leading investment
banks and brokerage firms, as ranked by the Reuters Tempest survey, and in
Asia, the Company offers research reports from 19 out of the 20 leading
investment banks and brokerage firms, as ranked by Asia Money. More than
600,000 individual investors, institutional investors and financial
professionals, including mutual fund managers, portfolio managers, 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 both the institutional
market and the individual investor market. For the institutional market, the
Company has established a number of strategic distribution relationships,
including ADP, Bloomberg, Bridge, Dow Jones and Reuters. For the individual
investor market, the Company has established a number of strategic distribution
relationships, including AOL, CBS MarketWatch and CNNfn.
The Company offers four main services: (i) MultexNET, which was launched in
June 1996; (ii) MultexEXPRESS, which was launched in January 1997; (iii) Multex
Research-On-Demand, which was launched in April 1997; and (iv) Multex Investor
Network, which was launched in November 1998. 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. Multex Investor Network gives
individual investors who register as members access to a range of financial
reports and services, including research reports on a free and pay-per-view
basis over the Internet from a majority of the contributors to MultexNET.
Multex Investor Network also includes banner advertising and sponsorship
advertising throughout the site. Sponsors to Multex Investor Network include
full-service brokerage firms and other financial institutions interested in
attracting individual investors to their products, services and brands.
Pricing of the Company's services is based on a number of factors. The annual
subscription fee for MultexNET typically ranges from $1,000 to $3,540 per
subscriber 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 $150,000 annually per subscriber installation. Fees for
information and research offered through Multex Research-On-Demand and Multex
Investor Network typically range from $10 to $150 per report, depending on the
length and type of document. Sponsorship fees for Multex Investor Network range
from $7,500 to $100,000 per month based on the level of sponsorship.
22
<PAGE>
Revenues from subscriptions to MultexNET and MultexEXPRESS are recognized in
equal installments over the term of the subscription. Revenues from Multex
Research-On-Demand and pay-per-view transactions on Multex Investor Network are
recognized upon sale. Revenues from sponsorships to Multex Investor Network are
recognized in equal installments over the term of the sponsorship. 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, Multex Research-On-Demand and Multex Investor Network are
expensed as and when incurred. The Company pays distribution fees to its
distributors and, with respect to Multex Research-On-Demand and pay-per-view
transactions on Multex Investor Network, royalties to the investment banks,
brokerage firms or third-party research providers that authored the research.
On February 27, 1998, the Company established a new subsidiary, Multex Data
Group, Inc. ("Multex Data Group"). On March 27, 1998, Multex Data Group
acquired assets (primarily software) of Research Data Group, Inc., an
aggregator of earnings estimates and a publisher of independent investment
reports, in exchange for 49% of the common stock of Multex Data Group. In
connection with this transaction, the Company issued to a principal of Research
Data Group, Inc., 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 shares at an exercise price of $7.50 per share. On December
15, 1998, the Company acquired the remaining 49% of Research Data Group, Inc.
in exchange for 83,333 shares of the Company's common stock valued
at approximately $625,000. The acquisition has been accounted for using the
purchase method of accounting and accordingly, the Company is consolidating the
results of operations of Multex Data Group effective March 27, 1998.
The Company has expanded its operations in recent years and has grown from 79
employees at December 31, 1996 to 106 employees at December 31, 1997 and to 149
employees at December 31, 1998. In January 1997, the Company opened its London
office and in 1998, the Company engaged the services of two independent
representatives 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
September 30, 1998 had an accumulated deficit of $28.6 million. The Company has
also incurred $841,000 of expenses relating to a proposed financing in 1998,
which were expensed in the three months ended September 30, 1998. In addition,
the Company has recorded cumulative deferred compensation of $1.9 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, $25,000 was amortized in 1997 and
$318,000 was amortized during the nine months ended September 30, 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. accounted for 21%, 20%, 16% and 11% of the Company's
consolidated revenues, respectively, and for the nine months ended September
30, 1998, Reuters accounted for 10% 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--We Have a High Level of Customer Concentration"
and Note 12 of Notes to the Consolidated Financial Statements.
23
<PAGE>
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. In January 1999, the Company changed its name to Multex.com,
Inc.
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>
Nine Months
Year Ended December 31, Ended September 30,
--------------------------- ----------------------
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 23.2 22.8
------- ------- ------- ---------- ---------
Gross profit............ 59.8 69.4 79.5 76.8 77.2
Operating expenses:
Sales and marketing... 188.4 88.4 58.3 65.3 46.3
Research and
development.......... 151.3 53.5 26.6 33.3 16.4
General and
administrative....... 269.7 172.0 130.3 158.6 72.6
------- ------- ------- ---------- ---------
Total operating
expenses............. 609.4 313.9 215.2 257.2 135.3
------- ------- ------- ---------- ---------
Loss from operations.... (549.6) (244.5) (135.7) (180.4) (58.1)
Net interest income
(expense).............. 2.7 2.3 2.1 1.6 (0.9)
Other expense........... -- -- -- -- 7.7
------- ------- ------- ---------- ---------
Net loss................ (546.9)% (242.2)% (133.6)% (178.8)% (66.7)%
======= ======= ======= ========== =========
</TABLE>
Nine Months Ended September 30, 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.com 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 161.4% to $9.3 million for the nine months ended
September 30, 1998 from $3.6 million for the nine months ended September 30,
1997. The increase was due in approximately equal measures to the introduction
of Multex Research-On-Demand in April 1997, a significant increase in the
number of MultexEXPRESS installations, growth in the number of MultexNET
subscribers and an increase in the level of professional services provided to
customers.
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, Web site
development costs for MultexEXPRESS customers, purchases of equipment for
resale and telecommunications costs.
Cost of revenues increased 157.0% to $2.1 million for the nine months ended
September 30, 1998 compared to $828,000 for the nine months ended September 30,
1997. As a percentage of revenues, cost of
24
<PAGE>
revenues were 22.8% and 23.2% for the nine months ended September 30, 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, the increased cost of equipment purchased for
resale, increased Web site development costs resulting from the increased
number of MultexEXPRESS customers, and additional telecommunication charges
resulting from increased sales of subscriptions for MultexNET and
MultexEXPRESS. The Company incurred minimal royalty and distribution expense in
the nine months ended September 30, 1997 related to Multex Research-On-Demand,
following the launch of that service in April 1997. While the gross margin for
the nine months ended September 30, 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
Multex Research-On-Demand sales and 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 85.5% to
$4.3 million for the nine months ended September 30, 1998 compared to $2.3
million for the nine months ended September 30, 1997. As a percentage of
revenues, sales and marketing expenses decreased to 46.3% from 65.3% for the
nine months ended September 30, 1998 and 1997, respectively. The increase in
dollar terms was due primarily to an expansion of the sales force both
domestically and internationally and increased marketing activities, including
the complete redesign of the Company's marketing materials and additional costs
resulting from commencing and expanding the Company's international marketing
efforts. The Company expects sales and marketing expenses to increase
significantly as the Company continues to expand 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 28.6% to
$1.5 million for the nine months ended September 30, 1998 compared to $1.2
million for the nine months ended September 30, 1997. As a percentage of
revenues, research and development expenses decreased to 16.4% from 33.3% for
the nine months ended September 30, 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, salary increases
and, following its acquisition in March 1998, expenses incurred by developers
based at the Company's Multex Data Group subsidiary. 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.
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 19.6% to $6.8 million for the nine months ended September 30, 1998
compared to $5.7 million for the nine months ended September 30, 1997. As a
percentage of revenues, general and administrative expenses decreased to 72.6%
from 158.6% for the nine months ended September 30, 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, including costs associated with the London and Multex Data Group
offices. 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 15.8% to $5.4
million for the nine months ended September 30, 1998 as compared to $6.4
million for the nine months ended September 30, 1997. As a
25
<PAGE>
percentage of revenues, loss from operations was (58.1)% and (180.4)% for the
nine months ended September 30, 1998 and 1997, respectively.
Interest Income (Expense) and Other Expense
Net interest expense was $86,000 for the nine months ended September 30, 1998
as compared to net interest income of $57,000 for the nine months ended
September 30, 1997. The increase in net interest expense was due principally to
interest on loans used to acquire equipment which amounted to $265,000.
Other expense was $716,000 for the nine months ended September 30, 1998 as
compared to none for the nine months ended September 30, 1997. This item was
comprised of other expenses of $841,000 relating to a proposed financing in
1998, offset in part by other income on 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, the costs of creating
Web sites for MultexEXPRESS customers 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 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, including print advertising and direct mail.
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.
26
<PAGE>
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.
27
<PAGE>
Selected Unaudited Quarterly Results of Operations
The following table sets forth certain unaudited quarterly statement of
operations data for each of the seven quarters ended September 30, 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
--------------------------------------------------------------------------
June
Mar. 31, June 30, Sept. 30, Dec. 31, Mar. 31, 30, Sept. 30,
1997 1997 1997 1997 1998 1998 1998
-------- -------- --------- -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(in thousands)
Revenues................ $ 950 $ 1,212 $ 1,404 $ 2,448 $ 2,714 $ 3,115 $ 3,492
Cost of revenues........ 242 284 302 404 694 752 684
------- ------- ------- ------- ------- ------- -------
Gross profit............ 708 928 1,102 2,044 2,020 2,363 2,808
Operating expenses:
Sales and marketing... 652 943 733 1,179 1,164 1,334 1,819
Research and
development.......... 370 393 423 415 440 513 573
General and
administrative....... 1,932 1,849 1,875 2,180 2,004 2,379 2,379
------- ------- ------- ------- ------- ------- -------
Total operating
expenses........... 2,954 3,185 3,031 3,774 3,608 4,226 4,771
------- ------- ------- ------- ------- ------- -------
Loss from operations.... (2,246) (2,257) (1,929) (1,730) (1,588) (1,863) (1,963)
Net interest income
(expense).............. 23 (5) 39 68 (196) 56 54
Other income (expense).. -- -- -- -- 125 -- (841)
------- ------- ------- ------- ------- ------- -------
Net loss................ $(2,223) $(2,262) $(1,890) $(1,662) $(1,659) $(1,807) $(2,750)
======= ======= ======= ======= ======= ======= =======
<CAPTION>
Percentage of Total Revenues
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues........ 25.5 23.4 21.5 16.5 25.6 24.1 19.6
------- ------- ------- ------- ------- ------- -------
Gross profit............ 74.5 76.6 78.5 83.5 74.4 75.9 80.4
Operating expenses:
Sales and marketing... 68.7 77.8 52.2 48.2 42.9 42.8 52.1
Research and
development.......... 38.9 32.4 30.1 16.9 16.2 16.5 16.4
General and
administrative....... 203.3 152.6 133.6 89.1 73.8 76.4 68.1
------- ------- ------- ------- ------- ------- -------
Total operating
expenses........... 310.9 262.8 215.9 154.2 132.9 135.7 136.6
------- ------- ------- ------- ------- ------- -------
Loss from operations.... (236.4) (186.2) (137.4) (70.7) (58.5) (59.8) (56.2)
Net interest income
(expense).............. 2.5 (0.4) 2.8 2.7 (7.2) 1.8 1.5
Other income (expense).. -- -- -- -- 4.6 -- (24.1)
------- ------- ------- ------- ------- ------- -------
Net loss................ (233.9)% (186.6)% (134.6)% (68.0)% (61.1)% (58.0)% (78.8)%
======= ======= ======= ======= ======= ======= =======
</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 margins fluctuate due to several factors. Increased prices and
improved operating efficiencies lead to an increase in gross margin, which is
also enhanced when significant volumes of professional services are supplied,
as in the three months ended December 31, 1997. In other quarters, when the
Company has significant amounts of equipment resale transactions, such as in
the three months ended March 31, 1998, gross margin tends to decrease.
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
28
<PAGE>
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.
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--Our Quarterly Operating Results Fluctuate Significantly."
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations primarily through the sale of equity
securities. Through September 30, 1998, the Company had received an aggregate
of $32.7 million in net proceeds from the sale of four series of convertible
preferred stock. At September 30, 1998, the Company had $5.3 million of cash
and cash equivalents. In December 1998, the Company received $19.9 million in
net proceeds from the sale of a fifth series of convertible preferred stock.
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
$2.4 million and $4.9 million for the nine months ended September 30, 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, and
$533,000 for the nine months ended September 30, 1997. Net cash provided by
investing activities was $7.0 million for the nine months ended September 30,
1998. 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 $9.8 million for the nine months ended September 30, 1997. For the nine
months ended September 30, 1998, the Company used $960,000 in financing
activities. Net cash provided by and used 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
29
<PAGE>
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 for the next twelve months.
Impact of the Year 2000
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 may recognize a date using "00" as the year 1900 rather than the year
2000. As a result, computer systems and/or software used by many companies and
governmental agencies may need to be upgraded to comply with such Year 2000
requirements or risk system failure or miscalculations causing disruptions of
normal business activities.
State of Readiness. The Company has begun to assess the Year 2000 readiness
of its information technology ("IT") systems, including the hardware and
software that enable the Company to provide and deliver its MultexNET,
MultexEXPRESS, Multex Research-On-Demand and Multex Investor Network services,
and its non-IT systems. The Company's assessment plan consists of the
following:
. quality assurance testing of its internally developed proprietary
software incorporated in its MultexNET, MultexEXPRESS, Multex Research-
On-Demand and Multex Investor Network services ("Services Software");
. contacting third-party vendors and licensors of material hardware,
software and services that are both directly and indirectly related to
the delivery of its MultexNET, MultexEXPRESS, Multex Research-On-Demand
and Multex Investor Network services;
. contacting providers of material non-IT systems;
. assessment of repair or replacement requirements;
. repair or replacement;
. implementation; and
. creation of contingency plans in the event of Year 2000 failures.
The Company plans to perform a Year 2000 simulation on its Services Software
during the first half of 1999 to test system readiness. Based on the results of
its Year 2000 simulation test, the Company intends to revise the code of its
Services Software as necessary to improve the Year 2000 compliance of its
Services Software. The Company has been informed by many of its vendors of
material hardware and software components of its IT systems that the products
used by the Company are currently Year 2000 compliant. The Company will require
vendors of its other material hardware and software components of its IT
systems to provide assurances of their Year 2000 compliance. The Company plans
to complete this vendor process during the first half of 1999. The Company is
currently assessing the materiality of its non-IT systems and will seek
assurances of Year 2000 compliance from providers of material non-IT systems.
Until such testing is complete and such vendors and providers are contacted and
have responded, the Company will not be able to completely evaluate whether its
IT systems or non-IT systems will need to be revised or replaced.
Costs. To date, the Company has not incurred any material costs in
identifying or evaluating Year 2000 compliance issues. Most of its expenses
have related to, and are expected to continue to relate to, the operating costs
associated with time spent by employees in the evaluation process and Year 2000
compliance matters generally. At this time, the Company does not possess the
information necessary to estimate the potential costs of revisions to its
Services Software should such revisions be required or the replacement of
third-party software, hardware or services that are determined not to be Year
2000 compliant. Although the Company does
30
<PAGE>
not anticipate that such expenses will be material, such expenses, if higher
than anticipated, could have a material adverse effect on the Company's
business, results of operations and financial condition.
Risks. The Company is not currently aware of any Year 2000 compliance
problems relating to its Services Software or its IT or non-IT systems that
would have a material adverse effect on the Company's business, results of
operations and financial condition, without taking into account the Company's
efforts to avoid or fix such problems. There can be no assurance that the
Company will not discover Year 2000 compliance problems in its Services
Software that will require substantial revisions or replacements. In addition,
there can be no assurance that third-party software, hardware or services
incorporated into the Company's material IT and non-IT systems will not need to
be revised or replaced, which could be time consuming and expensive. The
failure of the Company to fix its Services Software or to fix or replace third-
party software, hardware or services on a timely basis could result in lost
revenues, increased operating costs and other business interruptions, any of
which could have a material adverse effect on the Company's business, results
of operations and financial condition. Moreover, the failure to adequately
address Year 2000 compliance issues in its Services Software, and its IT and
non-IT systems could result in claims of mismanagement, misrepresentation or
breach of contract and related litigation, which could be costly and time-
consuming to defend.
In addition, there can be no assurance that governmental agencies, utility
companies, Internet access companies, third-party service providers and others
outside the Company's control will be Year 2000 compliant. The failure by such
entities to be Year 2000 compliant could result in a systemic failure beyond
the control of the Company, such as a prolonged Internet, telecommunications or
electrical failure, which could also prevent the Company from delivering its
MultexNET, MultexEXPRESS, Multex Research-On-Demand and Multex Investor Network
services, decrease the use of the Internet or prevent users from accessing its
MultexNET, MultexEXPRESS, Multex Research-On-Demand and Multex Investor Network
services, any of which would have a material adverse effect on the Company's
business, results of operations and financial condition.
Contingency Plan. As discussed above, the Company is engaged in an ongoing
Year 2000 assessment and has not developed any contingency plans. The results
of the Company's Year 2000 simulation testing and the responses received from
third-party vendors and service providers will be taken into account in
determining the need for and nature and extent of any contingency plans.
Recent Accounting Pronouncements
See Note 1 to Notes to Consolidated Financial Statements for recently adopted
and recently issued accounting standards.
31
<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.com is a leading provider of online investment research and
information services designed to meet the needs of individual and institutional
investors, including investment banks, brokerage firms and corporations. The
Company's services enable timely online access to over 900,000 research reports
and other investment information on over 15,000 companies. These reports are
published by more than 400 investment banks, brokerage firms and third-party
research providers worldwide. In the United States, the Company offers research
reports from 18 out of the 20 leading investment banks and brokerage firms,
according to the Institutional Investor rankings, including Merrill Lynch,
Morgan Stanley Dean Witter, Goldman Sachs and Salomon Smith Barney. In Europe,
the Company offers research reports from 18 out of the 20 leading investment
banks and brokerage firms, as ranked by the Reuters Tempest survey, and in
Asia, the Company offers research reports from 19 out of the 20 leading
investment banks and brokerage firms, as ranked by Asia Money. More than
600,000 individual investors, institutional investors and financial
professionals, including mutual funds managers, portfolio managers, 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 both the institutional
market and the individual investor market. For the institutional market, the
Company has established a number of strategic distribution relationships,
including ADP, Bloomberg, Bridge, Dow Jones and Reuters.
For the individual investor market, the Company has recently launched the
Multex Investor Network, an Internet service targeting the rapidly growing
online individual investor market. Multex Investor Network is an interactive
community for online investors. Visitors to Multex Investor Network can join as
a "member" at no cost. Members of Multex Investor Network have access to a
range of member services, investment research reports and other financial
information from Multex.com, sponsoring brokerage firms and investment banks,
as well as member generated content. Members also have access to over 250,000
premium "pay-per-view" investment and brokerage research reports from over 250
brokerage firms, investment banks and third-party information providers. The
Company has established a number of strategic distribution relationships
involving the Multex Investor Network, including a strategic distribution
relationship with America Online, Inc. to serve as the anchor tenant for
brokerage research on the AOL Personal Finance channel. America Online is also
a recent investor in the Company. In addition, the Company has established
distribution relationships for the Multex Investor Network with other Internet
portals and financial sites, including The Wall Street Journal Interactive,
CNNfn, CBS MarketWatch, Quote.com, Hoovers, and Edgar On-Line.
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
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. 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.
The emergence of the Internet as a tool for communications and commerce is
changing the markets for financial transactions and information services.
Individuals are rapidly embracing the Internet because it is
32
<PAGE>
simple to access and it makes vast amounts of information quickly available.
According to International Data Corporation, the number of users of the
Internet grew to 34 million users worldwide by the end of 1996, and is expected
to reach approximately 139 million users by the end of 2000.
Individuals are showing strong preferences for transacting certain types of
business, including trading securities, via the Internet, rather than in person
or over the telephone. These transactions are being streamlined and can now be
performed directly virtually anywhere at any time. Individual investors have
accepted and even welcomed self-directed online transactions because such
transactions can be faster, less expensive and more convenient than
transactions conducted through a human intermediary. The Company believes that
these trends evidence a fundamental change in the way certain individual
investors manage their financial assets. As individual investors seek to
independently manage their financial assets, these investors may seek
investment research and other financial reports online. As a result of these
factors, online investing accounts are gaining popularity and the aggregate
value of these accounts is expected to grow from $ billion in 1998 to $524
billion by 2001, according to Forrester Research, Inc.
Investment research is one of the primary tools individual and 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. The ability to offer investment
research to investors who traditionally have not had timely access to
investment research is increasingly becoming a competitive advantage and a key
distinguishing feature for brokerage firms. 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.
Individual and 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" or near "real-time" basis. Investment research traditionally has
been mailed to investors, which results in a delay in the receipt of the
research and significant 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. Likewise, 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.
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
varying degrees of 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. Investment
banks and brokerage firms need a solution to their internal and client
investment research distribution needs. Institutional investors need a real-
time, commingled source for their investment research needs. Individual
investors need access to research from investment banks, brokerage firms and
other third-party providers.
33
<PAGE>
THE MULTEX.COM SOLUTION
Multex.com is a leading provider of online investment research services
designed to meet the needs of individual investors and institutional investors,
including investment banks, brokerage firms and corporations. 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, Goldman Sachs and Salomon Smith Barney. 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.com
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:
Extensive Research Database. Multex.com provides entitled investors access to
an online database of more than 900,000 research reports and other investment
information on over 15,000 companies. These reports are published by more than
400 investment banks, brokerage firms and third-party research providers
worldwide. In the United States, the Company offers research reports from 18
out of the 20 leading investment banks and brokerage firms, according to the
Institutional Investor rankings, including Merrill Lynch, Morgan Stanley Dean
Witter, Goldman Sachs and Salomon Smith Barney. In Europe, the Company offers
research reports from 18 out of the 20 leading investment banks and brokerage
firms, as ranked by the Reuters Tempest survey, and in Asia, the Company offers
research reports from 19 out of 20 leading investment banks and brokerage
firms, as ranked by Asia Money. More than 600,000 individual investors,
institutional investors and financial professionals, including mutual fund
managers, portfolio managers, 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 15,000 new reports each week. Multex.com also provides
electronic access on a pay-per-view basis of more than 250,000 recently
published research reports from more than 250 leading contributors to
individual investors, buy-side professionals, corporate executives and investor
relations specialists. Research reports in the Multex.com database include all
text, charts, graphs, tables, color and document formatting contained in the
original report. For certain customers, Multex.com 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.com 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.com 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.com database can be accessed only by authorized users.
Comprehensive Search Capabilities. Multex.com 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.com 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
34
<PAGE>
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.com database. Research and information providers
can use existing word processing and desktop publishing software, such as
Microsoft Word, Excel, PowerPoint, WordPerfect, 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 provider of online investment
research services for the individual and institutional 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.com research database. The Company's database is growing rapidly and the
Company adds approximately 15,000 new research reports to its database each
week. By establishing relationships with other third-party providers of
investment and financial information, including EDGAR Online, Standard &
Poor's, ValueLine and others, Multex.com offers extensive third-party
investment research and information. The Company, through Multex Data Group,
its wholly-owned subsidiary, is also developing the ability to provide
proprietary earnings estimates and related financial reports. Multex.com
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.com 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 its 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.com believes that increasing the
brand name awareness of the Company and its services in the financial community
will contribute to its success. The Company 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. The
Company seeks to incorporate its branded logo on each Web site that utilizes
its technology to increase awareness of the Company and its services.
Target Individual Investor Market. The Company, through Multex Investor
Network, is targeting the expanding individual investor market. The Company
intends to expand its related sales and marketing efforts in order to increase
traffic on the Multex Investor Network and expand its member base. In addition,
to address the individual investor market, the Company intends to capitalize on
its arrangement with America Online and to develop links to the Multex Investor
Network from other leading Internet portals and personal finance Web sites. The
Company is also seeking to expand the amount of research available to
individual investors on the Multex Investor Network from leading investment
banks and brokerage firms. The Company believes that the availability of Multex
Investor Network will enhance individual investor's access to institutional
quality research and further the Company's position as a leading online
provider of such research.
35
<PAGE>
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.com 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 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 500,000+ Annual subscription
proprietary research and banks and brokerage firms
other information
Multex Research- Access to commingled Commercial and investment banks, 1,600+ Pay-per-view
On-Demand research on a delayed corporations, financial advisors
basis and professional services firms
Multex Investor Access to free and Individual investors 100,000+ Advertising,
Network premium investment sponsorship and
research and other reports pay-per-view
</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
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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 has ended (typically 15
days).
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.
The annual subscription fee for MultexNET typically ranges from $1,000 to
$3,540 per subscriber depending upon the number of users at the particular
buyside institution or corporation who have access to 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 31 leading investment banking and
brokerage firms, with more than 500,000 users (approximately 450,000 of which
are generated from one MultexEXPRESS installation), at December 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 $150,000 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
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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, 50% as of December 31, 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.
Multex Investor Network
Multex Investor Network is an Internet service targeting the rapidly growing
online individual investor market. Multex Investor Network is an interactive
community for online investors. Visitors to Multex Investor Network can join as
a "member" at no cost. Members of Multex Investor Network can download, view
and print a wide range of investment research reports and investment content
from Multex, sponsoring brokerage firms and investment banks, as well as member
generated content. Members also have access to over 250,000 premium "pay-per-
view" investment and brokerage research reports from over 250 brokerage firms,
investment banks and third-party information providers. The Company has
established a number of strategic distribution relationships regarding the
Multex Investor Network, including a strategic distribution relationship with
America Online to serve as the anchor tenant for brokerage research on the AOL
Personal Finance channel. In addition, the Company has established distribution
relationships for the Multex Investor Network with other Internet portals and
financial sites, including The Wall Street Journal Interactive, CNNfn, CBS
MarketWatch, Quote.com, Hoovers, and Edgar On-Line.
The Company generates revenue from Multex Investor Network through the sale
of sponsorships to leading investment banks and brokerage firms, the sale of
banner advertisements that allow interested users to link directly to the
advertisers' own Web sites, and pay-per-view sales of investment research and
other financial reports. To date, the Company has signed sponsorship agreements
with Merrill Lynch, Salomon Smith Barney and Gruntal & Co.
In connection with the Merrill Lynch sponsorship, Multex.com recently
assisted Merrill Lynch in the launch www.askmerrill.com, a four-month trial Web
site that makes Merrill Lynch's award-winning research available to anyone with
access to the Internet. Specifically, the trial Web site, developed by Merrill
Lynch in partnership with the Company, gives registered users access to: (i)
Merrill Lynch Research reports on specific companies, including analyst reports
and earnings estimates; (ii) an at-a-glance listing of the latest research
reports available from Merrill Lynch analysts and (iii) a research tracker
feature that automatically displays reports for as many as ten companies
specified by the user.
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Other Services
The Company, through Multex Data Group, 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.
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.com database consists of more than 900,000 research
reports and other investment information, and is growing at the rate of more
than 15,000 new reports each week. Research contributors include more than 400
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>
<S> <C>
ABN Amro Chicago ING Barings PaineWebber
Corporation Interstate/Johnson Lane* Piper Jaffray*
BancBoston Robertson J.P. Morgan Securities Ragen McKenzie*
Stephens* J.C. Bradford & Co. * Raymond James &
Bear Stearns & Co. Inc. Janney Montgomery Scott* Associates*
Brown Brothers Harriman* Jefferies & Co. * Robinson-Humphrey*
BT Alex. Brown* Keefe, Bruyette & Woods* Salomon Smith Barney*
Chase Securities* Legg Mason Wood Walker* Sanford Bernstein
CIBC Oppenheimer* Merrill Lynch* Schroder Securities
CS First Boston Morgan Keegan & Company* Ltd.
Dain Rauscher Wessels* Morgan Stanley Dean SG Cowen*
Goldman Sachs & Co. Witter Soundview Financial
Gruntal & Co.* NationsBanc Montgomery Group*
Hambrecht & Quist* Securities Volpe Brown Whelan
Warburg Dillon Read*
</TABLE>
Selected International Information Providers
<TABLE>
<S> <C>
ABN Amro Dresdner Kleinwort Benson PaineWebber
Alfred Berg Fox Pitt, Kelton* International
Auerbach Grayson* Goldman Sachs Paribas*
Bankers Trust Australia International RBC Dominion
Limited HSBC James Capel Securities Inc.
Cazenove & Co. Indosuez WI Carr* Robert Fleming & Co.
Clarion Securities ING Barings Salomon Smith Barney*
Commerzbank AG Jardine Fleming Holdings Santander Investment
Credit Lyonnais Europe Ltd. Securities*
Credit Suisse First JP Morgan Securities Ltd. SBC Warburg Dillon
Boston Merrill Lynch Read
Daiwa Institute of International* Schroder & Co. Ltd.*
Research Ltd.* Morgan Stanley SG Securities PTE
Deutsche Morgan Grenfell International Union Bank of
Nomura Securities Switzerland
International Yorktown Securities*
</TABLE>
Selected Third-Party Information Providers
<TABLE>
<S> <C>
Baseline* Instinet Research* The Red Chip Review*
CNBC/Dow Jones* IPO Maven* Value Line Mutual Fund
Disclosure* Renaissance Capital* Survey*
Ford Investor Services* Standard & Poor's* Wall Street
Transcript*
WEFA*
- --------
* Also provides research and information for Multex Research-On-Demand
</TABLE>
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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 31 of the world's leading brokerage
firms, and thousands of users access Multex Research-On-Demand. Multex Investor
Network, which was launched in November 1998, had more than 100,000 registered
users on December 31, 1998.
Set forth below is a representative list of the Company's customers:
<TABLE>
<S> <C> <C>
AIM Advisors Gabelli Asset Management Morgan Stanley Asset
Alliance Capital Management GE Capital Management
Arthur Andersen & Company Goldman Sachs & Co. Oppenheimer Funds
BancBoston Robertson Stephens Gruntal & Co. PaineWebber
Barclays Global Investors Heidrick & Struggles Piper Jaffray
BT Alex. Brown Hewlett-Packard Putnam Investments
Conseco Inc. 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 SG Cowen
Fleet Investment Advisors-- Legg Mason Wood Walker Soundview Financial Group
Equity Partners McKinsey & Co. UBS Securities
Franklin Research and Development Merrill Lynch Asset Management 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, Dow Jones and Reuters to assist the Company in
marketing its services to institutional investors, although in the case of
Bridge, the services are not expected to become available until the middle of
1999. 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. The Company recently renegotiated its strategic
relationship with Reuters for the five-year term beginning on January 1, 1999.
See "Certain Transactions."
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, MediaOne, Quote.com, Stock Smart, WSRN and Ziff Davis Interactive
Investor, to further attract traffic to the Multex Investor Network and the
Company's other Web sites.
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SALES AND MARKETING
The Company sells its services through a sales and marketing organization,
which consisted of an aggregate of 57 employees at December 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. Furthermore, sponsorships and
advertising space on the Multex Investor Network are sold pursuant to an
agreement with DoubleClick.
The Company's 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 two
independent representatives 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. The Company also utilizes its Web site,
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 rapidly 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 December
31, 1998, Multex had 24 employees engaged in research and development. Research
and development expenses were $1.4 million in 1996, $1.6 million in 1997 and
$1.5 million in the nine months ended September 30, 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--We are Dependent on Continued
Growth of the Emerging Market for Online 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
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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 December 31, 1998, Multex had 30
employees engaged in customer service and network support.
System Architecture and Technology
Multex.com 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.com 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--We Face
Risks of System Failure, Security Breaches or Other Damage to Our Systems."
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. In addition, extensive company-
specific information, as well as general investment research relating to
particular industries, may be obtained, frequently without charge, from public
sources, including annual reports, Standard & Poor's company-specific reports
and Value Line investment research reports, all of which are available from
public libraries and from the companies to which such reports relate, and
certain industry research appearing in financial periodicals.
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.
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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. The Company's MultexEXPRESS service competes with
services provided by in-house management information services personnel and
independent systems integrators. The Company's Multex Investor Network service
competes with Web sites that offer personal finance information (e.g.,
Microsoft Investor and Yahoo! Finance) and Web sites hosted by investment banks
and brokerage firms (e.g., DLJ Direct and Prudential Securities) that offer
such firm's research reports on-line either exclusively to their customers or
more generally to the public. 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 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. See "Risk Factors--Our Market
is Highly Competitive."
INTELLECTUAL PROPERTY
The Company's future success will depend, in part, on its intellectual
property, 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 these U.S. 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, two patents have been
issued to the Company relating to the secure electronic distribution of
research documents over the World Wide Web to authorized investors and to a
corporate information communications and delivery system. 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
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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 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 and Multex Investor Network. 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--We are Dependent on Intellectual
Property and Face a 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
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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--We may
be Subject to Government Regulation and Legal Uncertainties."
Employees
At December 31, 1998, the Company employed 149 persons, of which 57 were in
sales and marketing, 30 were in network operations, 21 were in contributor
relations, 24 were in research and development and 17 were in accounting,
finance and administration. In addition, the Company retains the services of
two independent representatives 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--We
are Dependent on our 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.
45
<PAGE>
MANAGEMENT
Directors, Executive Officers and Key Employees
Directors, executive officers and other key employees of the Company, and
their ages as of December 31, 1998, are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Isaak Karaev(1)......... 52 Chairman, President and Chief Executive Officer
James M. Tousignant..... 38 Executive Vice President
Philip Callaghan........ 46 Chief Financial Officer
Gregg B. Amonette....... 46 Senior Vice President, Sales and Marketing
John J. Mahoney......... 39 Senior Vice President, Product Development
Mikhail Akselrod........ 43 Vice President, Operations
Malcolm Draper, Jr...... 46 Vice President, Multex Data Group, Inc.
William Ferguson........ 50 Managing Director, International Operations
Eduard Kitain........... 32 Vice President, Software Engineering
Philip Scheps........... 52 Vice President, Finance and Controller
Davis Gaynes(2)(3)...... 36 Director
I. Robert Greene(1)(2).. 38 Director
Peter G. LaBonte........ 39 Director
Lennert J. Leader....... 43 Director
Milton J.
Pappas(1)(2)(3)........ 70 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 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.
However, he intends to continue to serve on the Board of Directors following
the consummation of the offering.
James M. Tousignant co-founded the Company in April 1993 and has served as
the Company's Executive Vice President since December 1998. Mr.Tousignant
served as the Company's Senior Vice President from April 1993 to December 1998.
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
distributor of 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 Senior Vice President, Sales
and Marketing since December 1998, and also served as the Company's Vice
President, Sales and Marketing from August 1996 to December 1998. From January
1995 to July 1996, Mr. Amonette was Vice President and General Manager of
Micrognosis, Inc., a division of CSK Software, Inc. and 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.
46
<PAGE>
John J. Mahoney has served as the Company's Senior Vice President, Product
Development since December 1998, and also served as the Company's Vice
President, Product Development from April 1993 to December 1998. Prior to
joining the Company, Mr. Mahoney was Vice President of Workstation Products at
ADP from 1987 to March 1993.
Mikhail Akselrod joined the Company in April 1993 and has served as the
Company's Vice President, 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, Multex Data
Group, 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. From March 1994 to April
1995, Mr. Draper was Chief Financial and Administrative Officer of Paresco,
Inc., an asset management company. 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, Finance and
Controller since December 1993. From 1990 to November 1993, Mr. Scheps served
as Controller of Harve Benard Ltd., a wholesale and retail apparel company.
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 which oversees Reuters' main
operating businesses in the U.S. Mr. Gaynes currently serves as Executive Vice
President of Sales and Marketing of Instinet Corporation, an affiliate of
Reuters which 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 January 1999, Mr. Greene has been a General Partner of Chase Capital
Partners, a global private equity organization. From August 1994 to December
1998, he was a Principal with Chase Capital Partners. From 1988 to July 1994,
Mr. Greene was an Associate, a Director and a 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.
Peter G. LaBonte has served as a director of the Company since April 1998.
Mr. LaBonte is Vice President, International Marketing of Reuters, a position
he has held since January 1997. From April 1996 to February 1997, he was a
Managing Director, Emerging Markets Services of Moody's Investors Services.
From March 1995 to April 1996, Mr. LaBonte served as Vice President, Fidelity
Brokerage Group of Fidelity Investments. From 1988 to March 1995, he was Vice
President, Capital International of Morgan Stanley & Co. Reuters America Inc.
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.
47
<PAGE>
Lennert J. Leader has served as a director of the Company since December
1998. Mr. Leader is President of America Online, Inc. ("AOL") Investments. Mr.
Leader served as Senior Vice President, Chief Financial Officer and Treasurer
of AOL from September 1989 until July 1998 and was Chief Accounting Officer
from October 1993 until July 1998. Prior to joining AOL, Mr. Leader was Vice
President, Finance, of LEGENT Corporation, a computer software and services
company, from March 1989 to September 1989. He also served as Chief Financial
Officer of Morino, Inc., a computer software and services company, from 1986 to
March 1989 and as its Director of Finance from 1984 to 1986. Prior to joining
Morino, Inc. in 1984, he was an audit manager at Price Waterhouse. Mr. Leader
was named to the Board of Directors pursuant to an agreement which will
terminate upon the consummation of the offering.
Milton J. Pappas served as a director of the Company from November 1993 to
March 1994, and has served as a director 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 determines the salaries
and incentive compensation of the officers of the Company and provides
recommendations for the salaries and incentive compensation of the Company's
employees. 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.
Under the Automatic Option Grant Program of the 1999 Stock Option Plan (as
defined below under "--1999 Stock Option Plan"), and subject to the last
sentence of this paragraph, each individual who is
48
<PAGE>
serving as a non-employee member of the Board of Directors on the date the
Underwriting Agreement is executed and who has not previously been in the
employ of the Company will receive at that time an option to purchase 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 2000 Annual Meeting, each individual who is to continue to
serve as a non-employee member of the Board of Directors will receive an option
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 options under the Automatic
Option Grant Program.
Executive Compensation
The following table sets forth all compensation earned during the fiscal year
ended December 31, 1998 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 1998 (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..................................... $200,000 -- 166,667
President and Chief Executive Officer
James M. Tousignant.............................. 129,942 $90,000 61,667
Executive Vice President
Philip Callaghan................................. 130,769 90,000 16,667
Chief Financial Officer
Gregg B. Amonette................................ 130,000 90,000 45,000
Senior Vice President, Sales and Marketing
John J. Mahoney.................................. 126,730 75,000 11,667
Senior Vice President, Product Development
</TABLE>
- --------
(1) The column for "Other Annual Compensation" has been omitted because there
is no compensation required to be reported in such column. The aggregate
amount of perquisites and other personal benefits provided to each Named
Executive Officer is less than 10% of the total annual salary and bonus of
such officer.
49
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding options granted
to the Named Executive Officers during the fiscal year ended December 31, 1998.
The Company has never granted any stock appreciation rights.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
-------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
NUMBER OF PERCENT OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS EXERCISE APPRECIATION
UNDERLYING GRANTED TO PRICE FOR OPTION TERM(3)
OPTIONS EMPLOYEES PER EXPIRATION ---------------------
NAME GRANTED IN 1998(2) SHARE($) DATE 5% 10%
- ---- ---------- ---------------- -------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Isaak Karaev............ 166,667(4) 25.5% $7.50 11/29/08 $ 786,120 $ 1,992,182
James M. Tousignant..... 11,667 1.8 11.25 4/23/08 82,545 209,185
50,000(4) 7.6 7.50 11/29/08 235,835 597,653
Philip Callaghan........ 11,667 1.8 11.25 4/23/08 82,545 209,185
5,000 0.8 7.50 12/15/08 23,584 59,765
Gregg B. Amonette....... 11,667 1.8 11.25 4/23/08 82,545 209,185
33,333(4) 5.1 7.50 12/15/08 157,222 398,432
John J. Mahoney......... 11,667 1.8 11.25 4/23/08 82,545 209,185
</TABLE>
- --------
(1) Each option represents the right to purchase one share of common stock. The
options shown in this column were all 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. The options with an exercise price
of $11.25 per share were granted on April 24, 1998. The options with an
exercise price of $7.50 were granted to Mr. Callaghan on December 14, 1998
and to the other recipients listed herein on December 16, 1998. In
addition, the options will vest in the event of an acquisition of the
Company (whether by merger or asset sale) or if any person (other than Mr.
Karaev) becomes the owner of more than 50% of the common stock of the
Company.
(2) In the year ended December 31, 1998, the Company granted options to
employees to purchase an aggregate of 654,833 shares of common stock.
(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 the rules of the Securities and Exchange 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) These options vest on the date which is six years following the date of
their grant, but may vest earlier if the Company achieves certain
milestones. Specifically, the options will vest with respect to (i) 50% of
the shares when total gross revenues in any 12-month period exceed $25
million and (ii) the other 50% of the shares when total gross revenues in
any 12-month period exceed $40 million and the Company achieves a positive
EBITDA (earnings before interest, taxes, depreciation and amortization).
50
<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, 1998 and the number and value of unexercised options held by
each of the Named Executive Officers at December 31, 1998.
<TABLE>
<CAPTION>
Number of Securities
Number of Subject to Unexercised Value of Unexercised
Shares Options at In-the-Money Options
Acquired December 31, 1998 at December 31, 1998(1)
on Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- --------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Isaak Karaev............ 66,667 $547,000 250,000 166,667 $1,668,750 --
James M. Tousignant..... 12,500 9,000 4,167 78,333 28,125 $115,500
Philip Callaghan........ 29,167 283,875 -- 54,187 -- 253,125
Gregg B. Amonette....... 25,000 215,625 -- 86,667 -- 281,250
John J. Mahoney......... 50,000 36,000 22,917 30,417 166,688 126,563
</TABLE>
- --------
(1) There was no public trading market for the common stock as of December 31,
1998. The fair market value as of December 31, 1998 was determined by the
Board of Directors to be $7.50 per share.
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.
1999 Stock Option Plan
The Company's 1999 Stock Option Plan (the "1999 Stock Option Plan") is
intended to serve as the successor equity incentive program to the Company's
existing 1993 Stock Incentive Plan (the "Predecessor Plan") and will become
effective prior to the date of the prospectus. The Company has reserved for
issuance 2,274,250 shares of common stock under the 1999 Stock Option Plan.
This initial share reserve is comprised of the shares issuable upon exercise of
outstanding stock options granted under the Predecessor Plan plus the remaining
share reserve available for option grants under that plan. 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 1999 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
1999 Stock Option Plan upon the effective date of this offering, and no further
option grants will be made under the Predecessor Plan thereafter. 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 1999
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 1999 Stock Option Plan.
The 1999 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 the Plan
51
<PAGE>
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 1999 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 1999 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) upon 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 vest in the event
of an acquisition of the Company (whether by merger or asset sale) or if any
person (other than Mr. Karaev) becomes the owner of more than 50% of the common
stock of the Company.
52
<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 on the date the Underwriting Agreement is executed 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 2000 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 ten 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
53
<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 1999 Stock Option Plan at any
time, subject to any required stockholder approval. The 1999 Stock Option Plan
will terminate on the earliest of (i) ten years after the date that the Board
of Directors adopts the 1999 Stock Option Plan, (ii) the date on which all
shares available for issuance under the 1999 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.
1999 Employee Stock Purchase Plan
The Company has reserved for issuance 500,000 shares of Common Stock under
the Company's 1999 Employee Stock Purchase Plan (the "Employee Stock Purchase
Plan"), which will become effective on the date the Underwriting Agreement is
executed. 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.
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 April 2001. The next offering period will commence on the first
business day in May 2001, 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 (May 1 or November 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 April and October 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 April 2009, 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.
Mr. Gaynes, a member of the Compensation Committee, serves as Executive Vice
President of an affiliate of Reuters, one of the Company's strategic
distributors. Reuters America Inc., an affiliate of Reuters, is a significant
stockholder of the Company. See "Certain Relationships and Related Party
Transactions."
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CERTAIN TRANSACTIONS
Reuters Agreements
Reuters, whose affiliate is a significant stockholder of the Company, entered
into a strategic distribution relationship with the Company in June 1995. Under
the terms of a Software and Reciprocal Data License Agreement, dated June 1,
1995, as amended on September 1, 1996, November 14, 1996 and December 18, 1997
(the "Old Reuters Agreement"), the Company granted to Reuters a limited, non-
exclusive license (i) to use and distribute certain of the Company's technology
for production and delivery of research reports to Reuters' customers, (ii) to
market and distribute MultexNET research reports to up to 15,000 Reuters'
customers and (iii) to market Multex Research-on-Demand service to Reuters'
customers. In 1998, Reuters made aggregate payments to the Company of
approximately $1.5 million, which consisted of a $500,000 license fee and
payments for consulting and maintenance services.
On July 15, 1998, the Company and Reuters entered into a revised agreement
(the "New Reuters Agreement"), pursuant to which the parties renegotiated the
terms of their relationship described above. The New Reuters Agreement, which
took effect on January 1, 1999, is for a five-year term and is automatically
renewable for one-year periods thereafter, unless terminated by either party.
Under the terms of the New Reuters Agreement, the Company supplies subscribers
of the Reuters 3000 product with the ability to access the Multex database via
the Reuters Web, an intranet controlled by Reuters that uses Internet
technology to retrieve and display data. Both MultexNET and Multex Research-On-
Demand are made available to Reuters 3000 subscribers on a subscription and
pay-per-view basis, respectively. Revenues generated from the use of Multex
products via the Reuters Web are shared in accordance with the terms of the New
Reuters Agreement.
The Company believes that the terms of the Old Reuters Agreement are no less
favorable than the terms the Company would have otherwise negotiated with an
unaffiliated third party as the parties entered into the Old Reuters Agreement
before an affiliate of Reuters became a stockholder of the Company in June
1996. In addition, the Company believes that the terms of the New Reuters
Agreement are no less favorable than the terms the Company would have otherwise
negotiated with an unaffiliated third party.
Messrs. Gaynes and LaBonte, each of whom is an executive officer of Reuters
or one of its affiliates, became directors of the Company in May 1997 and April
1998, respectively.
AOL Agreement
In March 1998, the Company entered into an agreement with AOL, a stockholder
of the Company. Pursuant to the terms of the agreement, the Company 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. The agreement is for a two-year
term and is automatically renewable unless either party gives advance notice of
its intention not to renew. In 1998, the Company made aggregate royalty
payments to AOL of approximately $100,000. Mr. Leader, who is a director of the
Company, is the President of America Online, Inc. Investments, an affiliate of
AOL. The Company believes that the terms of the agreement with AOL are no less
favorable than the terms the Company would have otherwise negotiated with an
unaffiliated third party as the parties entered into the agreement before AOL
became a stockholder of the Company in December 1998.
Preferred Stock Financings
In November 1993 and March 1994, respectively, the Company 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
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<PAGE>
amount of $2,500,000. In November 1994, the Company 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 $5,500,000. In 1996, the Company 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 and August 1997, the Company sold 55,556 shares of Series
D convertible preferred stock to Chase Venture Capital Associates, L.P., Euclid
Partners IV, L.P., FGIC Services, Inc., The Fl@tiron Fund, LLC and Reuters
America Inc. for an aggregate offering amount of $10,000,000. In December 1998,
the Company sold 80,000 shares of Series E convertible preferred stock to Chase
Venture Capital Associates, L.P., Flatiron Associates LLC, The Flatiron Fund
1998/99 LLC, Rader Reinfrank Investors, L.P., America Online, Inc., Prospect
Street NYC Discovery Fund, L.P. and Mellon Ventures, L.P. for an aggregate
offering amount of $20,000,000. Mr. Karaev is a limited partner of Flatiron
Associates LLC. Upon the consummation of this offering, all of these
outstanding shares of preferred stock will be automatically converted into an
aggregate of [ ] shares of common stock.
Stock Options Granted to Executive Officers
For additional information regarding the grant of stock options to executive
officers and directors, see "Management--Director Compensation," "--Executive
Compensation," "--1999 Stock Option Plan" and "Principal Stockholders."
Agreements with Underwriters
Certain of the Underwriters, including BancBoston Robertson Stephens Inc.,
CIBC Oppenheimer Corp. 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 the Underwriters of this offering. Pursuant
to their service agreements with the Company, BancBoston Robertson Stephens and
Dain Rauscher Wessels pay the Company certain fees for access to the Company's
services and software. The Company, in accordance with the agreements, pays
BancBoston Robertson Stephens and Dain Rauscher Wessels certain royalties based
on a percentage of gross and net revenues, respectively, from resales of their
respective investment research. There are no fees or royalties associated with
the Company's agreement with CIBC Oppenheimer. Other underwriters, including
certain of the Underwriters of this offering, may enter into similar agreements
with the Company from time to time in the future.
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the common stock as of December 31, 1998 (after giving
effect to the conversion of convertible preferred stock, 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 and (iii) all
directors and executive officers of the Company as a group. Unless otherwise
indicated, the address of each beneficial owner listed below is c/o Multex.com,
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(2)
- ---------------- --------- -------- -----------
<S> <C> <C> <C>
Executive Officers and Directors:
Isaak Karaev (3)............................... 905,112 7.3%
James M. Tousignant (4)........................ 152,167 1.3
Philip Callaghan............................... 29,167 *
Gregg B. Amonette (5).......................... 29,167 *
John J. Mahoney (6)............................ 129,167 1.1
Davis Gaynes (7)............................... 1,296,296 10.7
I. Robert Greene (8)........................... 2,028,078 16.8
Peter G. LaBonte (9)........................... 1,296,296 10.7
Lennert J. Leader (10)......................... 266,667 2.2
Milton J. Pappas (11).......................... 1,226,852 10.2
All directors and executive officers as a group
(10 persons) (12)............................. 7,358,968 59.5%
Other 5% Stockholders:
Chase Venture Capital Associates, L.P. (13).... 2,028,078 16.8%
Euclid Partners Corporation (14)............... 1,226,852 10.2
Multex Voting Trust (15)....................... 2,034,083 16.8
Rader Reinfrank Investors, L.P. (16)........... 666,667 5.5
Reuters America Inc. (17)...................... 1,296,296 10.7
Softbank Ventures, Inc. (18)................... 722,222 6.0
Venture Fund I, L.P. (19)...................... 611,100 5.1
</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 12,074,824 shares of common stock
outstanding as of December 31, 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 held by that person that are
exercisable within 60 days of December 31, 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: George C. Baird, III,
shares; Thomas V. D'Ambrosio, shares; Jane Gavronsky,
shares; Gregory Ginsburg, shares; Isaak Karaev, shares; Yefim
Karayev, shares; Mikhail Kolfman, shares; John Mahoney,
shares; Olympia Romero, shares; Philip Scheps, shares; James M.
Tousignant, shares; Daniel J. Zeidman, shares; and Morton I.
Zeidman, shares.
(3) Includes 250,000 shares of common stock issuable upon the exercise of
stock options which are exercisable within 60 days of December 31, 1998.
Does not include (i) the shares of common stock held by others through the
Multex Voting Trust, of which Mr. Karaev is the trustee and (ii) 5,333
shares of common stock held by Flatiron Associates LLC, of which Mr.
Karaev is a limited partner. See Note 15 below.
(4) Includes (i) 8,333 shares of common stock issuable upon the exercise of
stock options which are exercisable within 60 days of December 31, 1998
and (ii) 1,000 shares of common stock held by Mr. Tousignant's spouse. Mr.
Tousignant disclaims beneficial ownership of the shares held by his
spouse.
(5)Includes 4,167 shares of common stock issuable upon exercise of stock
options which are exercisable within 60 days of December 31, 1998.
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<PAGE>
(6) Includes 29,167 shares of common stock issuable upon the exercise of stock
options which are exercisable within 60 days of December 31, 1998.
(7) 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
Inc., an affiliate of Reuters America Inc. In such capacity, Mr. Gaynes may
be deemed to be the beneficial owner of such shares, although he disclaims
beneficial ownership of such shares except to the extent of his pecuniary
interest, if any.
(8) Consists of 2,028,078 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 General Partner 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.
(9) Consists of 1,296,296 shares of common stock held by Reuters America Inc.,
Mr. LaBonte serves as a Vice President of Reuters, an affiliate of Reuters
America Inc. 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.
(10) Consists of 266,667 shares of common stock held by America Online, Inc.
Mr. Leader serves as the President of an affiliate of America Online,
Inc., America Online, Inc. Investments. In such capacity, Mr. Leader may
be deemed to be a beneficial owner of such shares, although he disclaims
beneficial ownership of such shares to the extent of his pecuniary
interest, if any. The address of America Online, Inc. is 22000 AOL Way,
Dulles, Virginia 20166.
(11) Consists of (i) 666,667 shares of common stock held by Euclid Partners
III, L.P., of which Mr. Pappas is a General Partner and (ii) 560,185
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.
(12) Includes 291,667 shares of common stock issuable upon exercise of stock
options which are exercisable within 60 days of December 31, 1998. See
Notes 3 through 6.
(13) Consists of 2,028,078 shares of common stock held by Chase Venture Capital
Associates, L.P., of which Chase Capital Partners is the General Partner.
Mr. Greene is a General Partner 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 for Chase Venture Capital
Associates, L.P. is 380 Madison Avenue, 12th Floor, New York, New York
10017.
(14) Consists of (i) 666,667 shares of common stock held by Euclid Partners
III, L.P. and (ii) 560,185 shares of common stock held by Euclid Partners
IV, L.P. Mr. Pappas is a General Partner of each of Euclid Partners III,
L.P. and Euclid Partners IV, L.P. 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 Euclid Partners Corporation is 45 Rockefeller Plaza,
Suite 907, New York, New York 10111.
(15)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 except for 83,333 shares of common stock held by Research Data Group,
Inc. and 50,000 shares held by a principal of Research Data Group. 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, if any.
(16) Consists of 666,667 shares of common stock held by Rader Reinfrank
Investors, L.P., of which Rader Reinfrank & Co., LLC is a General Partner.
Stephen P. Rader is a Managing Member of Rader Reinfrank & Co., LLC. In
such capacity, Mr. Rader may be deemed to be the beneficial owner of such
shares, although he disclaims beneficial ownership of such shares to the
extent of his pecuniary interest, if any. The address of Rader Reinfrank &
Co. LLC is 9465 Wilshire Boulevard, Suite 950, Beverly Hills, California
90212.
(17) 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
Inc., an affiliate of Reuters America Inc. Mr. LaBonte serves as a Vice
President of Reuters, an affiliate of Reuters America Inc. In their
respective capacities, Messrs. Gaynes and LaBonte may be deemed to be the
beneficial owner of such shares, although each disclaims beneficial
ownership of such shares to the extent of his pecuniary interest, if any.
The address for Reuters America Inc. is 1700 Broadway, 40th Floor, New
York, New York 10019.
(18) Consists of 722,222 shares of common stock held by Softbank Ventures,
Inc., of which Mr. Yoshitaka Kitao is the President and Chief Executive
Officer. In such capacity, Mr. Kitao 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 for Softbank
Ventures, Inc. is 10 Langley Road, Newton Centre, Massachusetts 02159.
(19) Consists of 611,100 shares of common stock held by Venture Fund I, L.P.,
of which Venture Management I, G.P. is a General Partner. R. Bradford
Burnham is a General Partner of Venture Management I, G.P. In such
capacity, Mr. Burnham 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 for Venture Fund I, L.P. is
295 North Maple Avenue, Room 3361 C1, Basking Ridge, New Jersey 07920.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following description of the securities of the Company and certain
provisions of the Company's Second Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation") and the Company's Amended
and Restated Bylaws (the "Bylaws") are summaries thereof and are qualified by
reference to the Certificate of Incorporation and the Bylaws, each as will be
in effect upon consummation of this offering, copies of which have been filed
with the Commission as exhibits to the Company's Registration Statement.
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 December 31, 1998, there were [ ] shares of common stock
outstanding and held of record by stockholders, after giving effect to the
conversion of convertible preferred stock. 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 December 31, 1998, there were 297,222 shares of convertible preferred
stock outstanding (not giving effect to the reverse stock split). All
outstanding shares of convertible preferred stock will be converted into an
aggregate of [ ] shares of common stock upon the consummation of the
offering and such shares of convertible 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 December 31, 1998, options to purchase a total of [ ] shares of
common stock were outstanding, approximately [ ] of which are subject
to lock-up agreements entered into with the Underwriters. Beginning 90 days
after the date of this prospectus, approximately [ ] options which are not
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<PAGE>
subject to lock-up agreements will be eligible for sale in reliance on Rule 701
promulgated under the Securities Act. The total number of shares of common
stock that have been reserved for issuance under the 1998 Stock Option Plan
shall be equal to 2,274,250. See "Management--1999 Stock Option Plan" and
"Shares Eligible for Future Sale."
Warrant
As of December 31, 1998, a warrant to purchase 212,033 shares of common stock
was outstanding, at an exercise price of $7.20 per share. The warrant contains
anti-dilution provisions providing for adjustments of the exercise price and
the number of shares of common stock underlying the warrant upon the occurrence
of certain events, including any recapitalization, reclassification, stock
dividend, stock split, stock combination or similar transaction. The warrant
grants to the holder thereof certain registration rights with respect to the
common stock issuable upon its exercise, which are described below. See "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 10,119,441 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 10,119,441
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.
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In addition, certain provisions of the Certificate of Incorporation 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
of Incorporation authorizing 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 of
Incorporation provides that stockholders may not take action by written
consent, but only at duly called annual or special meetings of stockholders.
The Certificate of Incorporation 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 of Incorporation 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
61
<PAGE>
Company which is not eliminated by this provision of the Certificate of
Incorporation 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.
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 of Incorporation 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 of Incorporation. 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.
62
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has not been any public market for the common
stock, 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 of common stock
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, or the perception that such sales could occur, 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 closing of this 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 or
warrants. Of the outstanding shares, the [ ] shares sold in this
offering will be freely tradable, except that any shares held 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 common stock will be deemed
"restricted securities" as defined under Rule 144. 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, which rules are summarized below. Subject to the lock-up
agreements described below and the provisions of Rules 144 and 144(k),
additional shares will be available for sale in the public market as follows:
<TABLE>
<CAPTION>
Number of Shares Date
---------------- ---------------------------------------------------------
<C> <S>
[ ] After the date of this prospectus
[ ] Upon the filing of a registration statement to register
for resale shares of common stock issuable upon the
exercise of options granted under the 1999 Stock Option
Plan
[ ] At various times after 90 days from the date of this
prospectus
[ ] After 180 days from the date of this prospectus (subject,
in some cases, to volume limitations)
[ ] At various times after 180 days from the date of this
prospectus
</TABLE>
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
this 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 person's holding period for
the purpose of effecting a sale under Rule 144 commences on the date of
transfer from the affiliate.
As of the date of this prospectus, options to purchase a total of [ ]
shares of common stock are outstanding, of which [ ] are currently
exercisable. Upon the closing of this offering, the Company intends to file a
registration statement to register for resale the [ ] shares of common
stock reserved for issuance under the Company's 1999 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 lock-up agreements referred to below. Rule 701
promulgated under the Securities Act provides that shares of common stock
63
<PAGE>
acquired pursuant to written plans such as the Predecessor Plan and the 1999
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. Upon the closing of this offering, [ ] shares of
common stock will be issuable upon the exercise of outstanding warrants.
The Company's directors and officers and certain stockholders who hold [ ]
shares in the aggregate, together with the holders of options to purchase [ ]
shares of common stock and the holders of warrants to purchase [ ] shares of
common stock, have agreed that they will not sell, directly or indirectly, any
shares of common stock without the prior written consent of BancBoston
Robertson Stephens Inc. for a period of 180 days from 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 1999 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."
Following this offering, under certain circumstances and subject to certain
conditions, holders of [ ] shares of the Company's outstanding common stock
will have certain demand registration rights with respect to their shares of
common stock (subject to the 180-day lock-up arrangement described above) to
require the Company to register their shares of common stock under the
Securities Act, and they will have certain rights to participate in any future
registration of securities by the Company. The Company is not required to
effect more than an aggregate of three demand registrations on behalf of such
holders. These holders are subject to lock-up periods of not more than 180 days
following the date of this prospectus or any subsequent prospectus. See
"Description of Capital Stock--Registration Rights."
64
<PAGE>
UNDERWRITING
The Underwriters named below (the "Underwriters"), acting through their
representatives, BancBoston Robertson Stephens Inc., CIBC Oppenheimer Corp. and
Dain Rauscher Wessels, a division of Dain Rauscher Incorporated (the
"Representatives"), have severally agreed with us, subject to the terms and
conditions of the Underwriting Agreement, to purchase from the Company the
number of shares of common stock set forth below opposite their respective
names. The Underwriters are committed to purchase and pay for all shares if any
are purchased.
<TABLE>
<CAPTION>
Number of
Underwriter Shares
- ----------- ---------
<S> <C>
BancBoston Robertson Stephens Inc.....................................
CIBC Oppenheimer Corp.................................................
Dain Rauscher Wessels.................................................
---------
Total...............................................................
=========
</TABLE>
The Representatives have advised us that the Underwriters propose to offer
the shares of common stock 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, of which $ may be
reallowed to other dealers. After the completion of this offering, the public
offering price, concession and reallowance to dealers may be reduced by the
Representatives. No such reduction shall change the amount of proceeds to be
received by us as set forth on the cover page of this prospectus. The common
stock is offered by the Underwriters as stated herein, subject to receipt and
acceptance by them and subject to their right to reject any order in whole or
in part.
The Underwriters have advised us that they do not intend to confirm sales to
any accounts over which they exercise discretionary authority.
Over-Allotment Option. We and the Over-Allotment Selling Stockholders have
granted to the Underwriters an option, exercisable during the 30-day period
after the date of this prospectus, to purchase up to [ ] additional
shares of common stock to cover over-allotments, if any, at the public offering
price less the underwriting discount set forth on the cover page of this
prospectus. If the Underwriters exercise their over-allotment option to
purchase any of such additional [ ] shares of common stock, the
Underwriters have severally agreed, subject to certain conditions, to purchase
approximately the same percentage thereof as the number of shares to be
purchased by each of them bears to the total number of shares of common stock
offered hereby. If purchased, such additional shares will be sold by the
Underwriters on the same terms as those on which the shares offered hereby are
being sold. The Company and the Over-Allotment Selling Stockholders will be
obligated, pursuant to the over-allotment option, to sell shares to the
Underwriters to the extent such over-allotment option is exercised. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of the shares of common stock offered hereby.
The following table summarizes the compensation to be paid to the
Underwriters by the Company and the Over-Allotment Selling Stockholders:
<TABLE>
<CAPTION>
Total
-------------------
Without With
Per Over- Over-
Share allotment allotment
----- --------- ---------
<S> <C> <C> <C>
Underwriting Discounts and Commissions
paid by the Company................................. $ $ $
Underwriting Discounts and Commissions
paid by the Over-Allotment Selling Stockholders..... $ $ $
</TABLE>
65
<PAGE>
The Company estimates expenses payable by the Company in connection with this
offering (other than the underwriting discounts and commissions referred to
above) will be $900,000.
Indemnity. The Underwriting Agreement contains covenants of indemnity among
the Underwriters, Company and the Over-Allotment Selling Stockholders against
certain civil liabilities, including liabilities under the Securities Act of
1933, as amended, and liabilities arising from breaches of representations and
warranties contained in the Underwriting Agreement.
Lock-Up Agreements. Each officer and director of the Company and
substantially all of our stockholders have agreed, during the period ending 180
days after the date of this prospectus ("the lock-up period"), subject to
certain exceptions, not to offer to sell, contract to sell, or otherwise sell,
dispose of, loan, pledge or grant any rights with respect to any shares of our
common stock or any options or warrants to purchase any shares of our common
stock, or any securities convertible into or exchangeable for shares of our
common stock owned as of the date of this prospectus or thereafter acquired
directly by such holders or with respect to which they have the power of
disposition, without the prior written consent of BancBoston Robertson Stephens
Inc. However, BancBoston Robertson Stephens Inc. may, in its sole discretion
and at any time or from time to time, without notice, release all or any
portion of the securities subject to those lock-up agreement. There are no
existing agreements between the Representatives and any of the Company's
stockholders providing consent to the sale of shares prior to the expiration of
the lock-up period.
Future Sales. In addition, we have agreed that during the lock-up period we
will not, without the prior written consent of BancBoston Robertson Stephens
Inc., subject to certain exceptions, (i) consent to the disposition of any
shares held by stockholders subject to lock-up agreements prior to the
expiration of the lock-up period or (ii) issue, sell, contract to sell, or
otherwise dispose of, any shares of our common stock, any options to purchase
any shares of our common stock or any securities convertible into, exercisable
for or exchangeable for shares of our common stock other than our sale of
shares in this offering, the issuance of our common stock upon the exercise of
outstanding options, and the issuance of options under existing stock option
and incentive plans provided such options do not vest prior to the expiration
of the lock-up period. See "Shares Eligible for Future Sale."
The Underwriters do not intend to confirm sales to any accounts over which
they exercise discretionary authority.
Listing. Application has been made to have the shares of common stock
approved for quotation on the Nasdaq National Market under the symbol "MLTX."
Stabilization. The Representatives have advised the Company that, pursuant to
Regulation M under the Securities Exchange Act of 1934, as amended, certain
persons participating in the offering may engage in transactions, including
stabilizing bids, syndicate covering transactions or the imposition of penalty
bids, which may have the effect of stabilizing or maintaining the market price
of the shares of our common stock at a level above that which might otherwise
prevail in the open market. A "stabilizing bid" is a bid for or the purchase of
shares of our common stock on behalf of the Underwriters for the purpose of
fixing or maintaining the price of the shares of common stock. A "syndicate
covering transaction" is the bid for or purchase of shares of common stock on
behalf of the Underwriters to reduce a short position incurred by the
Underwriters in connection with the offering. A "penalty bid" is an arrangement
permitting the Representatives to reclaim the selling concession otherwise
accruing to an Underwriter or syndicate member in connection with the offering
if the shares of common stock originally sold by such Underwriter or syndicate
member are purchased by the Representatives in a syndicate covering transaction
and have therefore not been effectively placed by such Underwriter or syndicate
member. The Representatives have advised us that such transactions may be
effected on the Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.
Directed Share Program. At our request, the Underwriters have reserved up to
five percent (5%) of the shares of common stock to be issued by the Company and
offered hereby for sale, at the initial public offering
66
<PAGE>
price, to directors, officers, employees, business associates and persons
otherwise connected to the Company. The number of shares of common stock
available for sale to the general public will be reduced to the extent such
individuals purchase such reserved shares. Any reserved shares which are not so
purchased will be offered by the Underwriters to the general public on the same
basis as the other shares offered hereby.
Other Agreements. Certain of the Underwriters are subscribers of our
services. See "Certain Relationships and Related Party Transactions--Agreements
with Underwriters."
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 appearing in this Prospectus and Registration Statement, and the related
consolidated financial statement schedule included elsewhere in this
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon appearing elsewhere herein, are
included in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission a
Registration Statement on Form S-1 (including the exhibits, schedules and
amendments thereto) under the Securities Act with respect to the shares of
common stock to be sold in this offering. This prospectus does not contain all
the information set forth in the Registration Statement. For further
information with respect to the Company and the shares of common stock to be
sold in this offering, reference is made to the Registration Statement.
Statements contained in this prospectus as to the contents of any contract,
agreement or other document referred to are not necessarily complete, and in
each instance reference is made to the copy of such contract, agreement or
other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
You may read and copy all or any portion of the Registration Statement or any
other information the Company files at the Securities and Exchange Commission's
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You
can request copies of these documents, upon payment of a duplicating fee, by
writing to the Securities and Exchange Commission. Please call the Securities
and Exchange Commission at 1-800-SEC-0330 for further information on the
operation of the public reference rooms. The Company's Securities and Exchange
Commission filings, including the Registration Statement, are also available to
you on the Securities and Exchange Commission's Web site (http://www.sec.gov).
As a result of this offering, the Company will become subject to the
information and reporting requirements of the Securities Exchange Act of 1934,
as amended, and, in accordance therewith, will file periodic reports, proxy
statements and other information with the Securities and Exchange Commission.
Upon approval of the common stock for the quotation on the Nasdaq National
Market, such reports, proxy and information statements and other information
may also be inspected at the offices of Nasdaq Operations, 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company intends to furnish its stockholders with annual reports
containing audited financial statements and with quarterly reports for the
first three quarters of each year containing unaudited interim financial
information.
67
<PAGE>
MULTEX.COM, 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 September
30, 1998 (Unaudited)...................................................... F-3
Consolidated Statements of Operations for the years ended December 31,
1995, 1996 and 1997 and the nine months ended September 30, 1997 and 1998
(Unaudited)............................................................... F-4
Consolidated Statements of Stockholders' Deficit for the years ended
December 31, 1995, 1996 and 1997 and the nine months ended September 30,
1998 (Unaudited).......................................................... F-5
Consolidated Statements of Cash Flows for the years ended December 31,
1995, 1996 and 1997 and the nine months ended September 30, 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.com, Inc.
We have audited the accompanying consolidated balance sheets of Multex.com,
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.com, 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
January , 1999
---------------------
The foregoing report is in the form that will be signed upon the completion
of the restatement of capital accounts and the requisite Board and stockholder
approval of the name change described in Note 13 to the financial statements.
ERNST & YOUNG LLP
New York, New York
January 15, 1999
F-2
<PAGE>
MULTEX.COM, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Pro forma
December 31, September 30, September 30,
-------------------------- ------------- -------------
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 $ 5,307,425 $ 5,307,425
Marketable
securities............ 7,829,635 7,663,585 -- --
Accounts receivable,
less allowance of
$130,000, $240,000
and $125,000 in 1996,
1997 and 1998,
respectively.......... 923,397 1,813,570 2,564,067 2,564,067
Other current assets... 165,524 259,606 221,962 221,962
------------ ------------ ------------ -----------
Total current assets... 9,819,154 12,269,744 8,093,454 8,093,454
Property and equipment,
net.................... 2,372,101 2,161,315 2,221,404 2,221,404
Other................... 356,404 302,341 124,563 124,563
------------ ------------ ------------ -----------
$ 12,547,659 $ 14,733,400 $ 10,439,421 $10,439,421
============ ============ ============ ===========
LIABILITIES AND
STOCKHOLDERS' (DEFICIT)
EQUITY
Current liabilities:
Accounts payable....... $ 435,362 $ 344,901 $ 939,964 $ 939,964
Accrued expenses....... 897,027 1,091,324 1,179,384 1,179,384
Deferred revenues...... 585,062 1,446,699 2,897,350 2,897,350
Current portion of
long-term debt........ 653,116 1,053,188 -- --
Other current
liabilities........... -- 312,783 -- --
------------ ------------ ------------ -----------
Total current
liabilities........... 2,570,567 4,248,895 5,016,698 5,016,698
Long-term debt, less
current portion........ 731,227 -- -- --
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 3,407,170 --
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 7,182,566 --
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 17,756,154 --
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 10,897,535 --
Series E redeemable
preferred stock; $.01
par value:
None issued and
outstanding in 1996,
1997 and 1998........ -- -- -- --
Stockholders' (deficit)
equity:
Preferred stock--$.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
2,022,417 shares in
1998................. 13,795 16,299 20,224 92,631
Additional paid-in
capital............... (2,257,851) (3,305,109) (3,662,268) 35,508,750
Accumulated deficit.... (14,357,297) (22,394,473) (28,610,729) (28,610,729)
Deferred
compensation.......... -- (1,052,112) (1,604,738) (1,604,738)
Translation
adjustment............ -- (14,124) (21,810) (21,810)
------------ ------------ ------------ -----------
Total stockholders'
(deficit) equity...... (16,601,353) (26,749,519) (33,879,321) 5,364,104
------------ ------------ ------------ -----------
Total liabilities and
stockholders'
(deficit) equity.... $ 12,547,659 $ 14,733,400 $ 10,439,421 $10,439,421
============ ============ ============ ===========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
MULTEX.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine months ended
Year ended December 31, September 30,
--------------------------------------- ------------------------
1995 1996 1997 1997 1998
----------- ------------ ------------ ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Revenues................ $ 1,004,536 $ 2,646,527 $ 6,013,766 $ 3,566,208 $ 9,320,626
Cost of revenues........ 403,466 809,380 1,231,692 828,415 2,129,423
----------- ------------ ------------ ----------- -----------
Gross profit............ 601,070 1,837,147 4,782,074 2,737,793 7,191,203
Operating expenses:
Sales and marketing... 1,892,327 2,339,110 3,506,935 2,327,807 4,316,986
Research and
development.......... 1,519,643 1,414,908 1,600,893 1,186,462 1,525,941
General and
administrative....... 2,709,499 4,552,936 7,836,639 5,655,918 6,762,742
----------- ------------ ------------ ----------- -----------
Total operating
expenses............... 6,121,469 8,306,954 12,944,467 9,170,187 12,605,669
----------- ------------ ------------ ----------- -----------
Loss from operations.... (5,520,399) (6,469,807) (8,162,393) (6,432,394) (5,414,466)
Other income (expense):
Gain on sale of
equipment............ -- -- -- -- 124,796
Offering expenses..... -- -- -- -- (840,781)
Interest expense...... (111,633) (250,175) (309,769) (233,404) (359,818)
Interest and
investment income.... 138,317 310,177 434,986 290,784 274,013
----------- ------------ ------------ ----------- -----------
Net loss................ (5,493,715) (6,409,805) (8,037,176) (6,375,014) (6,216,256)
Redeemable preferred
stock dividends........ 639,992 1,402,788 2,181,472 1,518,239 1,974,569
----------- ------------ ------------ ----------- -----------
Net loss available to
common stockholders'... $(6,133,707) $( 7,812,593) $(10,218,648) $(7,893,253) $(8,190,825)
----------- ------------ ------------ ----------- -----------
Basic and diluted loss
per common share....... $ (4.69) $ (5.80) $ (7.03) $ (5.63) $ (4.43)
=========== ============ ============ =========== ===========
Number of shares used in
computing
basic and diluted loss
per share.............. 1,307,427 1,347,944 1,452,839 1,402,986 1,848,156
=========== ============ ============ =========== ===========
Pro forma basic and
diluted loss per
share.................. -- -- $ (0.92) -- $ (0.68)
============ ===========
Number of shares used in
computing pro forma
basic and diluted loss
per share.............. -- -- 8,693,580 -- 9,088,897
============ ===========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
MULTEX.COM, 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............... -- -- 1,077,219 -- (1,077,219) -- --
Translation
adjustment............ -- -- -- -- -- (14,124) (14,124)
--------- ------- ----------- ------------ ----------- -------- ------------
Balance, December 31,
1997................... 1,630,000 16,299 (3,305,109) (22,394,473) (1,052,112) (14,124) (26,749,519)
Exercise of options
(unaudited)........... 342,417 3,425 102,348 -- -- -- 105,773
Net loss (unaudited)... -- -- -- (6,216,256) -- -- (6,216,256)
Redeemable preferred
stock dividend
(unaudited)........... -- -- (1,974,569) -- -- -- (1,974,569)
Amortization of
deferred compensation
(unaudited)........... -- -- -- -- 317,936 -- 317,936
Cancellation of stock
options (unaudited)... -- -- (1,896) -- 1,896 -- --
Deferred compensation
related to stock
options (unaudited)... -- -- 872,458 -- (872,458) -- --
Sale of stock and
issuance of options in
connection with
acquisition of certain
assets of RDG-Multex,
Inc. (unaudited)...... 50,000 500 644,500 -- -- -- 645,000
Translation adjustment
(unaudited)........... -- -- -- -- -- (7,686) (7,686)
--------- ------- ----------- ------------ ----------- -------- ------------
Balance at September 30,
1998 (unaudited)....... 2,022,417 $20,224 $(3,662,268) $(28,610,729) $(1,604,738) $(21,810) $(33,879,321)
========= ======= =========== ============ =========== ======== ============
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
MULTEX.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine months ended
Year ended December 31, September 30,
------------------------------------- ------------------------
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) $(6,375,014) $(6,216,256)
Adjustments to reconcile
net loss to net cash
used in operating
activities:
Amortization of
deferred
compensation......... -- -- 25,107 -- 317,936
Gain on sale of
equipment............ -- -- -- -- (124,796)
Depreciation and
amortization......... 617,431 1,096,754 1,368,318 1,090,558 1,117,542
Amortization of
issuance costs....... 12,133 29,384 40,988 29,248 34,832
Bad debt expense...... -- 130,000 168,130 10,000 103,500
Stock issued for
services............. -- -- 10,500 10,500 --
Changes in operating
assets and
liabilities:
Accounts
receivable......... (898) (798,099) (1,058,303) (352,835) (853,997)
Other current
assets............. 10,897 (64,225) (94,082) (64,296) 37,644
Other assets........ (264,045) (56,254) 54,063 26,618 177,778
Accounts payable.... 186,157 (843,560) (136,797) (98,518) 546,805
Accrued expenses.... 59,687 608,251 194,297 6,009 88,060
Deferred revenue.... 286,250 798,812 361,637 731,798 1,450,651
Other liabilities... -- -- -- 47,575 58,619
----------- ----------- ----------- ----------- -----------
Net cash used in
operating activities... (4,586,103) (5,508,742) (7,103,318) (4,938,357) (3,261,682)
Investing activities
Purchase of marketable
securities............. -- (12,044,939) (7,663,585) (7,503,829) (1,268,529)
Proceeds from sale of
marketable securities.. -- 4,215,304 7,829,635 7,829,635 8,932,114
Proceeds from sale of
equipment.............. -- -- -- -- 200,953
Purchase of property and
equipment.............. (904,643) (1,372,224) (1,111,196) (859,050) (860,530)
----------- ----------- ----------- ----------- -----------
Net cash (used in)
provided by investing
activities............. (904,643) (9,201,859) (945,146) (533,244) 7,004,008
Financing activities
Proceeds from issuances
of stock............... 100 15,002,188 10,048,999 10,000,562 405,773
Preferred stock issuance
costs.................. -- (164,245) (54,095) (44,095) --
Proceeds from long-term
debt................... 619,334 1,231,525 474,667 474,667 1,250,000
Repayments of long-term
debt................... (241,807) (564,299) (805,822) (608,550) (2,303,188)
Proceeds (repayments) of
short-term debt........ 327,000 (327,000) -- -- --
Other liabilities....... 66,390 177,837 31,224 -- (312,783)
----------- ----------- ----------- ----------- -----------
Net cash provided by
(used in) financing
activities............. 771,017 15,356,006 9,694,973 9,822,584 (960,198)
Effect of exchange rate
changes on cash........ -- -- (14,124) (11,052) (7,686)
----------- ----------- ----------- ----------- -----------
Increase (decrease) in
cash and cash
equivalents............ (4,719,729) 645,405 1,632,385 4,339,931 2,774,442
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 $ 5,240,529 $ 5,307,425
=========== =========== =========== =========== ===========
Supplemental disclosures
of cash flow
information
Noncash investing and
financing activity:
Accrued purchases of
fixed assets......... $ 681,940 $ 210,046 $ 46,336 $ 87,779 $ 48,258
=========== =========== =========== =========== ===========
Fair market value of
consideration given
in connection with
acquisition of
certain assets of
RDG-Multex, Inc...... $ -- $ -- $ -- $ -- $ 345,000
=========== =========== =========== =========== ===========
Stock issued for
services............. $ -- $ -- $ 10,500 $ 10,500 $ --
=========== =========== =========== =========== ===========
Interest paid........... $ 78,974 $ 158,277 $ 159,705 $ 123,188 $ 314,744
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1995, 1996 and 1997 and the nine months ended
September 30, 1997 and 1998 (Information as of September 30, 1998 and
for the nine months ended September 30, 1997 and 1998 is unaudited)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Organization
Multex.com, 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. In January 1999, the Company changed its name to Multex.com, Inc. (see
Note 13).
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
On February 27, 1998, the Company established a new wholly owned subsidiary,
RDG-Multex, Inc. In September 1998, the subsidiary's name was changed to Multex
Data Group, Inc. ("Multex Data Group"). Multex Data Group acquired assets
(primarily software) of Research Data Group Inc. in exchange for 49 shares of
the common stock (49%) of Multex Data Group on March 27, 1998.
In connection with the transaction above, the Company issued to a principal
of Research Data Group, Inc., 50,000 shares of the Company's common stock at a
purchase price of $6.00 per share ($300,000) and a one year option ("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 $450,000 and has valued the option at
approximately $195,000 as of the date of grant using the Black-Scholes option
pricing model. The purchase price of the assets acquired was $345,000, the
estimated fair market value of the consideration given to a principal of
Research Data Group, Inc. (see calculation of fair market value below)
<TABLE>
<S> <C>
Fair market value of 50,000 shares sold..................... $ 450,000
Fair market value of One Year Option........................ 195,000
Less cash consideration received by the Company............. (300,000)
---------
Fair market value of consideration given for assets
acquired................................................... $ 345,000
=========
</TABLE>
The acquisition has been accounted for by the purchase method of accounting
and accordingly, the Company is consolidating the results of operations of
Multex Data Group effective March 27, 1998. The minority interest included in
the consolidated financial statements have not been separately disclosed due to
immateriality.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Multex.com, 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.
F-7
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Years ended December 31, 1995, 1996 and 1997 and the nine months ended
September 30, 1997 and 1998 (Information as of September 30, 1998 and
for the nine months ended September 30, 1997 and 1998 is unaudited)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Concentration of Credit Risk
At December 31, 1997 and September 30, 1998, substantially all cash and cash
equivalents were held in two and one banks, respectively.
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.
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 ($575,000 and $439,000 for the
nine months ended September 30, 1997 and 1998, respectively).
Revenue Recognition
Revenues from subscriptions are recognized in equal installments over the
term of the subscriptions. Non-subscription revenues from the Multex Research-
On-Demand service are recognized upon sale. Revenues from sponsorships are
recognized in equal installments over the term of the contract. Revenues from
professional services are recognized when the services are accepted by the
client. Such services are primarily customization software services which allow
the Company's services to interface and function with the customers' existing
software platforms.
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.
Offering Expenses
Offering expenses represent costs incurred in connection with a proposed
financing in 1998. On October 19, 1998, the Company withdrew the registration
statement relating to such proposed financing, and accordingly, the offering
costs incurred to date were expensed.
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
F-8
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Years ended December 31, 1995, 1996 and 1997 and the nine months ended
September 30, 1997 and 1998 (Information as of September 30, 1998 and
for the nine months ended September 30, 1997 and 1998 is unaudited)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)
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 $6,134,000, $7,813,000 and
$10,233,000 for the years ended December 31, 1995, 1996 and 1997, respectively,
and $7,904,000 and $8,199,000 for the nine months ended September 30, 1997 and
1998, respectively.
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 a measurable effect on the financial statements;
however, it may require additional disclosure.
Unaudited Information
The unaudited financial statements at September 30, 1998 and for the nine
months ended September 30, 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 nine months ended September 30, 1998 are not necessarily indicative of
results that may be expected for the entire year or for any future period.
F-9
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Years ended December 31, 1995, 1996 and 1997 and the nine months ended
September 30, 1997 and 1998 (Information as of September 30, 1998 and
for the nine months ended September 30, 1997 and 1998 is unaudited)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)
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
(9,010,000 shares at September 30, 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.
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.
F-10
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Years ended December 31, 1995, 1996 and 1997 and the nine months ended
September 30, 1997 and 1998 (Information as of September 30, 1998 and
for the nine months ended September 30, 1997 and 1998 is unaudited)
3. REDEEMABLE PREFERRED STOCK (continued)
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 $15.00 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 ($6,442,000 at September 30, 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-11
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Years ended December 31, 1995, 1996 and 1997 and the nine months ended
September 30, 1997 and 1998 (Information as of September 30, 1998 and
for the nine months ended September 30, 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>
Nine months ended
Year Ended December 31, September 30,
-------------------------------------- ------------------------
1995 1996 1997 1997 1998
----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Numerator:
Net loss.............. $(5,493,715) $(6,409,805) $ (8,037,176) $(6,375,014) $(6,216,256)
Redeemable preferred
stock dividends........ 639,992 1,402,788 2,181,472 1,518,239 1,974,569
----------- ----------- ------------ ----------- -----------
Numerator for basic and
diluted loss per
share--net loss
available for common
stockholders........... $(6,133,707) $(7,812,593) $(10,218,648) $(7,893,253) $(8,190,825)
=========== =========== ============ =========== ===========
Denominator:
Denominator for basic
and dilutive loss per
share--weighted
average shares....... 1,307,427 1,347,944 1,452,839 1,402,986 1,848,156
=========== =========== ============ =========== ===========
Basic and diluted loss
per share.............. $ (4.69) $ (5.80) $ (7.03) $ (5.63) $ (4.43)
=========== =========== ============ =========== ===========
</TABLE>
The following securities have been excluded from the dilutive per share
computation as they are antidilutive:
<TABLE>
<CAPTION>
Nine months ended
Year Ended December 31, September 30,
------------------------- -------------------
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 55,556
Stock options................... 620,667 851,250 1,369,334 1,336,250 1,337,917
</TABLE>
The following table sets forth the computation of pro forma basic and diluted
loss per share, assuming conversion of the redeemable preferred shares to
shares of common stock at the beginning of the respective periods:
<TABLE>
<CAPTION>
Year ended Nine months
December 31, ended
1997 September 30, 1998
------------ ------------------
<S> <C> <C>
Numerator:
Net loss available to common stockholders... $(10,218,648) $(8,190,825)
Redeemable preferred stock dividends........ 2,181,472 1,974,569
------------ -----------
Numerator for pro forma loss available to
common stockholders........................ $ (8,037,176) $(6,216,256)
============ ===========
Denominator:
Weighted average number of common shares.... 1,452,839 1,848,156
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 9,088,897
============ ===========
Pro forma basic and diluted loss per share.... $ (0.92) $ (0.68)
============ ===========
</TABLE>
F-12
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Years ended December 31, 1995, 1996 and 1997 and the nine months ended
September 30, 1997 and 1998 (Information as of September 30, 1998 and
for the nine months ended September 30, 1997 and 1998 is unaudited)
5. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
December 31, September 30,
--------------------- -------------
1996 1997 1998
---------- ---------- -------------
(Unaudited)
<S> <C> <C> <C>
Computer and telecommunications
equipment and related software....... $3,829,735 $4,932,499 $5,733,441
Furniture and fixtures................ 212,084 266,852 302,839
Leasehold improvements................ 237,393 237,393 237,393
---------- ---------- ----------
4,279,212 5,436,744 6,273,673
Less accumulated depreciation and
amortization......................... 1,907,111 3,275,429 4,052,269
---------- ---------- ----------
$2,372,101 $2,161,315 $2,221,404
========== ========== ==========
</TABLE>
6. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
December 31, September 30,
------------------- -------------
1996 1997 1998
-------- ---------- -------------
(Unaudited)
<S> <C> <C> <C>
Payroll and related costs.................. $103,534 $ 170,976 $ 200,256
Accrued vacation........................... -- 125,000 99,893
Accrued bonuses............................ 35,000 130,000 65,000
Royalties.................................. 258,204 424,971 534,027
Other...................................... 500,289 240,377 280,208
-------- ---------- ----------
$897,027 $1,091,324 $1,179,384
======== ========== ==========
</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 in 1998.
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
F-13
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND 1998 (INFORMATION AS OF SEPTEMBER 30, 1998 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1998 IS UNAUDITED)
8. LONG-TERM DEBT (CONTINUED)
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 was payable in twenty four monthly installments of approximately $52,000
and was fully repaid during June 1998.
In October 1998, the Company entered into agreements with respect to a
$2,000,000 equipment line and a $4 million revolving credit facility with a
bank. The Company may borrow up to 80% of eligible accounts receivable, as
defined, in the revolving credit facility, and advances under the equipment
line cannot exceed 75% of the net book value of equipment purchased within the
last twelve months.
Substantially all of the assets of the Company are pledged as collateral for
the above obligations. The equipment line and revolving credit facility bear
interest at the prime rate plus 1%, as defined therein.
In connection with the above obligations, the Company granted to the bank a
warrant to purchase 212,033 shares of the Company's common stock at $7.20 per
share. The warrant expires on December 28, 2003.
The above obligations also provide for, among other things, the maintenance
of certain covenants, as defined, including a liquidity ratio, leverage ratio
and a minimum tangible capital base, as defined.
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.
Significant components of the Company's deferred tax assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1997
----------- -----------
<S> <C> <C>
Net operating loss
carryforward............... $ 4,774,000 $ 7,423,000
Research and development
credits.................... 310,000 494,000
Depreciation and
amortization............... 402,000 565,000
Deferred revenue............ 387,000 579,000
Other....................... 52,000 96,000
----------- -----------
5,925,000 9,157,000
Valuation allowance......... (5,925,000) (9,157,000)
----------- -----------
$ -- $ --
=========== ===========
</TABLE>
F-14
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Years ended December 31, 1995, 1996 and 1997 and the nine months ended
September 30, 1997 and 1998 (Information as of September 30, 1998 and
for the nine months ended September 30, 1997 and 1998 is unaudited)
9. INCOME TAXES (continued)
Due to the uncertainty of the realization of the tax assets, a valuation
allowance has been provided. The valuation allowance was increased by
approximately $2,460,000, $2,475,000 and $3,232,000 for the years ended
December 31, 1995, 1996 and 1997, respectively.
The effective income tax rate differs from the statutory rate as follows:
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Statutory rate..................... (34)% (34)% (34)%
Loss for which no tax benefit was
provided.......................... 31 33 33
Other.............................. 3 1 1
--- --- ---
Effective tax rate................. 0 % 0 % 0 %
=== === ===
</TABLE>
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 approximately $1,077,000 ($872,000
for the nine months ended September 30, 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 ($318,000 for the nine months ended
September 30, 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% 0.0% 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.
F-15
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Years ended December 31, 1995, 1996 and 1997 and the nine months ended
September 30, 1997 and 1998 (Information as of September 30, 1998 and
for the nine months ended September 30, 1997 and 1998 is unaudited)
10. STOCK OPTIONS (continued)
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) $(7,816,122) $(10,231,110)
Pro forma basic and diluted loss
per share........................ $ (4.69) $ (5.80) $ (7.04)
</TABLE>
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........................... 322,667 7.53
Cancelled during the period......................... (11,667) (0.60)
Exercised during the period......................... (342,417) (0.31)
---------
Outstanding September 30, 1998...................... 1,337,917 2.32
=========
</TABLE>
Exercise prices for options outstanding as of December 31, 1997 and September
30, 1998 ranged from $0.03 to $11.25 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 $1.28, respectively. The
weighted average remaining contractual life of those options outstanding as of
December 31, 1997 is 8.7 years and 7.6 years at September 30, 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
September 30, 1998 were 233,604, 387,543 and 391,376, respectively. The
weighted average exercise price of exercisable options as of December 31, 1997
and September 30, 1998 is $0.39 and $0.62, 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.
F-16
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Years ended December 31, 1995, 1996 and 1997 and the nine months ended
September 30, 1997 and 1998 (Information as of September 30, 1998 and
for the nine months ended September 30, 1997 and 1998 is unaudited)
10. STOCK OPTIONS (continued)
Other Stock Options
During June and December 1996, the Company granted to one of its major
customers two options to purchase 555,555 and 555,555 shares, respectively, of
the Company's common stock at $4.50 and $6.00 per share, respectively. Such
options were valued at $0 on the date of grant using the Black-Scholes option
pricing method. The options expired unexercised in December 1996 and June 1997.
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 ($319,000 and
$341,000 for the nine months ended September 30, 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. The same customer
accounted for approximately 36% and 31% of accounts receivable at December 31,
1996 and 1997, respectively.
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 (13% at September 30, 1998).
A third customer accounted for approximately 16% and 11% of revenues for the
years ended December 31, 1996 and 1997, respectively.
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
(10% for the nine months ended September 30, 1998). This stockholder accounted
for approximately 26% and 19% of accounts receivable at December 31, 1996 and
1997, respectively (13% at September 30, 1998).
F-17
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Years ended December 31, 1995, 1996 and 1997 and the nine months ended
September 30, 1997 and 1998 (Information as of September 30, 1998 and
for the nine months ended September 30, 1997 and 1998 is unaudited)
13. SUBSEQUENT EVENTS AND PRO FORMA ADJUSTMENTS
Stock Split
In January 1999, 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. Immediately prior to the
consummation of the initial public offering, the Company will effect a 1-for-3
reverse stock split. In December 1998, the Company increased the number of
authorized shares of its common stock to 50,000,000 shares of $0.01 par value
per share. The financial statements give retroactive effect to the reverse
stock split.
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.
Redeemable Preferred Stock
During December 1998, the Company authorized 80,000 shares of $.01 par value
Series E convertible preferred stock ("Series E Stock") and issued 80,000
shares of the Series E Stock for $20 million.
Pro Forma Financial Information
Upon the completion of an initial public offering at a per share price to the
public of not less than $15.00 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 September 30, 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 nine months ended September 30,
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.
Acquisition
On December 15, 1998, the Company acquired the remaining 49% of Multex Data
Group (see Note 1) in exchange for 83,333 shares of the Company's common stock,
which was valued at approximately $625,000.
Name Change
In January 1999, the Company changed its name to Multex.com, Inc., pending
requisite approval from its Board of Directors and stockholders. The
accompanying financial statements give effect to the name change.
F-18
<PAGE>
[LOGO] MULTEX
<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............................................. $ 11,510
NASD filing fee.................................................. 4,640
Nasdaq National Market listing fee............................... 50,000
Printing and engraving........................................... 175,000
Legal fees and expenses.......................................... 350,000
Accounting fees and expenses..................................... 175,000
Blue sky fees and expenses (including legal fees)................ 10,000
Transfer agent fees.............................................. 15,000
Miscellaneous.................................................... 108,850
--------
Total........................................................ $900,000
========
</TABLE>
Item 14. Indemnification of Directors and Officers
The Second Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") provides that, except to the extent prohibited
by the Delaware General Corporation Law (as amended from time to time, the
"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 of Incorporation 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 of Incorporation 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 of Incorporation. 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
Common Stock. In February 1998, the Registrant established a subsidiary under
the name, RDG-Multex, Inc. In September 1998, RDG-Multex changed its name to
Multex Data Group, Inc. When the Registrant established RDG-Multex, it issued
to a principal of Research Data Group (i) 50,000 shares of the Registrant's
common stock in April 1998 at a price per share of $6.00 and (ii) a one-year
option to acquire 83,333 shares of the Registrant's common stock at an exercise
price of $7.50 per share.
Until December 1998, the Registrant held 51% of the common stock of Multex
Data Group, and Research Data Group held the remaining 49%. On December 15,
1998, the Registrant exercised an option to acquire all of the shares of Multex
Data Group's common stock held by Research Data Group in exchange for the
issuance of 83,333 shares of the Registrant's common stock.
Preferred Stock and Warrants. 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. Upon the closing of this offering, all
of the outstanding shares of Series A convertible preferred stock will convert
into an aggregate of 833,333 shares of common stock.
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. Upon the closing of this offering, all of the outstanding
shares of Series B convertible preferred stock will convert into an aggregate
of 1,222,200 shares of common stock.
In connection with a bridge financing completed by the Registrant in December
1995, January 1996 and February 1996, the Registrant issued to Euclid Partners
III, L.P., 77 Capital Partners, L.P. and Venture Fund I, L.P. (collectively,
the "Bridge Participants") promissory notes in an aggregate principal amount of
$1.1 million and warrants to purchase an aggregate of 87,500 shares of common
stock at an exercise price of $0.75 per share. The bridge notes and warrants
were subsequently cancelled in connection with the issuance of Series C
convertible preferred stock in February 1996.
In February, April and June 1996, the Registrant sold an aggregate of 100,000
shares of Series C convertible preferred stock 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
February and April 1996, the Registrant issued to the Bridge Participants,
Massachusetts Mutual Life Insurance Company and Alce Partners, L.P., warrants
to purchase an aggregate of 1,643,078 shares of common stock at an exercise
price of $.75 per share. In connection with the issuance of Series C
convertible preferred stock in June 1996, the common stock purchase warrants
were subsequently cancelled pursuant to an automatic termination provision
contained in such warrants, which provided for cancellation upon the receipt by
the Registrant of an aggregate of $5,000,000 in gross proceeds. Upon the
closing of this offering, all of the outstanding shares of Series C convertible
preferred stock will convert into an aggregate of 3,333,356 shares of common
stock.
In July and August 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., FGIC Services, Inc., The Fl@tiron Fund, LLC and Reuters
America Inc. for an aggregate offering amount of $15,000,000. Upon the closing
of this offering, all of the outstanding shares of Series D convertible
preferred stock will convert into an aggregate of 1,851,852 shares of common
stock.
II-2
<PAGE>
In October 1998, the Registrant entered into a loan agreement with Fleet
National Bank relating to a $2,000,000 equipment line and a $4,000,000
revolving credit facility. In connection with this loan, the Registrant issued
to Fleet National Bank a warrant to purchase 6,361 shares of Series D
convertible preferred stock at an exercise price of $240 per share. Upon the
closing of this offering, all of the shares of Series D convertible preferred
stock subject to the warrant will convert into an aggregate of 212,033 shares
of common stock at an exercise price of $7.20 per share.
In December 1998, the Registrant sold an aggregate of 80,000 shares of Series
E convertible preferred stock to Chase Venture Capital Associates, L.P.,
Flatiron Associates LLC, The Flatiron Fund 1998/99 LLC, Rader Reinfrank
Investors, L.P., America Online, Inc., Prospect Street NYC Discovery Fund, L.P.
and Mellon Ventures, L.P. for an aggregate offering amount of $20,000,000. Upon
the closing of this offering, all of the outstanding shares of Series E
convertible preferred stock will convert into an aggregate of 2,666,667 shares
of common stock.
Options. The Registrant from time to time has granted stock options to
employees. The following table sets forth certain information regarding such
grants during the past three fiscal years:
<TABLE>
<CAPTION>
NUMBER OF EXERCISE
OPTIONS PRICES
--------- -----------
<S> <C> <C>
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 December 31, 1998.................. 654,833 0.75-11.25
</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 of 1933, as transactions not involving any public offering, or
(ii) Rule 701 under the Securities Act of 1933. No underwriters were involved
in connection with the sales of securities referred to in this Item 15.
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 Second Amended and Restated Certificate of Incorporation to be
in effect upon the consummation of this offering.
3.3 Bylaws.
3.4* Form of Amended and Restated Bylaws to be in effect upon the
consummation of this offering.
3.5* Form of Certificate of Amendment of Amended and Restated Certificate of
Incorporation (included above as Exhibit 3.1) to be in effect
immediately prior to the effectiveness of this registration statement.
4.1* Specimen common stock certificate.
4.2 See Exhibits 3.1, 3.2, 3.3, 3.4 and 3.5 for provisions of the
Certificate of Incorporation and Bylaws 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.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
10.3+ Distribution and Joint Sourcing Agreement, dated as of June 4, 1996, by
and between Bloomberg, L.P. and the Registrant.
10.4+ Specialist Data Agreement, dated as of July 15, 1998, by and between
Reuters Limited and the Registrant.
10.5* 1998 Stock Option Plan.
10.6* Employee Stock Purchase Plan.
10.7 Fourth Amended and Restated Registration Rights Agreement, dated as of
December 15, 1998.
10.8+ Agreement for Internal Electronic Distribution Services, dated as of
April 10, 1997, by and between Robertson, Stephens & Company LLC and
the Registrant.
10.9+ Amendment No.1, dated as of March 9, 1998, to the Agreement for
Internal Electronic Distribution Services, dated as of April 10, 1997,
by and between Robertson, Stephens & Company LLC and the Registrant.
10.10 Amendment No. 2, dated as of July 29, 1998, to the Agreement for
Internal Electronic Distribution Services, dated as of April 10, 1997,
by and between Robertson, Stephens & Company LLC and the Registrant.
10.11+ Amendment No. 3, dated as of September 10, 1998, to the Agreement for
Internal Electronic Distribution Services, dated as of April 10, 1997,
by and between Robertson, Stephens & Company LLC and the Registrant.
10.12 Agreement for Electronic Distribution Services, dated as of June 30,
1998, by and between CIBC Wood Gundy Securities, Inc.
10.13+ Master Services Agreement, dated as of November 23, 1998, by and
between Multex Systems, Inc. and Dain Rauscher Incorporated.
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 nine months ended September 30, 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.
Report of Independent Public Accountants on Schedule
Schedule II: Valuation and Qualifying Accounts
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-4
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424 (b) (1) or (4), or 497 (h) under the Securities Act of 1933 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
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 15th day of January, 1999.
Multex.com, 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.com, 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 January 15, 1999:
<TABLE>
<S> <C>
</TABLE>
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/ Davis Gaynes Director
- ------------------------------------
Davis Gaynes
<TABLE>
<S> <C>
</TABLE>
II-6
<PAGE>
<TABLE>
<S> <C>
</TABLE>
Signature Title(s)
/s/ I. Robert Greene Director
- -------------------------------------
I. Robert Greene
/s/ Peter LaBonte Director
- -------------------------------------
Peter LaBonte
/s/ Lennert J. Leader Director
- -------------------------------------
Lennert J. Leader
/s/ Milton J. Pappas Director
- -------------------------------------
Milton J. Pappas
<TABLE>
<S> <C>
</TABLE>
II-7
<PAGE>
Report of Independent Auditors
To the Board of Directors and Stockholders of
Multex.com, Inc.
We have audited the consolidated financial statements of Multex.com, 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 January , 1999 (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 and the requisite Board and stockholder
approval of the name change described in Note 13 to the financial statements.
Ernst & Young LLP
New York, New York
January 15, 1999
S-1
<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
MULTEX.COM, INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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>
Nine months ended September 30, 1998
(unaudited):
Deducted from asset
account
Allowance for doubtful
accounts............... $240,000 $103,500 $ -- $218,500 $125,000
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............... $ -- $130,000 $ -- $ -- $130,000
Year Ended December 31,
1995:
Deducted from asset
account
Allowance for doubtful
accounts............... $ -- $ -- $ -- $ -- $ --
</TABLE>
S-2
<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 increasing
the number of shares of capital stock and by designating a series of Series E
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.
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
<PAGE>
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 INC.
ARTICLE FIRST: The name of the corporation is Multex 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 52,000,000 shares, of which:
(i) 50,000,000 shares shall be designated as Common Stock, and
shall have a par value of $.01 per share; and
(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:
2
<PAGE>
(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.
(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"), and the series of
convertible preferred stock consisting of 100,000 shares of Series E
Convertible Preferred Stock (the "Series E Shares"). The Series A Shares,
Series B Shares, Series C Shares, Series D Shares and Series E Shares are
referred to collectively herein as the "Series Shares." The Series E Shares,
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, with respect to
redemption and as to distributions upon a Liquidation Event (as defined
herein). The Series E Shares, Series D Shares and Series C Shares shall rank
pari passu as to dividend payments, with respect to redemption, and as to
---- -----
distributions
3
<PAGE>
upon a Liquidation Event. 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, Series D Shares and Series E 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, $14.40 and $20 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, Series D Shares and Series E
Shares shall be cumulative and have accrued and shall accrue, whether or not
declared, from the date of issue of the Series A Shares, Series B Shares,
Series C Shares, Series D Shares and Series E Shares, respectively.
In no event, so long as any Series E Shares, Series D Shares or 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 E Shares, Series D Shares and Series C
Shares as to the payment of dividends, upon redemption, or the distribution
of assets upon a Liquidation Event (collectively, the "Junior Stock"),
unless in each instance dividends on all outstanding Series C Shares, Series
D Shares and Series E Shares for all past dividend periods shall have been
paid and the full dividend on all outstanding shares of Series C Shares,
Series D Shares and Series E 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 C
Shares, Series D Shares and Series E Shares shall have been made good. The
Series E Shares, 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 E Shares, Series D Shares and Series C Shares an amount
which is less than the then accrued dividends on Series E Shares, Series D
Shares and Series C Shares, such amount shall be allocated pari passu among
---- -----
the holders of Series E Shares , 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 E Shares, 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
4
<PAGE>
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, 2003 (the "Redemption Date") in the manner and with the effect
provided in subparagraphs 3B through 3D below all Series Shares which shall
then be outstanding.
3B Redemption Price. The Series Shares to be redeemed on the
----------------
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, $180 in the case of the
Series D Shares and $250 in the case of the Series E 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 the Redemption Date, the sum of (I) and (II) being herein sometimes
referred to as the "Redemption Price". Not less than 60 days before the
Redemption Date, 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 its 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
5
<PAGE>
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 E Shares,
-------------------------------------------------------------
Series D and Series C Shares. All Series E Shares, Series D Shares and
----------------------------
Series C Shares shall rank pari passu with one another in priority and right
---- -----
of payment. In case of the redemption, for any reason, of only a part of the
outstanding shares of the Series E Shares, Series D Shares or the Series C
Shares on a Redemption Date, all shares of Series E Shares, Series D Shares
or Series C Shares to be redeemed shall be selected pro rata, and there
--- ----
shall 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 E Shares, Series D Shares or Series C Shares at
the time out-standing. Any Series E Shares, 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 the 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 E Shares, 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 E, 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 E Shares,
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) $250 in the case of the Series E Shares, $180 in the case of
the Series D Shares and $150 in the case of the Series C Shares (in each
case 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 E Shares, 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 E
---- -----
Shares, Series D Shares and Series C Shares.
6
<PAGE>
4B Series A and Series B Liquidation Payments. Upon a Liquidation
------------------------------------------
Event, after the holders of the Series E Shares, 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
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 remaining net assets of the Company
available for distribution to its shareholders shall be distributed to the
holders of the Common Stock.
4D 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 the 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 the corporation is
the surviving corporation and which will not result in more than 49% of the
capital stock of the 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 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 (each a
"Corporate Transaction") 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.
4E Deemed Conversion. Notwithstanding the foregoing, upon a
-----------------
Liquidation Event, the holders of the Series Shares shall be paid the
greater of (i) the preferential amount to which they are entitled or (ii)
the amount payable upon liquidation on the shares of Common Stock into which
such Series Shares are then convertible.
4F Distributions in Cash. Payments due in connection with any
---------------------
Liquidation Event (the "Liquidation Amount") shall in all events be paid in
cash; provided, however,
-------- -------
7
<PAGE>
that if the Liquidation Amount is payable in connection with a Corporate
Transaction, then the holders of the Series Shares shall receive payment of
the Liquidation Amount in the same form of (and in the same proportion as
the) consideration payable in respect of the capital stock in such Corporate
Transaction. In the event of any non-cash consideration, such consideration
shall be valued as agreed by the holders of a majority of interest of the
Common Stock on the one hand and the holders of a majority in interest of
the Series Shares on the other hand (the Series Shares holders voting as a
single class); provided that, in absence of any such agreement, the value of
such consideration shall be its fair market value as determined by an
independent nationally recognized appraiser selected by the Board whose
costs are paid by the Company.
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 and from time to time, to convert any such shares of
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 $250 in the case of each of the Series E
Shares, $180 in the case of each of the Series D Shares, $150 in the case of
each of the Series C and Series B Shares and $100 in the case of the Series
A Shares and dividing the result by the conversion price of $2.50 per share
in the case of the Series E Shares, $1.80 per share in the case of the
Series D Shares, $1.50 per share in the case of each of the Series C Shares
and the Series B 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 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
8
<PAGE>
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 and
Options and Convertible Securities) 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 and Options and Convertible Securities).
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 exchange-able for Common Stock
(such rights or options being herein called "Options" and such convertible
or exchangeable stock or securities being herein called "Convertible
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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
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 other-wise 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.
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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 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
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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 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 (including Series D Shares subject to a certain
warrant held by Fleet National Bank); (II) the issuance of up to 4,836,250
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 217,750
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) the issuance of 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.
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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
consolidated 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 E Shares, 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 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 E Shares, 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,
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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
$4.00 (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 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
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<PAGE>
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 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.
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
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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 E Shares, 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 E Shares, 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 E Shares, the Series D Shares and the Series
C Shares, or the authorized amount of any additional class or series of
shares unless the same ranks junior to the Series E Shares, 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 E Shares. Series D Shares or Series C Shares or into
shares of any other class or series unless the same ranks junior to the
Series E Shares, 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
16
<PAGE>
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 by amendment, merger or any other
manner, or 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 E Shares, Series D Shares or the Series C Shares or
which in any manner adversely affects the Series E Shares, Series D Shares
or the Series C Shares, or the holders thereof;
(3) The corporation will not by amendment, merger or any other manner
reclassify the Series E Shares, 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 E
Shares, 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 49% 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.
Any action proposed to be taken pursuant to this Section 7A that would
adversely and disproportionately affect the Series E Shares, Series D Shares
or the Series C Shares, as the case may be, shall require the consent of the
holders of a majority of the then outstanding shares of the Series E Shares,
Series D Shares or the Series C Shares, as applicable.
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
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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;
(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 49% 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
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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.
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 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
19
<PAGE>
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 18th day of December, 1998.
/s/ Isaak Karaev
---------------------------
Isaak Karaev, President
/s/ Philip Callaghan
---------------------------
Philip Callaghan, Secretary
20
<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 TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS EXHIBIT
PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
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>
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.
[****]).
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 [****] during the Term according to the following schedule:
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933,
as amended.
2
<PAGE>
(a) ICP shall pay AOL [****] no later than 30 days after the Launch
Date.
(b) ICP shall pay AOL [****] 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).
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933,
as amended.
3
<PAGE>
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>
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 [****] in Advertising Revenues
and Transaction Revenues ("Total Revenues"), ICP shall pay AOL [****]
of the Advertising Revenues generated by ICP or its agents with
respect to Welcome Mat Advertisements. Beginning on the date on which
ICP receives [****] in Total Revenues, and continuing through the
remainder of the Term, ICP shall pay AOL [****] 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 [****] in Total Revenues, ICP shall pay AOL [****] of the
Transaction Revenues generated by ICP or its agents with respect to
Interactive Commerce. Beginning on the date on which ICP receives
[****] in Total Revenues and continuing through the remainder of the
Term, ICP shall pay AOL [****]
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933,
as amended.
5
<PAGE>
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>
(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. [****]) 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.
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933,
as amended.
7
<PAGE>
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
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Tax ID/EIN#: 22-3253344
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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
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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.
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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) [****] 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
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AOL hold at least a nineteen percent (19%) equity interest.
AOL LOOK AND FEEL. The distinctive and particular elements of graphics, design,
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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
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using the AOL Network under an authorized master account.
AOL NETWORK. (i) The AOL Service, (ii) AOL's Driveway product, (iii) AOL.com,
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(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
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933,
as amended.
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video), and other data, products, services, advertisements, promotions, links,
pointers, technology and software.
ICP COMPETITORS. First Call, Investext, IBES, Zacks Investment Research,
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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
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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
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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
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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
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I. AOL NETWORK
CONTENT. ICP represents and warrants that all Content contained within the ICP
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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
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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
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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
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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
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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>
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>
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>
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]
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS EXHIBIT
PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
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 [****] for the first [****] 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
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933,
as amended.
<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
[****] 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., [****] 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.
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933,
as amended.
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 [****] year from the signing date of this Agreement,
BLP may not enter into any type of Agreement with [****], unless [****]
agrees to waive all broker penalties and its exclusive rights to broker
research for all [****] 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.
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933,
as amended.
4
<PAGE>
3. FEES.
(a) Multex agrees to pay BLP within 30 days of collection of Service Fees, a
Distribution Fee based on [****] 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 [****] 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 [****] 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 [****] 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 [****], the excess over
[****] 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.
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933,
as amended.
5
<PAGE>
6. BLOOMBERG TERMINALS.
(a) During the term of this Agreement, BLP will provide Multex with [****] 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 6 month option to purchase 1,666,667 shares of
Multex common stock at $1.50 per share.
(b) After the expiration of the first option, Multex shall grant BLP an
additional 6 month option to purchase 1,666,667 shares of Multex common
stock at $2.00 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
[****], 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
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933,
as amended.
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
- ----------------------------------------------------------------
[****] per month [****] (as specified under section
4c)
[****] per month [****]
[****] per month [****]
[****] [****]
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933,
as amended.
13
<PAGE>
Exhibit 10.4
REUTERS LOGO
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF
THIS EXHIBIT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS
AMENDED
Date: July 15, 1998
__________________________________________________________________
REUTERS LIMITED
AND
MULTEX SYSTEMS, INC.
_________________________________________________
SPECIALIST DATA AGREEMENT
(DIRECT CONNECTIONS)
_________________________________________________
<PAGE>
THIS AGREEMENT IS DATED THE 15th DAY OF JULY 1998
BETWEEN
(1) REUTERS LIMITED whose registered office is at 85 Fleet Street, London EC4P
4AJ (REUTERS)
and
(2) MULTEX SYSTEMS, INC. of 33 Maiden Lane, New York, NY 10038 (the SUPPLIER)
BACKGROUND
(A) Reuters is in the business of developing, marketing and supplying on-line
news and financial information services.
(B) The Supplier has gathered and/or developed or agrees to gather and/or
develop the Specialist Data (as defined below).
(C) The Supplier wishes to provide access to the Specialist Data to Subscribers
by integrating the Specialist Data and the functionality of the Supplier
Server with the generic capabilities of the Network and Reuters is willing
to provide the Supplier with access to the Network in accordance with the
provisions of this Agreement.
1. DEFINITIONS AND INTERPRETATION
1.1 The following definitions apply throughout this Agreement unless the
context otherwise requires:
ACCESS ID means the specific user account/password of each Subscriber
required to access the Specialist Data Service;
Affiliate means, with respect to any Person, any other Person directly or
indirectly Controlling, Controlled by or under common Control with such
Person;
Agreement means this Agreement and all its schedules and attachments as
amended from time to time by the Parties in accordance with Clause 17.6;
AUTHORISED DISTRIBUTOR means any Person authorised by any member of the
Reuters Group to distribute the Special Data Service in one or more
countries that
<PAGE>
form part of the Territory, current countries in which Authorised
Distributors are located as at the Commencement Date are listed in Schedule
7. Reuters acknowledges that Authorised Distributors are utilised in
countries where Reuters Limited or members of the Reuters Group are
required to act through third party companies for governmental or
regulatory reasons;
BUSINESS DAY means a day when New York Stock Exchange is open for business;
COMMENCEMENT DATE means 1 January 1999;
CONTENT means data or information in any form, whether text, visual (still
or moving) audio or any combination of the foregoing;
CONTROL (including with correlative meanings, the terms CONTROLLING,
CONTROLLED BY and UNDER COMMON CONTROL WITH), as used with respect to any
Person, shall mean 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 by contract
or otherwise;
DAMAGES means any losses, damages, costs (including reasonable attorney's
fees and costs of investigation) and liabilities;
DIRECT CONNECTIONS SERVICE means the integration of Content and
functionality of remote servers with the Network generic capabilities
consisting in whole or in part of the integration of the Specialist Data
and Supplier Server with the Network;
FEES means the sums, if any, to be paid by Reuters to the Supplier in
accordance with Clause 9;
HYPERTEXT LINK means an icon, logo, highlighted or coloured text, figure or
image representing a URL which allows a user to move between pages, servers
or locations within a document;
INTELLECTUAL PROPERTY RIGHTS means patents, trade marks, service marks,
trade and service names, copyrights, mask work rights, topography rights,
database rights and design rights (whether or not any of them are
registered and including applications for registration of any of them),
moral rights, trade secrets, know how and rights of confidence; all rights
of forms of protection of a similar nature or having similar or equivalent
effect to any of them which may subsist anywhere in the world now or in the
future;
MULTEXNET means the browser based, on-line service which the Supplier has
developed and owns. MultexNet includes host servers and related equipment
located at the Supplier's facility in New York City and the databases which
contain the Specialist Data;
<PAGE>
MULTEX RESEARCH ON DEMAND means the web based product developed and owned
by the Distributor which is incorporated into MultexNet and which consists
of pay-per-view access to certain portions of the Specialist Data;
NETWORK means the equipment and telecommunications facilities owned or used
by the Reuters Group from time to time, including the Reuters Web;
PARTIES means Reuters and the Supplier, and PARTY shall be construed
accordingly;
PERSON means an individual, corporation, partnership, company, association,
trust or other entity or organisation;
QUALIFYING REVENUE means the aggregate value of all subscriptions invoiced
by Reuters excluding sales taxes and/or other taxes, and/or tariff duties
directly levied in respect of the supply of the Specialist Data Service;
RELEVANT GROUP MEMBER means the members of the Reuters Group (other than
Reuters) including Authorised Distributors responsible in various areas
within the Territory for the delivery of the Reuters Service;
REUTERS GROUP means collectively Reuters Group PLC (a company incorporated
in England and Wales) (and its successors and assigns) and all Persons it
Controls from time to time including Reuters;
REUTERS SERVER means the computer server or servers from which the Reuters
Service is accessed;
REUTERS SERVICE means the services provided from time to time by Reuters to
Subscribers including the Specialist Data Service and the Direct
Connections Service;
REUTERS WEB means an intranet controlled by Reuters that uses Internet
technology (i.e. web browsers) to retrieve and display data;
SPECIALIST DATA means the Content provided by the Supplier and agreed
between the Parties as described in Schedule 1 as updated, enhanced,
modified, altered or changed in accordance with this Agreement;
SPECIALIST DATA SERVICE means the service known as Reuters Broker Research
consisting of access through the Reuters Web to the Specialist Data
residing on the MultexNet;
SPECIFICATION means the document setting out details in respect of the
Direct Connections Service including technical, security, delivery and
format
<PAGE>
requirements for the inclusion of the Specialist Data as part of the Direct
Connections Service and attached to this Agreement at Schedule 3;
SUBSCRIBER means a subscriber any Reuters Service from time to time;
SUBSCRIPTION AGREEMENT means any subscription agreement pursuant to which
Reuters or Relevant Group Members provide Subscribers with access to the
Reuters Service as may be amended from time to time by Reuters, the current
version used by local Reuters Subscribers in the United States is attached
at Schedule 6 by way of an example. Each of the Parties acknowledges that
the Subscription Agreement used by Reuters may vary from country to country
or geographical region, but that each local or regional Subscription
Agreement will contain substantially similar provisions in respect of the
use of the Specialist Data;
SUPPLIER SERVER means MultexNet or any other computer server or servers
from which the Specialist Data is accessed;
SUPPLIER SITE means the URL from which the Specialist Data may be accessed
by a Subscriber by way of the Supplier Server;
TERRITORY means all countries specified in Schedule 5 or any of them;
TRADE MARKS means the registered and/or unregistered trade and/or service
marks set out in Schedule 2, or any of them;
URL means the Universal Resource Locator designating the location of a
server.
1.2 The following terms are defined in the Clause indicated:
TERM CLAUSE
Relevant Material 3.2
MARKETING PARTY 6.4
NAMED PARTY 6.4
NOTIONAL SUBSCRIPTION 8.1
SUPPLIER REVENUE 9.1.1
REUTERS ROYALTY 9.4
SETOFF 9.4
FACILITY 9.5
ACCOUNTANT 9.9
IP CLAIM 13.1.2
INDEMNIFIED PARTY 13.3
THIRD PARTY CLAIM 13.3
INDEMNIFYING PARTY 13.3
INITIAL TERM 15.1
<PAGE>
TERM 15.1
RECEIVING PARTY 16.1
DISCLOSING PARTY 16.1
RECIPIENT 16.1
CONFIDENTIAL INFORMATION 16.1
2. SUPPLY OF THE DATA
2.1 Subject to the provisions of this Agreement (including the payment
provisions set out in Clause 9), the Supplier will provide to Reuters and
the Relevant Group Members and the Subscribers access to the Specialist
Data. Such supply shall commence on the Commencement Date and shall
continue for the Initial Term and any subsequent Term.
2.2 Where Reuters provides the Specialist Data to Subscribers through an
Authorised Distributor, Reuters shall ensure that such Authorised
Distributor is aware of the provisions of this Agreement, and will use
reasonable endeavours to ensure that such Authorised Distributor comply
with such provisions. Reuters may at any time by notice in writing add to,
delete from or otherwise amend the contents of Schedule 7.
2.3 Subject to Clause 2.4 the Supplier shall be responsible for all expenses
involved in producing, formatting and supplying the Specialist Data to
Reuters in accordance with the Specification unless otherwise agreed in
writing between the Parties including the provision of the Supplier Server
and all associated equipment necessary for connection to the Reuters Web as
part of the Direct Connections Service.
2.4 Where from time to time the Supplier agrees to supply the Specialist Data
(or any substantially similar Content) to any third party for distribution
by such third party in electronic form, the Supplier:
(a) must ensure that the Specialist Data supplied to Reuters pursuant to
this Agreement is of a standard (in terms of quality, quantity and
timeliness) at least as good as the Content supplied to such third
party;
(b) shall notify Reuters of that standard and Reuters will have the option
to receive such Content from the Supplier without any amendment to the
Fees.
3. GRANT OF LICENCES
3.1 The Supplier grants to the Reuters Group and its Authorised Distributors a
non-exclusive, and subject to Clause 15, irrevocable and perpetual licence
in the Territory to:
<PAGE>
3.1.1 to use, copy and adapt the Specialist Data provided that the Content
of the Specialist Data is not altered by such copying or adaptation
and such copying and/or adaptation is for the purpose of providing
access to the Specialist Data;
3.1.2 to provide access to and otherwise market the Specialist Data (alone
or in compilation or collection) and to make it available for
retrieval through the Specialist Data Service in the way, manner or
form, and in accordance with the provisions of the Subscription
Agreement and via the Reuters Web.
3.2 Subject to Clause 6.4, each Party grants the other Party a non-exclusive,
royalty free license to use the name of the other Party and/or the Trade
Marks to identify the Supplier as the source of the Specialist Data in any
Specialist Data Service or Reuters as the distributor of the Specialist
Data as part of the Specialist Data Service or in any announcement,
advertisement, publication or similar promotional material relating to
Specialist Data Service (RELEVANT MATERIAL); provided that the Party
producing the material shall not use the name of the other or any of its
Trade Marks in marketing efforts affirmatively to denigrate that Party and
that each Party shall comply with the guidelines or use of the other
Party's name or Trade Marks as may be notified to such other Party from
time to time.
4. FORMAT AND PROVISION OF THE DATA
4.1 The Specialist Data shall meet in all respects during the Term the
requirements set out in the Specification so as to allow the Specialist
Data to be provided by Reuters to Subscribers as part of the Specialist
Data Service by way of the Direct Connections Service. The Specification
may be amended in writing by the Parties from time to time in accordance
with Clause 17.6. As soon as reasonably practicable after execution of this
Agreement and before the Commencement Date the Parties will write and agree
the Specification. For the avoidance of doubt, the Specification shall be
consistent with the supply of the Specialist Data to Reuters as at the date
of signature of this Agreement by both Parties subject to any changes which
the Parties may agree. Notwithstanding the foregoing, each of the Parties
acknowledges that the Supplier Server shall be operated, maintained and
administered by the Supplier such that the Specialist Data Service will be
available to Subscribers on at least the same level of timeliness, access
uptime and/or performance as MultexNet is available to the Supplier's own
subscribers.
4.2 The Supplier shall document and promptly report to Reuters any material
difficulties, malfunctions or problems in respect of the Direct Connections
Service and/or Specialist Data Service and Reuters shall have the right to
notify Subscribers of the same.
<PAGE>
5. CONTENT AND EDITORIAL CONTROL
5.1 Subject to the provisions of this Agreement, the Supplier is responsible
for the Content of the Specialist Data which is contributed to Supplier by
third parties and for the Content of and editorial control over the
Specialist Data which is contributed directly or under the control of the
Supplier. Reuters acknowledges that nothing in this Agreement shall operate
to prevent the Supplier from including whatever Content it requires in the
Specialist Data provided that the Supplier undertakes not to change the
fundamental nature of the Content. Notwithstanding anything to the contrary
contained in this Agreement, the Parties agree and acknowledge that the
agreements between the Supplier and the contributors of the Content may
contain certain restrictions regarding the entities to whom the Content
contributed thereunder may be distributed, moratoria on distribution of
such Content, the rights of contributors to discontinue providing and/or
distributing the Content and other applicable limitations. Accordingly the
Parties agree that the Supplier shall not be obligated to provide access to
Content from a given contributor to the extent that such contributor ceases
to supply the same or discontinues Supplier's rights to distribute the
Content and Reuters agrees to abide by any reasonable restrictions,
moratoria and other distribution limitations which are either coded into
the Content or as to which Reuters has been notified in advance by the
Supplier.
5.2 The Supplier undertakes that it will not include in any Specialist Data
any:
5.2.1 defamatory or obscene Content;
5.2.2 Content, the dissemination of which is contrary to the law of any
stock or commodity exchange in any country in which the Supplier is
deemed for the purpose of applicable tax legislation to be carrying
on a business, or any banking regulations or any other applicable
market regulations or conventions;
5.2.3 Content which is in breach of any Intellectual Property Rights of
any third party;
5.2.4 Content which is in breach of the data protection laws of any
country in which the Supplier is deemed for the purpose of
applicable tax legislation to be carrying on a business.
5.3 The Supplier agrees that it shall:
5.3.1 except where notified to the contrary by Reuters, obtain and
maintain during the Term all necessary licenses, consents or
approvals for the provision of and use of the Specialist Data in
whole or in part, which may include consents of telecommunication,
exchange or similar information
<PAGE>
providers or other government or regulatory authorities and shall
certify to Reuters in writing receipt of the same;
5.3.2 observe any restrictions which Reuters notifies to the Supplier
regarding the use of the Specialist Data Service including any
restrictions imposed on Reuters by any court of competent authority;
and
5.3.3 ensure that the Reuters navigation bar as described in the
Specification is available, clearly visible and operative on every
page within the Specialist Data Service.
5.4 The Supplier shall ensure that the wording set out in Schedule 4 is
included in a prominent position with the Specialist Data Service.
5.5 Except as may be agreed by Reuters and the Supplier, the Supplier
undertakes not to include any advertising in the Specialist Data other than
advertising relating directly to the Supplier.
6. MARKETING
6.1 Except as expressly provided in this Agreement, the Reuters Group has total
control over the manner in which the Specialist Data may be marketed by the
Reuters Group as part of the Specialist Data Service. Reuters is under no
obligation to market or sell the Specialist Data.
6.2 Reuters may request the Supplier, at times and places agreed between the
Parties, to give the training specified in Schedule 1 free of charge to
sales executives nominated by Reuters on matters concerning the marketing
of the Specialist Data.
6.3 Any advertising or other material (other than internal communications,
subscriber directories, help screens and similar listings) which a Party
(the MARKETING PARTY) wishes to use to promote and market the Specialist
Data Service including the name of the other party (the NAMED PARTY), shall
be approved in advance by the Named Party, such approval not to be
unreasonably withheld or delayed. If the Marketing Party receives no
comments from the Named Party within 30 working days after its submission
to the Named Party, the material is deemed to be approved by the Named
Party. Marketing material which is substantially similar to material
previously approved does not have to be resubmitted for approval.
7. DISTRIBUTION OF THE DATA
7.1 Reuters and Relevant Group Members may deliver the Specialist Data to a
Subscriber for a limited period of time not to exceed [3 months/30 days]
free of charge for the Subscriber to determine if it wishes to subscribe to
the Reuters Service without the Subscriber needing to sign a Subscription
Agreement.
<PAGE>
7.2 Subject to Clause 7.1, Reuters will distribute the Specialist Data only
after a Subscriber has signed a Subscription Agreement. The Supplier
acknowledges that Relevant Subscribers who have entered into a Multi-Centre
Contract, Reuters Global Agreement, Group Global Agreement or Global
Reuters Services Contract with Reuters have the right, in certain
circumstances, to cancel the Specialist Data Service on 90 days' notice in
which event the Subscription payable by the Relevant Subscriber will cease
to be payable, without penalty, at the expiration of the 90 day notice
period.
7.3 Reuters or the Relevant Group Member may terminate any Subscriber's use of
or access to the Specialist Data Service for any reason in Reuters or the
Relevant Group Members sole discretion.
7.4 If the Supplier gives Reuters notice in writing of any matter which might
entitle Reuters or any Relevant Group Member to terminate any Subscribers
access to the Specialist Data Service, Reuters will and will ensure that
the Relevant Group Member will within a reasonable time of having received
the Supplier's notice terminate the Subscribers access to the Direct
Connections Service subject to the provisions of the Subscription Agreement
provided Reuters considers that reasonable grounds for such termination to
exist.
7.5 Reuters may permit Subscribers to redisseminate elements of the Specialist
Data in accordance with the provisions of the Subscription Agreement.
7.6 Reuters shall consider in good faith any comments or suggestions made by
the Supplier in respect of enhancing or modifying the Direct Connections
Service to take into account any specific requirements of Subscribers or
the Direct Connections Service of which the Supplier is or becomes aware
during the Term.
7.7 Each of the Supplier and Reuters agrees to give to the other Party all
reasonable co-operation in the performance of its respective obligations
pursuant to this Agreement.
7.8 The Supplier shall provide to Reuters details of the usage Subscribers have
made of the Specialist Data as reasonably requested by Reuters from time to
time.
8. SUBSCRIPTIONS
8.1 Subject to Clause 8.2, the Supplier shall recommend the notional monthly
subscription (the NOTIONAL SUBSCRIPTION) to be paid by Subscribers for the
Specialist Data Service and shall notify Reuters accordingly. The Notional
Subscription shall recommend the prices in the appropriate currency or
currencies to be charged in the Territory. As at the Commencement Date, the
Notional Subscription recommended by the Supplier is as set out in Schedule
1.
8.2 The Supplier may change the Notional Subscription as it reasonably
considers advisable in view of market conditions by giving Reuters at least
120 days advance written notice.
<PAGE>
8.3 Reuters or the Relevant Group Member may in its sole discretion set the
fees and/or subscription charged to any Subscriber for access to the
Specialist Data Service.
9. PAYMENT AND FEES
9.1 Reuters shall pay to the Supplier in arrears within 45 days of the end of
each calendar month an amount equal to:
9.1.1(i) [****] of the Qualifying Revenue for such Calendar Month in
respect of the first [****] Access IDs; and
(ii) [****] of the Qualifying Revenue for such Calendar Month in
respect of all Access IDs in excess of the [****], if
applicable,
collectively the SUPPLIER REVENUE, less
9.1.1 the following:
9.1.1.1 in respect of each relevant subscriber invoiced for the first time,
(excluding for the avoidance of doubt any Subscriber who is a Subscriber as at
the Commencement Date) an amount equal to the first month's subscription fee of
the relevant subscriber (determined pro rata as appropriate);
9.1.1.2 allowances or credits which may reasonably be allowed by Reuters and
which are actually granted in respect of the unavailability of the Specialist
Data Service, and/or billing corrections in respect of any Specialist Data
Service; and
9.1.1.3 any other amounts which Reuters may set-off against any amounts due to
the Supplier pursuant to this Agreement or otherwise and as agreed in good faith
between the Parties and in the absence of any agreement within a reasonable
period, the provisions of Sections 9.9, 9.10, 9.11, 9.12 and 9.13 shall apply to
the amount under dispute.
9.2 If the total amount to be deducted pursuant to Section 9.1.2 from the
Supplier Revenue for any calendar month exceeds the Supplier Revenue for
such calendar month, then the balance shall be carried forward during the
term of this Agreement and deducted from Supplier Revenue for subsequent
months. Reuters shall have the right to recover any amount which has not
been set-off in this manner at the end of this Agreement from the Supplier
as a debt.
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of
1933, as amended.
<PAGE>
9.3 Reuters shall be entitled to assign to personnel authorised by Reuters and
the Reuters Group a reasonable number of Access IDs (to be agreed between
the Parties) to be used for Reuters and the Reuters Group's internal
business purposes including development, administration, monitoring and
demonstration purposes in respect of the Specialist Data Service. Use of
the Specialist Data Services by such Access IDs shall be free of charge.
Reuters agrees to take reasonable measures to monitor the use of and
assignment of such Access IDs to prevent the use of such Access IDs other
than in accordance with the provisions of this Section 9.3.
9.4 On or prior to the 30th day after the end of each calendar month (each, a
PAYMENT DATE), Multex will deliver to Reuters (a) a statement of all
purchases made by Subscribers from Multex Research on Demand during the
preceding calendar month, together with the information necessary for
Reuters to bill its Subscribers for the purchases made, (b) an invoice for
100% of the gross revenues for the purchases made in that month, adjusted
as appropriate to reflect any Setoffs, as defined below, and (c) a
computation of the royalty due to Reuters, based upon [****] of the
adjusted gross revenues (the REUTERS ROYALTY). Reuters shall be solely
responsible for billing, and collecting fees from, its Subscribers for
their purchases of Multex Research on Demand. Reuters shall be entitled to
rely on the statements provided at sub-sections (a) to (c) above in
invoicing Subscribers. Within 45 days after its receipt of a statement,
invoice and Reuters Royalty Computation, Reuters will pay to Multex the
full amount, without setoff of any kind, of the invoice, adjusted to
reflect the Reuters Royalty, and will provide to Multex a statement setting
forth, in reasonable detail, the amount of any allowances or credits which
Reuters has reasonably and actually allowed for billing corrections related
to the purchases represented by such statement and invoice (collectively,
SETOFFS). The parties expressly agree that Setoffs shall not include
amounts which are due and owing but remain uncollected from Subscribers. If
the amount of the Setoffs is equal to or less that 10% of the gross
revenues for the applicable month, then Reuters shall be entitled to
determine in its discretion if the amount should be deducted from the next
invoice delivered pursuant to sub-section (b) above. If the amount of the
Setoffs is greater than 10% of the gross revenues for the applicable month
then the Parties shall agree, in good faith, the amount which Reuters shall
be entitled to deduct from such invoice. In the event of any dispute in
respect of such amount which the Parties cannot resolve by good faith
discussions within a reasonable time of the Setoffs being raised, then the
provisions of Section 9.9, 9.10, 9.11, 9.12 and 9.13 shall apply equally to
that part of the Setoffs which is under dispute.
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of
1933, as amended.
<PAGE>
9.5 The Supplier agrees that it shall provide to Reuters as soon as is
reasonably practicable after the execution of the Agreement and in any
event within 90 days of the Commencement Date the on-line billing and
administration software (the Facility) which shall enable Reuters to
invoice and monitor a Subscriber's use of Multex Research on Demand.
Reuters and the Supplier shall co-operate to install and to ensure the
satisfactory operation of the Facility. Reuters shall not be required to
make available Multex Research on Demand to a Subscriber unless and until
the Facility has been provided to Reuters and is operating satisfactorily.
The use of this Facility shall be subject to the execution of license terms
which are acceptable to both of the Parties.
9.6 All amounts to be paid by Reuters in accordance with Section 9 shall be in
US Dollars to a bank account specified by the Supplier from time to time.
9.7 Where any subscription fee is invoiced by Reuters in a currency other than
US Dollars, the equivalent amount for the purpose of computing the Supplier
Revenue in the relevant calendar month shall be determined by applying the
appropriate exchange rate published in the Wall Street Journal for the last
business day of such calendar month.
9.8 In accordance with this Section 9, the Supplier, on giving Reuters
reasonable notice in writing, is entitled once during each 12 month period
commencing on the Commencement to audit the records of the Reuters Group
which relate exclusively to the computation of the Supplier Revenue in that
12 month period; Reuters shall as soon as reasonably practicable after
receipt of such notice make those records available to the Supplier for
inspection during normal business hours at the location reasonably
nominated by Reuters, subject to Reuters reasonable security, operational
and/or confidentiality procedures.
9.9 If the Supplier disputes the amount of Qualifying Revenue due to the
Supplier, the Supplier shall notify Reuters in writing, and the amount of
Qualifying Revenue due to the Supplier shall be determined on an expedited
basis by an independent accountant (THE ACCOUNTANT) to be appointed by
agreement between the Parties (and in default of agreement by the
President, Institute of Chartered Accountants of England and Wales).
9.10 Reuters shall make available in confidence all relevant documents which
the Accountant may reasonably require for the purposes of his
determination.
9.11 The decision of the Accountant, who shall act as an expert and not an
arbitrator, is final and binding between the parties except in the presence
of manifest error on the face of the decision.
<PAGE>
9.12 Reuters shall pay the Supplier any additional amounts which the Accountant
determines are due to the Supplier, and the Supplier shall repay any
overpayments by Reuters which the Accountant determines have been made.
9.13 The costs of the Accountant shall be borne by Reuters only if and to the
extent that the Accountant determines that Reuters has underpaid the
Supplier by more than 10% over the period being audited. In all other
cases, the cost shall be borne by the Supplier.
10. SUPPORT
10.1 The Supplier undertakes to:
10.1.1 ensure that the Supplier Server and all associated equipment are
maintained in good operating condition as specified in the
Specification and that the Supplier shall use all reasonable
endeavours to ensure that communications lines are maintained in
good operating condition;
10.1.2 provide SUPPORT : for the purpose of this Clause 10.1.2, Support
means that the Supplier will provide to Reuters personnel support
and maintenance for the connectivity between the Network and the
Supplier Server. The Supplier shall, when it receives the call
from Reuters, escalate the call to the appropriately qualified
personnel to resolve the problem as soon as is reasonably
practicable and as more particularly set out in the Specification.
11. OWNERSHIP OF DATA AND GOODWILL
11.1 As between the Supplier and the Reuters Group, the Supplier retains all
Intellectual Property Rights subsisting in or relating to the Specialist
Data, Supplier Server, Supplier Site, the Facility, Multex Research on
Demand and MultexNet.
11.2 As between the Supplier and the Reuters Group, all goodwill arising as a
result of the use of the Supplier's Trade Marks enures to the benefit of
the Supplier and all goodwill arising as a result of the use of the
Reuters Trade Marks enures to the benefit of Reuters.
11.3 As between the Supplier and the Reuters Group, Intellectual Property
Rights subsisting in or relating to the Reuters Service and all goodwill
arising as a result of the provision of the Reuters Service, whether or
not including the Specialist Data, including goodwill arising as a result
of the use of any words, logos, devices (other than the Supplier's Trade
Marks), enures to the benefit of the Reuters Group.
11.4 Each Party agrees to notify the other Party promptly if it becomes aware
of any unauthorised distribution of the Direct Connections Service or the
Specialist Data, as the case may be and to provide all reasonable co-
operation to the other party to
<PAGE>
prevent the use or distribution of the Direct Connections Service or
Specialist Data, as the case may be, in any manner not expressly
authorised by this Agreement.
11.5 Each of the Parties agrees that the home page of the Suppliers Site or
such other pages as the Parties may agree shall have reference to each of
the Reuters Marks and the Supplier Marks and it will be agreed between the
Parties as to the size given to the Reuters Marks and to the Supplier
Marks and as more particularly described in Schedule 3.
12. WARRANTIES
12.1 Each Party represents and warrants to the other that:
12.1.1 it has requisite legal and corporate power and authority to
execute and deliver this Agreement and to carry out and perform
all of its obligations under this Agreement;
12.1.2 it holds and will continue to hold and is in compliance and will
continue to be in compliance with any applicable permits, licences
and other approvals required to carry out its obligations under
the Agreement;
12.1.3 the execution, delivery and performance by it of its obligations
under the Agreement require no consent, approval or authorisation
of, action by or in respect of, or filing with, any governmental
body, agency, or official;
12.1.4 the execution, delivery and performance by it of the Agreement do
not (i) violate its Certificate of Incorporation (or other
constitutional documents) or By-laws, or (ii) violate any
applicable law, rule, regulation, judgement, injunction, order or
decree, except to the extent that any such violation would not,
individually or in the aggregate, have a material adverse effect
on its ability to perform the terms of the Agreement.
12.2 The Supplier warrants that the Specialist Data:
12.2.1 has been and will continue to be developed with due care and
skill, in a professional manner and will be accurately and
completely transmitted to the Network;
12.2.2 will during the Initial Term or any further Term continue to be
provided at the same or higher quality than as at the Commencement
Date.
12.3 The Supplier warrants and represents to Reuters that from the Commencement
Date there will not be a reduction in any material respect in the ability
of the Specialist Data Service to function as a result of the Specialist
Data Service's and/or the Supplier Server's inability to process date
information accurately
<PAGE>
before, on or after 1 January 2000 (including leap years) to the extent
such reduction is caused by the Specialist Data.
Compliance of the Specialist Data with the foregoing means that the
Specialist Data is MILLENNIUM COMPLIANT and MILLENNIUM COMPLIANCE shall be
construed accordingly.
12.4 The Supplier also agrees:
12.4.1 to cooperate with Reuters in connection with Reuters reasonable
investigations relating to the Millennium Compliance of the
Specialist Data, including, for example:
(a) permitting Reuters to obtain relevant information from
knowledgeable employees, representatives and agents of the
Supplier in response to written and/or oral questions; and
(b) providing Reuters on reasonable notice with access to relevant
information and documentation including the Supplier's data
format specifications and Millennium-related test results;
12.4.2 to provide Reuters with such assistance Reuters reasonably
requires in connection with Millennium Compliance testing by
Reuters relating to the Specialist Data; and.
12.4.3 to give Reuters at least 90 days' notice in writing if the
Supplier intends to change its data format specifications, in
particular as such may relate to the way in which dates are
represented in a datafeed, data file, screen display or hard copy.
13. INDEMNIFICATION
13.1 The Supplier hereby indemnifies Reuters, the Relevant Group Members and
its and their officers, directors, employees and agents against and agrees
to hold them harmless from any and all Damages, incurred or suffered by
the Relevant Group Members arising out of:
13.1.1 any misrepresentation or breach of representation, undertaking, or
warranty or covenant made or to be performed by the Supplier
pursuant to this Agreement; and
13.1.2 all claims or proceedings that possession, use or exploitation of
the Specialist Data in accordance with the provisions of this
Agreement or anything else done or omitted to be done within the
scope of the Licences or any permitted sub-licenses granted by the
Reuters Group infringes the Intellectual Property Rights of any
third party (IP CLAIM) except to the extent that the IP Claim is
based upon or arises out of the Specialist Data
<PAGE>
which has been altered or combined with other data if such IP
Claim would have been avoided has not such alteration or
combination occurred.
13.2 Reuters hereby indemnifies Supplier, its officers, directors, employees
and agents against and agrees to hold them harmless from any and all
Damages incurred or suffered by Supplier arising out of any
misrepresentation or breach of warranty or representation or covenant,
made or to be performed by Reuters pursuant to this Agreement.
13.3 A Party seeking indemnification pursuant to this Clause 13 (an INDEMNIFIED
PARTY) from or against the assertion of any claim by a third Person (a
THIRD PARTY CLAIM) will give prompt notice to the party from whom
indemnification is sought (the INDEMNIFYING PARTY); provided, however,
-------- -------
that failure to give prompt notice will not relieve the Indemnifying Party
of any liability hereunder (except to the extent the Indemnifying Party
has suffered actual material prejudice by such failure).
13.4 Within 10 Business Days of receipt of notice from the Indemnified Party
pursuant to Clause 13.3, the Indemnifying Party will have the right,
exercisable by written notice to the Indemnified Party, to assume the
defense of a Third Party Claim. If the Indemnifying Party assumes such
defense, the Indemnifying Party may select counsel, which counsel will be
reasonably acceptable to the Indemnified Party.
13.5 If the Indemnifying Party:
13.5.1 does not assume the defense of any Third Party Claim in accordance
with Clause 13.4;
13.5.2 having so assumed such defense, unreasonably fails to defend
against such Third Party Claim; or
13.5.3 has been advised by the written opinion of counsel to the
Indemnified Party that the use of the same counsel to represent
both the Indemnifying Party and the Indemnified Party would
present a conflict of interest,
then, upon 5 Business Days' written notice to the Indemnifying Party, the
Indemnified Party may assume the defense of such Third Party Claim, and
the cost of such defense (including reasonable attorney's fees and
expenses) will be paid by the Indemnifying Party.
13.6 The Party controlling the defense of a Third Party Claim will have the
right to consent to the entry of judgement with respect to, or otherwise
settle, such Third Party Claim with the prior written consent of the other
Party, which consent will not be unreasonably withheld or delayed;
provided, however, that such other Party may withhold its consent if any
-------- -------
such judgement or settlement imposes a monetary or continuing non-monetary
obligation on the Indemnified Party, or does not
<PAGE>
include an unconditional release of the Indemnified Party and its
Affiliates from all elements of the Third Party Claim.
13.7 The Indemnifying Party and the Indemnified Party will cooperate, and cause
their respective Affiliates to cooperate, in the defense or prosecution of
any Third Party Claim. The Indemnifying Party or the Indemnified Party, as
the case may be, will have the right to participate, at its own expense,
in the defense or settlement of any Third Person Claim.
14. LIABILITY
14.1 Neither the Reuters Group, Authorised Distributors nor the Supplier shall
be liable for any indirect or consequential loss, damage or expense
including any management time, economic loss or loss of profit or goodwill
incurred or sustained in connection with any claim under this Agreement
except that this shall not apply to any Damages suffered by Reuters
resulting from an IP Claim.
14.2 The maximum liability of either Party under this Agreement (excluding
either Party liability with respect to Third Party Claims which shall be
without limitation) shall be limited to the annualised Qualifying Revenue
based on the monthly Qualifying Revenue at the time the event giving rise
to the claim took place.
15. TERM AND TERMINATION
15.1 Subject to earlier termination in accordance with this Clause 15, this
Agreement shall come into force on Commencement Date and shall continue in
force for 5 years (the INITIAL TERM). This Agreement shall automatically
continue for successive periods of 1 year unless either Party terminates
it by giving to the other twelve (12) months written notice to take effect
at any time but no earlier that the expiry of the Initial Term (the TERM).
15.2 In addition to any other remedy available at law or in equity, either
Party may terminate this Agreement immediately, in whole or in part,
without further obligation to the other party in the event of:
15.2.1 any material breach of this Agreement by the other Party that is
not remedied within twenty-one (21) Business Days of the
defaulting Party being so requested in writing;
15.2.2 any merger or consolidation involving the other Party or any sale,
lease or other transfer of all or substantially all of the assets
of the other Party to any Person, in each case, that is not prior
to the time of such transaction an Affiliate thereof; or
15.2.3 the other Party makes an assignment for the benefit of its
creditors, files a voluntary or involuntary petition under any
bankruptcy insolvency, reorganisation or similar law, seeks or has
appointed a trustee, receiver or
<PAGE>
administrative receiver for any of its property or commences (by
resolution or otherwise) the liquidation or winding up of its
affairs.
15.3 Reuters may terminate this Agreement in whole or in part, without further
obligation to the Supplier:
15.3.1 on the date, if any, that it and any and all of its successors and
assigns have generally ceased to offer the Direct Connections
Service and/or Specialist Data Service;
15.3.2 if there is a change in Control of the Supplier excluding any
initial public offering or a secondary offering of securities of
the Supplier;
15.3.3 if at:
(a) 31 December 1999 there are not at least [****] Subscribers
receiving the Specialist Data;
(b) 31 December 2000 there are not at least [****] Subscribers
receiving the Specialist Data;
(c) 31 December 2001 there are not at least [****] Subscribers
receiving the Specialist Data;
(d) 31 December 2002 there are not at least [****] Subscribers
receiving the Specialist Data;
(e) 31 December 2003 there are not at least [****] Subscribers
receiving the Specialist Data;
(f) for each year thereafter at minimum of [****] Subscribers
receiving the Specialist Data.
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of
1933, as amended.
<PAGE>
15.4 Upon expiration or termination of this Agreement, Reuters right to access
and to permit Subscribers to access the Specialist Data service shall
immediately cease (except that Reuters shall be entitled to fulfil any of
its rights or obligations pursuant to a Subscription Agreement until
expiration of such Subscription Agreement in accordance with its
provisions without any renewal terms. If Reuters continues to make use of
the Specialist Data Service or make the Specialist Data available to
Subscriber Reuters will pay the Qualifying Revenue to the Supplier).
Reuters shall be under no obligation to erase or delete any Specialist
Data obtained from the Supplier up until the date of termination or
expiration as part of the Reuters Service or databases but except as
provided above, Reuters may not continue to distribute the Specialist Data
to Subscribers.
16. CONFIDENTIALITY
16.1 Each Party (the RECEIVING PARTY) undertakes and agrees with the other (the
DISCLOSING PARTY) not to disclose or permit to be disclosed to any third
party or otherwise make use of or permit to be made use of any trade
secrets or confidential information (CONFIDENTIAL INFORMATION) relating to
the business affairs or finances of the Disclosing Party and, where the
Supplier is the Receiving Party, this includes details of Subscribers and
the business affairs or finances of the Reuters Group, which comes into
the possession of the Receiving Party pursuant to this Agreement.
16.2 The obligations of confidence referred to in Clause 16.1 shall not extend
to any information which:
16.2.1 is or becomes generally available to the public otherwise than by
reason of breach by the Receiving Party of this Clause 16;
16.2.2 is subsequently disclosed to the Receiving Party without
obligations of confidence by a third party owing no such
obligations in respect of it;
16.2.3 is required to be disclosed by law, regulation or court order, but
only to the extent and for the purpose of such disclosure 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 or
other appropriate action and in any event to provide its consent
to such disclosure. In the event 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, but shall be made
only to the extent and for the purpose of such legally compelled
disclosure and the extent of any such disclosure is agreed between
the Disclosing Party and Receiving Party as necessary in order for
the Disclosing Party to fulfill its legal obligations;
<PAGE>
16.2.4 is developed by the Receiving Party independent of any
Confidential Information it receives from the Disclosing Party.
16.3 This undertaking will be binding for as long as such information retains
commercial value.
16.4 During the term of this Agreement the Receiving Party may disclose
Confidential Information to its directors officers, employees and agents
and those of its affiliates (each a RECIPIENT) to the extent that it is
necessary for the purpose of this Agreement.
16.5 The Receiving Party shall procure that each Recipient is made aware of and
complies with the Receiving Party's obligations of confidentiality under
this Agreement as if the Recipient were a party to this Agreement.
16.6 A breach of this Clause 16 is a material breach of this Agreement.
17. INTERNET DELIVERY
17.1 Subject to the payment by Reuters of additional sums, to be agreed between
the Parties, the Supplier agrees and acknowledges that the Supplier shall
make the Specialist Data available to Reuters and Subscribers by way of
the public Internet, and/or the Supplier service known as Multex Express
on such additional or different terms and conditions as the Parties may
agree from time to time.
18. GENERAL
18.1 Neither Party shall be held liable for any loss or failure to perform an
obligation due to circumstances beyond its reasonable control. In the
event that such circumstances continue for more than 3 months, then either
Party may give notice to the other to terminate this Agreement.
18.2 Subject to Clause 6.4, no public announcement, press release,
communication or circular (other than to the extent required by law or
regulation) concerning this Agreement or the transactions contemplated
hereby will be made or sent by either Party without the prior consent of
the other Party. This consent will not be unreasonably withheld or
delayed.
18.3 Except as otherwise expressly provided in this Agreement, each Party shall
pay its own costs of and incidental to the negotiation, preparation,
execution and implementation by it of this Agreement and of all other
documents referred to in it.
18.4 If either Party delays or fails to exercise any right or remedy under this
Agreement, that Party shall not have waived that right or remedy.
18.5 This Agreement contains each of the Party's entire understanding in
respect of the Specialist Data and Reuters Service. In entering into this
Agreement, each of the party acknowledges that it has not relied on any
warranty or representation (except in the case of fraud) made by either
Party other than as expressly provided
<PAGE>
in this Agreement. This Agreement supersedes any agreement which has
previously been entered into by the Parties in respect of access to and
distribution of the Specialist Data.
18.6 No supplement, modification or discharge of this Agreement is binding
unless executed in writing by authorised officers of the Parties.
18.7 Nothing in this Agreement shall create any partnership, joint venture or
relationship of principal and agent between the Parties, who are
independent contractors.
18.8 Any notice to be given under this Agreement may be delivered by hand
delivery, registered mail (or the equivalent in the country where the
notice is delivered) or facsimile.
18.8.1 Notices given:
(a) by hand delivery will be addressed to the person at the
address; or
(b) by facsimile will be addressed to the person at the number
set out below:
Reuters: 1700 Broadway, New York, NY 10019
fax: (212) 307-9378
marked for the attention of General Counsel
The Supplier: 33 Maiden Lane, New York, NY 10038
fax: (212) 742-9561
marked for the attention of Philip Callaghan
18.8.2 Either Party may change the person, address and facsimile number
notices are to be delivered to, by giving notice to the other
Party in accordance with this Clause 17.8.
18.8.3 Notices will be deemed to have been received:
(a) if hand delivered, on the day delivered;
(b) if sent by registered mail, on the third business day after
being sent; or
(c) if sent by facsimile, on the day sent provided the
transmitting facsimile machine produces a report verifying
successful completion of the transmission
<PAGE>
provided that if any of the events in (a), (b) or (c) above
occur after 5pm the notice will be deemed to have been
received on the next business day.
18.9 This Agreement will be deemed to have been executed in the State of New
York and will be governed by and construed in accordance with laws of the
State of New York, and each of the Parties consents to the jurisdiction
of the courts of the State of New York or the United States District
Court for the Southern District of New York for the purpose of any action
or proceeding brought by either Party in connections with this Agreement.
This Agreement has been executed in the English language and no
translation into any other language shall be used in its interpretation.
18.10 The invalidity or unenforceability for any reason of any part of this
Agreement shall neither prejudice nor affect the validity or
enforceability of the remainder.
18.11 Neither Party shall without the prior written consent of the other (not
to be unreasonably withheld or delayed) assign or transfer or purport to
assign or transfer any of its rights or obligations under this Agreement,
except that Reuters may assign any of its rights or obligations under
this Agreement to any other member of the Reuters Group without the prior
written consent of the Supplier.
18.12 This Agreement may be executed in any number of counterparts each of
which when executed and delivered shall be an original, but all
counterparts together shall constitute one and the same instrument.
18.13 Clauses 3, 5, 11, 12, 13, 14, 15, 16, and 17.9 shall survive the
termination or expiration of this Agreement for any reason.
<PAGE>
18.14 In this Agreement:
18.14.1 unless the context otherwise requires all references to a
particular Clause or Schedule are references to that clause or
schedule in or to this Agreement as they may be amended from
time to time;
18.14.2 the headings are inserted for convenience only and must be
ignored in construing this Agreement;
18.14.3 references to a notice means a written notice;
18.14.4 references to statutes, by-laws, and regulations include any
statute, by-law, or regulation re-enacting or amending them; and
18.14.5 references to DOLLARs or $ are to US Dollars.
REUTERS LIMITED MULTEX SYSTEMS, INC.
Signed /s/ John Parcell Signed /s/ Philip Callaghan
------------------------------ -----------------------------
Name John Parcell Name Philip Callaghan
------------------------------ -----------------------------
Position Executive Director Position CFO
------------------------------ -----------------------------
Date 15 July 1998 Date 15 July 1998
------------------------------ -----------------------------
<PAGE>
SCHEDULE 1
SPECIALIST DATA
The Content consists of the Market Data, Morning Meeting Notes and/or Published
Research Reports, covering the fixed income, equity, foreign and global
financial and other markets, which are contributed by the entities with which
Supplier has agreements for such contribution. The Content shall be no less
than that made available to Supplier's customers for MultexNet, subject to the
entitlement and other restrictions described in Section 5.1 of the Agreement.
TRAINING
To be agreed between the Parties.
NOTIONAL SUBSCRIPTION
As at the Commencement Date, the Notional Subscription recommended by the
Supplier is [****] per Access ID per month.
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of
1933, as amended.
<PAGE>
SCHEDULE 2
REUTERS MARKS
REUTERS LOGO
SUPPLIER'S MARKS -
Multex to provide within 7 days of the execution of this Agreement.
NOTE:
Reuters and the Supplier must agree on how the Trade Marks are to be displayed
together/co-branding/look and feel. This should follow guidelines issued by
Reuters from time to time.
<PAGE>
SCHEDULE 3
Specification
See Section 4.1
<PAGE>
SCHEDULE 4
Disclaimer
"Powered by Multex" plus Multex logo
<PAGE>
SCHEDULE 5
Territory
WORLD-WIDE
<PAGE>
SCHEDULE 6
REUTERS AMERICA LOCAL SUBSCRIBER AGREEMENT
REUTERS LOGO
REUTERS SERVICES CONTRACT
FOR REUTERS USE ONLY
CONTRACT NO.
AGREEMENT made by and between REUTERS AMERICA INC. with an office located at
1700 Broadway, New York, New York 10019 ("Reuters"), and
__________________________, with its principal office at _____________________
(the "Subscriber").
1. THE REUTERS SERVICES
Reuters will grant the Subscriber access to the service(s) (hereinafter
collectively referred to as the "Service") listed on the schedule(s) attached
and/or hereafter agreed to (the "Schedule"). The Service will be supplied to the
Subscriber along with, where applicable, such Reuters equipment or subsequent
additions or changes thereto (the "Equipment"), as may be necessary or
appropriate in order to provide access to the Service at the location(s)
specified on the Schedule (the "Premises"). The Subscriber will/will not (circle
one) contribute information to a Reuters service.
2. COMMENCEMENT AND TERM OF AGREEMENT
This Agreement will take effect from the date of signature by Reuters below and
will continue for two (2) years from (a) the first day of the calendar month
following the Installation Date (as hereinafter defined of the first of the
Reuters services which comprise the Service hereunder, or (b)
______________________ (the "Commencement Date"). This Agreement will continue
thereafter for periods of two (2) years each at the end of the initial term
and/or any renewal term hereunder at the then current Subscription Fee (as
hereinafter defined), unless either party terminates this Agreement upon written
notice given at least ninety (90) days in advance of the last day of the initial
term or any renewal term hereunder.
<PAGE>
3. THE CHARGES
The Subscriber will pay Reuters the service charges listed on the Schedule (the
"Subscription Fee"), as well as all Additional Fees described in Section 6 of
the General Conditions of Business annexed hereto.
4. THE GENERAL CONDITIONS OF BUSINESS AND ANY AND ALL SCHEDULES AND ADDENDA
ANNEXED HERETO FORM AN INTEGRAL PART OF THIS AGREEMENT AND SHOULD BE READ BY THE
SUBSCRIBER BEFORE SIGNATURE.
Client name: REUTERS AMERICA INC.:
- ---------------------------------------- -----------------------------------
Authorized Signature Authorized Signature
- ---------------------------------------- -----------------------------------
Name of Signatory Name of Signatory
- ---------------------------------------- -----------------------------------
Title Date Title Date
<PAGE>
GENERAL CONDITIONS OF BUSINESS
OF
REUTERS AMERICA INC.
1. THE SERVICE
(a) The Subscriber will access the Service only at the Premises and will not
transfer, transmit, recirculate, either outside or within the Premises by
digital or analogue means, republish or resell all or part of the information
contained in the Service, except as otherwise permitted in an Addendum to this
Agreement. Storage of information contained in the Service is permitted at the
Premises except as otherwise specified in an Addendum to this Agreement.
(b) Notwithstanding the provisions of Section 8(c) hereof, this Agreement is,
and at all times will be, subject to applicable federal, state and local laws
and to the rules and regulations of the Federal Communications Commission, the
Securities and Exchange Commission, and the various exchanges, and to the rules
and regulations of any other applicable regulatory authority, now in effect or
hereafter enacted and adopted. Where applicable, the Subscriber will execute
applications to and agreements with the respective exchanges as may be required
and comply with any and all of the aforesaid rules, regulations, approvals,
terms and conditions.
(c) Reuters reserves to itself complete editorial freedom in the form and
content of the Service and may alter the same from time to time.
(d) The Subscriber acknowledges and agrees that other subscribers authorized to
input information into Reuters services ("Contributors") may restrict the
Subscriber from receiving their items of contributed information. No subscriber
or Contributor will have any recourse against Reuters arising out of the supply
of, or failure to supply, contributed information by or to any other subscriber.
(e) Reuters will have the right to monitor the number of Subscriber accesses to
the Service or to Reuters data. The Subscriber will allow Reuters or a Reuters
designee access to the Premises at all reasonable times in order to install,
inspect, maintain, repair, replace or remove all or part of the Service or
Equipment, if any.
(f) The Subscriber acknowledges that certain databases, programs, protocols,
displays and manuals which may form part of the Service (as well as the
selection, arrangement and sequencing of the contents thereof) (the "Proprietary
Information"), are proprietary and unique to Reuters, as to which copyright,
patent or other proprietary rights may be held by Reuters or by third parties
from whom Reuters has licensed or otherwise acquired such rights. The
Subscriber agrees to take or cause to be taken any and all necessary precautions
to maintain the confidentiality of such Proprietary Information, to comply with
all copyright, trademark, trade secret, patent and other laws necessary to
protect all rights in the Proprietary Information, and agrees not to remove,
conceal or obliterate any copyright or other proprietary notice included in the
Service.
2. THE SOFTWARE (if applicable)
(a) The Subscriber further acknowledges that among the Proprietary Information
may be various software elements and related materials, documents or data
(collectively, the "Software"). the Subscriber is granted a non-exclusive, non-
transferable right to use each copy of the Software provided on a single
computer solely in conjunction with the Service. Such use does not include the
right to assign, copy, modify, merge, transfer, decompile or reverse engineer
the Software, or use the same in conjunction with non-approved software. The
Subscriber understands that any such disclosure or copying will cause damage far
greater than the value of any copies made, and that this Agreement may be
terminated by Reuters for the Subscriber's breach of the provisions of this
Section 2.
(b) In the event that the Software is or becomes defective, Reuters sole
liability will be to replace the same after receipt of notice, or, in its
discretion, to refund the portion of the prepaid Subscription Fee applicable to
the portion of the Service no longer accessible, from the date of receipt of
notice. Upgrades to and support of the Software, or any macros, may be provided
at Reuters discretion.
(c) The location of all copies of the Software in the Subscriber's possession
will be reported to Reuters upon request and such copies will be returned to
Reuters upon expiration or termination of this Agreement in the same condition
as delivered to the Subscriber, ordinary wear and tear excepted.
(d) The Subscriber acknowledges and agrees that use (i) of any Equipment or
Software for any purpose other than in connection with the Service, and (ii) of
any equipment or software in connection with the Service which is not expressly
authorized by Reuters, will be at the Subscriber's sole risk and will result in
no liability whatsoever to Reuters. Service calls arising out of the foregoing
will be at the Subscriber's sole expense.
(e) The Subscriber agrees that the provisions of this Section 2 will inure to
the benefit of any Third Party Provider (as hereinafter defined) of Software,
and agrees to indemnify and hold Reuters harmless from and against any loss,
cost or damage (including reasonable attorneys' fees) arising out of the
Subscriber's breach of the provisions of this Section 2. The Subscriber may be
required to execute an additional agreement as a condition to receiving Software
supplied by a Third Party Provider.
3. THE EQUIPMENT (applicable only where Reuters Equipment is provided)
(a) Unless otherwise provided herein to the contrary, the Service may be
accessed only by means of the Equipment and the Software (if any). The
Equipment will be supplied and installed at the Premises, and maintained and
repaired only by Reuters or a Reuters designee. Reuters will, at its cost, take
all reasonable steps to arrange for the maintenance and proper functioning of
the Equipment, except where required as a result of accident, negligence or
misuse not attributable to Reuters, failure of operating environment or other
than ordinary use as permitted hereunder.
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(b) Reuters may, at any time, upon notice, replace the Equipment with other
equipment (which shall then be deemed to form part of the Equipment), or replace
the means of transmission of the Service with another means of transmission.
Reuters will take reasonable steps to ensure that the services provided to the
Subscriber after replacement of the Equipment, or replacement of the means of
the transmission, are substantially similar to the Service. The replacement
notice will indicate any change in charges for the Service as a result of the
replacement, which change in charges will commence upon replacement. In the
event of an increase in charges for the Service or if such replacement service
is substantially different from the existing Service, the Subscriber may cancel
the Service by giving notice of such termination to Reuters not more than sixty
(60) days after the date of Reuters notice of replacement.
(c) Reuters holds title to the Equipment, or has obtained the right from a
third party to make the same available for use by the Subscriber. Such
Equipment will at all times remain the personal property of Reuters or such
third party, as the case may be, regardless of the manner in which it is
installed in or attached at the Premises. The Subscriber will be responsible
for any loss, cost, claim or damage caused to or by the Equipment from any cause
whatsoever including but not limited to mysterious disappearance or theft, or in
connection with its installation, removal, use, maintenance or repair, unless
such loss or damage is due to the negligence or willful misconduct of Reuters.
The Subscriber will indemnify and hold Reuters harmless from and against any
loss, cost, claim or damage (including reasonable attorneys' fees) arising out
of any property damage or personal injury caused to or by the Equipment or in
connection with its installation, removal, use, maintenance or repair, unless
such property damage or personal injury is due to the negligence or willful
misconduct of Reuters.
(d) The Subscriber will not, without Reuters prior written consent, make any
alteration, addition, correction to or interface with the Equipment, or permit
access to the Equipment by any person not authorized by Reuters.
(e) The Subscriber will not move the Equipment from its location as installed
without the prior written consent and supervision of Reuters; nor will the
Subscriber allow the Equipment to become subject to any claims, liens or
encumbrances.
(f) The Subscriber will provide all risk insurance coverage sufficient to
protect the Equipment. The Subscriber will name Reuters as an additional
insured on any policy or policies obtained with respect to the Equipment.
(g) The Subscriber will provide, at its own expense, all consumable items,
suitable environmental conditions and cable pulling services, as applicable,
(each in accordance with applicable Underwriters Laboratories, Inc. standards)
for the Equipment, and will make arrangements to obtain any and all consents,
rights of access, easements, governmental approvals, building permits, zoning
authorizations, or other rights or authorizations necessary for the installation
and use of Equipment on the roof or within other portions of the Premises for
purposes of transmission and receipt of the Service.
4. LIABILITY
(a) Although Reuters makes every effort to ensure the accuracy and reliability
of the Service, the Subscriber acknowledges that Reuters, its employees, agents,
contractors, subcontractors, Contributors and Third Party Providers will not be
held liable for any loss, cost or damage, (including the loss of Subscriber
data) suffered or incurred by the Subscriber or any third party arising out of
any faults, interruptions or delays in the Service or out of any inaccuracies,
errors or omissions in the information contained in the Service as supplied to
or contributed by the Subscriber, however such faults, interruptions, delays,
inaccuracies, errors or omissions arise unless due to Reuters gross negligence
or willful misconduct.
(b) The Subscriber will indemnify and hold Reuters, its employees, agents,
contractors and subcontractors harmless from and against any loss, cost or
damage (including reasonable attorneys' fees) in connection with any claim or
action which may be brought by any third party, accessing all or part of the
Service through or by means of the Subscriber, and arising out of any faults,
interruptions or delays in the Service or any inaccuracies, errors or omissions
in the information contained in the Service as supplied to or contributed by the
Subscriber, unless due to Reuters gross negligence or willful misconduct.
(c) THERE ARE NO WARRANTIES, CONDITIONS, GUARANTIES OR REPRESENTATIONS AS TO
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHER WARRANTIES,
CONDITIONS, GUARANTIES OR REPRESENTATIONS, WHETHER EXPRESS OR IMPLIED, IN LAW OR
IN FACT, ORAL OR IN WRITING, EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT. THE
SUBSCRIBER HEREBY ACKNOWLEDGES THAT IT HAS NOT RELIED UPON ANY WARRANTY,
CONDITION, GUARANTY OR REPRESENTATION MADE BY REUTERS.
(d) Reuters will be under no liability for any loss, cost or damage resulting
from any failure by Reuters to perform any obligation hereunder or from any
delay in the performance thereof due to causes beyond Reuters control,
including, without limitation, industrial disputes of whatever nature, acts of
God, public enemy, acts of government, failure of telecommunications, fire or
other casualty.
(e) Under no circumstances will Reuters be liable for any indirect, incidental,
special or consequential damages with respect to provision of the Service, the
Software or the Equipment to the Subscriber, including, without limitation, lost
profits.
(f) Notwithstanding any provision contained herein to the contrary, in no event
will the aggregate liability of Reuters, its affiliates, employees or agents to
the Subscriber or to any other party for damages, direct or otherwise, arising
out of or in connection with this Agreement exceed the total amount of
Subscription Fees actually paid to Reuters during the then current term of this
Agreement, regardless of the cause or form of action, whether claims therefor
are grounded in contract, tort (including negligence) or strict liability.
5. CONTRIBUTED INFORMATION (if applicable)
(a) A Contributor may only contribute information in a format approved in
advance by Reuters. Such information may be used by Reuters and its affiliates
in any of its services with or without attribution.
(b) The Contributor agrees to take all necessary steps to ensure that only
competent and responsible persons have the necessary authority and physical
access to contribute information to the Service.
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(c) The Contributor agrees to regularly update and correct, where necessary,
all information contributed by it. Unless otherwise specified in the
information contributed, prices contributed must be indicative of those at which
the Contributor would be prepared to negotiate.
(d) Contributed Information must not comprise administrative messages,
defamatory or advertising material or any information the dissemination of which
is contrary to the law or stock or commodity exchange or banking regulations, or
any other applicable regulations or market conventions.
(e) The Contributor hereby indemnifies and holds Reuters, its employees,
agents, contractors and subcontractors harmless from and against any loss, cost
or damage (including reasonable attorneys' fees) arising out of an actual or
threatened claim brought by any third party against Reuters due to the use or
possession of the Contributor's contributed information by Reuters, its
employees, agents or subscribers.
6. THE CHARGES
(a) The Subscription Fee is net of all taxes and duties, whether withheld or
directly payable. In all cases the amount of the Subscription Fee will be paid
by the Subscriber to Reuters in full without any right of set-off or deduction.
In addition to the Subscription Fee, the Subscriber will pay the following
additional charges (the "Additional Fees"):
(i) stock and commodity or other applicable exchange fees, if any, (the
"Exchange Fees") (which may be charged on the basis of the number of Subscriber
accesses to the Service);
(ii) all charges, if any, for delivery of the Service by Reuters to the
Subscriber including costs for lines and terminal equipment;
(iii) all costs incurred by Reuters or its designees, where applicable, for
installation, relocation, modification, or removal of the Service and/or
Equipment (including but not limited to, costs due to site surveys, provision of
cable wire, shipment and connection of Equipment, and Subscriber-caused delays);
(iv) (to Reuters or to a taxing authority, as appropriate) any applicable sales,
use, goods and services, value added or similar taxes, payable with respect to
the Subscription Fee, the Additional Fees, or any part thereof and/or the
Service, or otherwise arising with respect to this Agreement (other than taxes
levied or imposed upon Reuters income); and
(v) any applicable fees (the "Third Party Provider Fees") charged by third
parties other than Contributors or exchanges whose information or Software is
supplied by Reuters as part of the Service (a "Third Party Provider").
(b) A further Additional Fee (the "Security Deposit") will be paid by the
Subscriber upon the execution hereof, in an amount equal to the Subscription Fee
payable by the Subscriber during the first three (3) months of the term of this
Agreement. The Security Deposit may be used, applied or retained by Reuters, in
whole or in part, to the extent required for the payment of any Subscription Fee
and/or Additional Fees payable hereunder as to which the Subscriber is in
default, or for any sum which Reuters may expend or may be required to expend by
reason of the Subscriber's default hereunder. The balance of the Security
Deposit, if any, will be returned to the Subscriber upon the termination of this
Agreement after the return of the Equipment to Reuters.
(c) The Subscriber's liability to pay the Subscription Fee and the Additional
Fees (excluding the Security Deposit) arises on the Installation Date. The
Installation Date for each of the one or more Reuters services which comprise
part of the Service will be the earlier of the date on which such service is (i)
installed and operational, and (ii) first accessed by the Subscriber. Unless
specified herein or in any Addendum hereto to the contrary, the Subscription Fee
is due quarterly in advance on the first day of each calendar quarter (the
"Payment Date"). Any payments arising between the Installation Date and the
next Payment Date are due in advance on the Installation Date. Time of payment
will be of the essence of this Agreement. Should there be any additions to the
Service or Equipment hereunder, the additional charges therefor will be listed
on one or more addenda hereto and will be payable for the full remaining term of
this Agreement and any renewal term(s) hereof, and will be deemed to form part
the Subscription Fee and the Additional Fees, as applicable.
(d) In the event of an increase in Additional Fees due to parties other than
Reuters, any and all additional charges therefor will automatically be made a
part of this Agreement and will be payable, pro rata, by the Subscriber for the
full remaining portion of the term of this Agreement and any renewal term(s)
hereof.
(e) Reuters may, at any time, on not less than ninety (90) days written notice,
increase the Subscription Fee payable hereunder for any one or more of its
services. In such event the Subscriber may terminate this Agreement with
respect to such service or services on the date on which the increase(s) would
have become effective, by giving notice of termination to Reuters not less than
sixty (60) days before the effective date of the increase. Reuters will then
refund any portion of the Subscription Fee prepaid for the canceled portion of
the term. The Subscriber will continue to be charged for any service(s) still
being delivered pursuant to this Agreement.
(f) Without limitation of the provisions of Section 6(e) hereof, during each
year of the term and any renewal term of this Agreement, Reuters reserves the
right to increase its Subscription Fee by the yearly percentage increase in the
Consumer Price Index for all urban consumers as issued by the Bureau of Labor
Statistics of the US. Department of Labor in the New York/New Jersey
Metropolitan area ("CPI"), reported each September (as measured by the increase
in the CPI from September of the previous year to August of the present year).
Such percentage increase will become effective as of January 1st of the
following year.
7. TERMINATION
(a) In addition to any other remedy available at law or in equity, Reuters may
terminate this Agreement immediately, in whole or in part, without further
obligation to the Subscriber in the event of:
(i) any breach by the Subscriber of Section 1(a) or 1(f) of these General
Conditions of Business or a breach of the Subscriber's obligation to pay the
Subscription Fee or Additional Fees as specified in this Agreement;
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(ii) any other breach of this Agreement by the Subscriber which cannot be
remedied or is not remedied within thirty (30) days of the Subscriber being
requested to do so;
(iii) any merger, consolidation, acquisition, or the sale, lease or other
transfer of all or substantially all of the assets or shares of stock of the
Subscriber, or any other change in the control or ownership of the Subscriber;
(iv) the Subscriber's making an assignment for the benefit of its creditors, or
the filing by or against the Subscriber of a voluntary or involuntary petition
under any bankruptcy or insolvency law, under the reorganization or arrangement
provisions of the United States Bankruptcy Code, or under the provisions of any
law of like import, or the appointment of a trustee or receiver for the
Subscriber or its property; or
(v) as determined by Reuters sole reasonable discretion, the impracticability of
serving the Premises by, or the inaccessibility of the Premises to, the means of
transmission used for the delivery of the Service, in which case Reuters only
obligation to the Subscriber will be to refund the proportionate part of the
Subscription Fee prepaid for the portion of the Service which would have been
received following the date of termination.
(b) Reuters may, without penalty, interrupt the provision of the Service to the
Subscriber if the Subscriber uses non-Reuters equipment or software which in
Reuters reasonable opinion will cause errors, omissions or delays in the Service
or will interfere with transmission, reception or the operation of the Reuters
system or Equipment. The Service will be restored if, in Reuters reasonable
opinion, it has received satisfactory assurances as to future use of the
Service.
(c) Where the operation or delivery of the Service or any part thereof is
dependent upon an agreement between Reuters and a third party and such agreement
has expired or is terminated or suspended in whole or in part for any reason,
and Reuters is unable to enter into another equivalent agreement upon reasonable
terms, Reuters may immediately terminate this Agreement or the relevant part
thereof, and upon such termination Reuters only obligation to the Subscriber
will be to refund the proportionate part of the Subscription Fee prepaid for the
portion of the Service which would have been received following the date of
termination.
(d) Without limitation of any other remedy available at law or in equity, the
Subscriber and Reuters hereby agree that upon the Subscriber's:
(i) breach of this Agreement and subsequent termination by Reuters, or
(ii) terminating this Agreement (except as permitted hereunder) Reuters will be
entitled to recover from the Subscriber as and for liquidated damages an amount
equal to the total aggregate charges payable for the unexpired portion of the
then current term, discounted at the rate of two (2%) percent of such aggregate
sum for each month of the term during which this Agreement was in effect and
fully paid for, to a minimum of seventy-five (75%) percent of such aggregate
sum. The parties hereto hereby acknowledge and agree that, after giving due
consideration to the expenses Reuters will incur by reason of such breach or
termination, to the possibility that Reuters will not be able to mitigate its
damages, and to the savings that Reuters will obtain by not having to maintain
any installed Equipment, the aforesaid sum constitutes a realistic pre-estimate
of the loss to Reuters in the event of such breach or premature termination of
this Agreement and will not be construed as a penalty.
(e) Reuters will be entitled to remove any Equipment from the Premises
immediately upon termination of this Agreement for any reason.
(f) Reuters may, on six months' written notice, cease providing a Service or
withdraw any Software or Equipment if Reuters withdraws the Service or such
Software or Equipment from the country where the Premises are located.
8. GENERAL
(a) This Agreement and any and all Addenda, Schedules or Exhibits annexed hereto
represent the entire agreement of the parties regarding the subject matter
hereof. There are no other oral or written collateral representations,
agreements, or understandings regarding the subject matter hereof. In the event
that the Subscriber issues a purchase order or other instrument related to the
Service, it is understood and agreed that such document is for the Subscriber's
internal purposes only and will in no way supersede, modify, add to or delete
any of the terms and conditions of this Agreement.
(b) All notices given hereunder will be in writing, delivered personally or
mailed by registered or certified mail, return receipt requested, postage
prepaid, or delivered by overnight mail or by confirmed facsimile; if to the
Subscriber, to the address specified in this Agreement, and if to Reuters, to
the address of its local sales office, unless either party gives notice in
writing of a change of such address in the manner provided herein for giving
notice. All notices will be deemed given when delivered personally, if mailed
by registered or certified mail, five (5) days after the date of mailing, if
delivered by overnight mail 72 hours after mailing, or if by confirmed
facsimile, 24 hours after the time of sending.
(c) This Agreement will be deemed to have been executed and delivered in the
State of New York and it will be governed by and construed in accordance with
the laws of New York. The parties hereby consent to the jurisdiction of the
courts of the State of New York for the purpose of any action or proceeding
brought by either of them on or in connection with this Agreement or any alleged
breach thereof.
(d) This Agreement will be binding upon and inure to the benefit of the parties
hereto, their respective heirs, personal representatives, successors and
assigns. The Subscriber will not assign this Agreement without the prior
written consent of Reuters. "Any attempted assignment in violation of this
Section is void."
(e) This Agreement may not be amended, modified or superseded, nor may any of
its terms or conditions be waived unless expressly agreed to in writing by both
parties. The failure of either party at any time or times to require full
performance of any provision hereof will in no manner affect the right of such
party at a later time to enforce the same.
(f) If any provision or term of this Agreement, not being of a fundamental
nature, is held to be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remainder of this Agreement will not be affected.
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(g) The provisions of Section 1(a), 1(f) and 2(a) hereof, and any and all
disclaimers and indemnities contained herein or in any addenda annexed hereto
will survive the termination of this Agreement.
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SCHEDULE 7
AUTHORISED DISTRIBUTOR COUNTRIES
Brazil
Indonesia
Malaysia
<PAGE>
EXHIBIT 10.7
FOURTH AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
-----------------------------
As of December 15, 1998
To the several persons named
at the foot hereof:
Dear Sirs:
For clarity of reference, the Third Amended and Restated Registration
Rights Agreement dated as of July 24, 1997, among Multex Systems, Inc., a
Delaware corporation (the "Company"), and the several persons named therein, as
supplemented by the Supplement to Third Amended and Restated Registration Rights
Agreement dated as of August 14, 1997 among 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. ("77 Capital") 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
<PAGE>
Convertible Preferred Stock acquired in June 1996 and 5,555.56 shares of Series
D Convertible Preferred Stock acquired in July 1997; 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 in July 1997; Chase Venture Capital Associates, L.P.
("Chase") is the owner of an aggregate of 61,208.34 shares of Preferred Stock,
consisting of 26,666.67 shares of Series C Convertible Preferred Stock acquired
in June 1996, 16,041.67 shares of Series D Convertible Preferred Stock acquired
in July 1997 and 18,500 shares of Series E 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 in July 1997; The
Flatiron Fund 1998/99 LLC ("FF") is the owner of 1,440 shares of Series E
Convertible Preferred Stock acquired concurrently herewith; Flatiron Associates,
LLC ("FA") is the owner of 160 shares of Series E Convertible Preferred Stock
acquired concurrently herewith; FGIC Services, Inc. ("FGIC") is the owner of an
aggregate of 11,111.11 shares of Series D Convertible Preferred Stock, acquired
in August 1997; Prospect Street NYC Discovery Fund, L.P. ("Prospect") is the
owner of an aggregate of 16,000 shares of Series E Convertible Preferred Stock
acquired concurrently herewith; Rader Reinfrank Holdings ("RRI") is the owner of
an aggregate of 24,000 shares of Series E Convertible Preferred Stock acquired
concurrently herewith; and Mellon Ventures L.P. ("Mellon") is the owner of
16,000 shares of Series E Convertible Preferred Stock acquired concurrently
herewith and America Online, Inc. ("AOL") is the owner of 8,000 shares of Series
E Convertible Preferred Stock acquired concurrently herewith, (Euclid III, 77
Capital, ADP, AT&T, Massachusetts Mutual, Alce, Euclid IV, Reuters, fl@tiron,
Chase, SOFTBANK, FF, FA, FGIC, Prospect, RRI, Mellon and AOL 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 Fourth 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 E Convertible Preferred Stock by Prospect, 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:
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1. 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.
"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, Series D
Convertible Preferred Stock, par value $.01, and Series E 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
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<PAGE>
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. 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
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<PAGE>
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, 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
-5-
<PAGE>
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
--- ----
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, if eligible to do so:
(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
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<PAGE>
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 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
-7-
<PAGE>
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:
(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;
-8-
<PAGE>
(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;
(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;
-9-
<PAGE>
(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 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.
-10-
<PAGE>
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 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,
including attorneys fees, 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
-11-
<PAGE>
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 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; Paul, Hastings, Janofsky & Walker,
-12-
<PAGE>
LLP; Reboul, MacMurray, Hewitt, Maynard & Kristol; Robinson Brog Leinwand Greene
Genovese & Gluck P.C.; Orrick, Herrington & Sutcliffe LLP; and Mayer, Brown &
Platt) 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 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 deter-
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<PAGE>
mined 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 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
-14-
<PAGE>
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.
(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. Market Stand-Off Agreement. If requested by the Company and an
--------------------------
underwriter of Common Stock (or other securities) of the Company, a holder of
Restricted Securities shall not sell or otherwise transfer or dispose of any
Common Stock (or other securities) of the Company held by such holder of
Restricted Securities (other than those included in the registration) during the
one hundred eighty (180) day period following the effective date of a
registration statement of the Company filed under the Securities Act, provided
that:
-15-
<PAGE>
(a) such agreement shall only apply to the first such
registration statement of the Company, including securities
to be sold on its behalf to the public in an underwritten
offering; and
(b) all officers and directors of the Company and holders of at
least ten percent (10%) of the Company's voting securities
are bound by and have entered into similar agreements.
The obligations described in this Section 14 shall not apply to a registration
relating solely to employee benefit plans or to a SEC Rule 145 transaction. The
Company may impose stop-transfer instructions with respect to the shares of
Common Stock (or other securities) subject to the foregoing restriction until
the end of said one hundred eighty (180) day period.
15. 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:
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;
-16-
<PAGE>
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, Series D
Convertible Preferred Stock and Series E 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.
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/ I. Karaev
---------------------------
AGREED TO AND ACCEPTED
as of the date first above written:
/s/ I. Karaev /s/ I. Karaev
- --------------------------- ---------------------------
Isaak Karaev, Individually Isaak Karaev, Voting Trustee
-17-
<PAGE>
/s/ Morton Zeidman
- ------------------
Morton I. Zeidman
ADP FINANCIAL INFORMATION SERVICES, INC. ALCE PARTNERS, L.P.
By: /s/ Frederick J. Koczwarce By: /s/ Douglas G. DeVivo
------------------------------ ----------------------------------
Name: Frederick J. Koczwarce Name: Douglas G. DeVivo
Office: Senior Vice President Office: General Partner
AT&T VENTURE COMPANY, L.P. CHASE VENTURE CAPITAL ASSOCIATES, L.P.
By: /s/ Brad Burnham By: /s/ Arnold L. Chavkin
------------------------------ ----------------------------------
Name: Brad Burnham Name: Arnold L. Chavkin
Office: General Partner Office: Partner
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:
EXECUTION CONTINUED ON PAGE 18
------------------------------
-18-
<PAGE>
<TABLE>
<S> <C>
77 CAPITAL PARTNERS, L.P. THE fl@tiron FUND, LLC
By: 77 Capital Corporation, its General partner
By: /s/ Russell B. Pyne By: /s/ Frederick Wilson
___________________________________________ __________________________________________
Name: Russell B. Pyne Name: Frederick Wilson
Office: President Office: Managing Member
REUTERS AMERICA INC. SOFTBANK VENTURES INC.
By: /s/ Davis Gaynes By: /s/ Yoshitaka Kitao
__________________________________________ __________________________________________
Name: Davis Gaynes Name: Yoshitaka Kitao
Office: Office: President
MASSACHUSETTS MUTUAL LIFE INSURANCE FGIC SERVICES, INC.
COMPANY
By: /s/ Michael L. Klofas By: /s/ Vernon M. Endo
__________________________________________ __________________________________________
Name: Michael L. Klofas Name: Vernon M. Endo
Office: Managing Director Office:
PROSPECT STREET NYC DISCOVERY MELLON VENTURES L.P.
FUND, L.P.
By: Prospect Street Discovery Fund, Inc., By: MVMA, L.P., its General Partner
its General Partner By: MVMA, Inc., its General Partner
By: /s/ Edward Ryeon By: /s/ John Shoemaker
___________________________________________ __________________________________________
Name: Edward Ryeon Name: John Shoemaker
Office: Vice President Office:
RADER REINFRANK HOLDINGS AMERICA Online, Inc.
By: Rader Reinfrank Investors, L.P. By: /s/ Lennert Leader
its General Partner __________________________________________
Name: Lennert Leader
By: Rader Reinfrank & Co., LLC Office:
its General Partner
FLATIRON ASSOCIATES, LLC
By: /s/ Stephen P. Rader By: Flatiron Partners LLC, its Manager
___________________________________________
Name: Stephen P. Rader By: /s/ Frederick Wilson
Office: Managing Member -----------------------------------------
Name: Frederick Wilson
THE FLATIRON FUND 1998/99 LLC. Office: Managing Member
By: /s/ Frederick Wilson
____________________________________________
Name: Frederick Wilson
Office: Managing Member
</TABLE>
-19-
<PAGE>
ANNEX 1
-------
Euclid Partners III, L.P.
Euclid Partners IV, L.P.
50 Rockefeller Plaza
New York, New York 10020
With a copy to:
Rebouol, MacMurray, Hewitt,
Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10020
77 Capital Partners, L.P.
c/o Atrium Capital Corporation
3000 Sand Hill Road, Building. 2, Suite 240
Menlo Park, California 94025
ADP Financial Information Services, Inc.
2 Journal Square Plaza
Jersey City, New Jersey 07306
With a copy to:
Automatic Data Processing, Inc.
1 ADP Boulevard
Roseland, New Jersey 07068
Attention: General Counsel
AT&T Venture Company, L.P.
295 North Maple Avenue
Room 3361 C1
Basking Ridge, New Jersey 07920
Isaak Karaev
Yefin Karayev
Jane Gavronsky
c/o Isaak Karaev
59 Lancaster Avenue
Brooklyn, New York 11223
Morton I. Zeidman
Daniel Zeidman
c/o Morton I. Zeidman
115 East 87th Street
New York, New York 10128
Massachusetts Mutual Life Insurance Company
Securities Investment Division
1295 State Street
Springfield, Massachusetts 01111
Alce Partners, L.P.
One First Street, Suite 16
Los Altos, California 94022
FGIC Services, Inc.
115 Broadway
New York, New York 10006
Attention: General Counsel
Chase Venture Capital Associates, L.P.
380 Madison Avenue, 12th Floor
New York, New York 10017
With a copy to:
O'Sullivan, Graev & Karabell, LLP
30 Rockefeller Plaza, 41st Floor
New York, New York 10112
SOFTBANK Ventures Inc.
1-16-8 Nihonbashi-Kakigaracho
Chou-ku, Tokyo 103-0014, Japan
With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Stephen Grant, Esq.
Reuters America, Inc.
1700 Broadway, 40th Floor
New York, New York 10019
Attention: General Counsel
The fl@tiron Fund
380 Madison Avenue
New York, New York 10017
Attention: Fred R. Wilson
The Flatiron Fund 1998/99 LLC
257 Park Avenue South
New York, New York 10010
Attention: Fred R. Wilson
Flatiron Associates LLC
380 Madison Avenue
New York, New York 10017
Attention: Fred R. Wilson
Prospect Street NYC Discovery Fund, L.P.
250 Park Avenue, 17th Floor
New York, New York 10177
Rader Reinfrank Investors, L.P.
c/o Rader Reinfrank & Co. LLC
9465 Wilshire Boulevard, Suite 950
Beverly Hills, California 90212
Mellon Ventures L.P.
5 Radnor Corporate Center
100 Matson Ford Roads, Suite 170
Radnor, Pennsylvania 19087-4515
America Online, Inc.
22000 AOL Way
Dulles, Virginia 20166
-20-
<PAGE>
Exhibit 10.8
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS EXHIBIT
PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
INTERNAL DISTRIBUTION SERVICES AGREEMENT
Dated as of: April 21, 1997
Between
MULTEX SYSTEMS, INC.
and
ROBERTSON STEPHENS & COMPANY
EXHIBITS
A Fees
B Services
C Third Party Software
D Perpetual Licenses
E Multex or Company Provided Equipment
ATTACHMENTS
A Third Party License Requirements for End Users
<PAGE>
AGREEMENT FOR
INTERNAL ELECTRONIC DISTRIBUTION SERVICES AGREEMENT
THIS AGREEMENT FOR INTERNAL ELECTRONIC DISTRIBUTION SERVICES ("Agreement") is
made and entered into as of April 10, 1997, by and between Robertson, Stephens &
Company LLC, with offices at 555 California Street, San Francisco, CA 94104
(hereinafter referred to as "Company"), and MULTEX SYSTEMS, INC., a Delaware
corporation with offices at 33 Maiden Lane, New York, N.Y. 10038 (hereinafter
referred to as "Multex"). Multex and Company shall be referred to herein as the
"Parties".
RECITALS
A. Company creates, produces and develops various Documents including but not
limited to market data, Morning Meeting Notes and/or Published Research
Reports (Research) or other documents of Company or its independent
branches and subsidiaries and Third Party Research as determined by Company
("the Research and other documents are collectively known as "Documents"),
all in accordance with Company's own access and entitlement policies.
B. Company desires to disseminate and distribute the Documents internally
within the Company.
C. Multex via its proprietary Multex Express software ("Multex Software")
electronically receives the Documents and distributes the Documents to
others (hereinafter collectively the "Services"). (See exhibit B.)
D. Company desires that Multex provide the Services to enable Company to
distribute the Documents within the Company.
In consideration of the mutual promises and covenants hereinafter contained, the
parties hereto agree as follows:
1. Scope of Services.
(a) Company grants to Multex the non-exclusive right to
obtain and distribute the Documents via the Multex Software to
investment professionals and others within the Company or as otherwise
designated by the Company. Multex agrees to provide the Services and
the Services listed on Exhibits A and B hereto (or any additional
related services) to the Company subject to the payment of the fee as
set forth in Exhibit A. As part of the Services Multex grants to
Company a non-exclusive, non-transferable license to use Multex
Software, including software licensed from third parties identified in
Exhibit C ("Third Party Software") in accordance with the provisions
of Attachment A
<PAGE>
(Third Party License Requirements for End Users) which is incorporated
and made a part of this Agreement for the term of this Agreement.
Multex Software and the Third Party Software contained therein is
sometimes referred to as the Software or Multex Software.
(b) Any equipment i.e., computers, servers, etc. ("Equipment") to be
provided by Multex or Company is set forth in Exhibit E.
(c) The Company may use the Services only for internal distribution within
the Company.
(d) Multex will provide maintenance of the Multex Software. Maintenance
will consist of diagnosis and correction of errors in the Multex
Software providing upgrades in the nature of bug fixes and maintenance
updates as characterized by Multex. Multex shall also provide
telephone support on normal business days during normal business hours
solely to support personnel of the Company.
2. Independent Contractor.
Multex (and its employees), in performance of this Agreement, is acting as
an independent contractor. Personnel supplied by Multex hereunder are not
Company's personnel or agents, and Multex assumes full responsibility for
their acts. Multex shall be solely responsible for the payment of
compensation, benefits, insurance and taxes relating to Multex's employees
assigned to perform services hereunder. Notwithstanding the foregoing,
Multex (and its employees) shall abide by Company rules and regulation
while visiting Company premises.
3. Costs.
Company is solely responsible for the costs relating to (i) the development
of the Documents and (ii) the delivery of the Documents to Multex and (iii)
the distribution of the Documents within the Company. Such costs include
the costs of Company's telecommunication lines, telephones, modems,
computers, magnetic tape, magnetic tape delivery and messenger services.
4. Term.
(a) The term of this Agreement shall be for two (2) years beginning on
April 1, 1997 and terminating on March 31, 1999. The Agreement shall
automatically renew for successive one year periods unless either
Multex or Company terminates the Agreement thirty (30) days prior to
the expiration of each renewal period. In addition this Agreement may
be terminated by either Multex or the Company at any time
-2-
<PAGE>
subsequent to March 31, 1999 upon 60 days prior written to the non-
terminating party.
(b) Notwithstanding the term set forth above, in the event either party to
this Agreement shall fail to perform or observe any material term,
covenant, agreement or warranty, the other party may immediately
terminate this Agreement if such failure is not corrected within 30
days after delivery of written notice thereof to the other party
(provided however if the failure cannot reasonably be corrected within
30 days and the defaulting party has commenced performance during such
thirty (30) day period and proceeds to cure the default, the time for
curing such default shall be extended for such period as may be
necessary to cure the default.
(c) If, during the term of this Agreement, either party shall cease doing
business or if a petition in bankruptcy shall be filed (voluntary or
involuntary) with respect to a party, the other party may terminate
this Agreement upon 10 days' written notice to the other party.
(d) In the event the Agreement is not renewed or is terminated, or
canceled pursuant to this Agreement, Company shall return any
Equipment, Software, documentation, or other materials provided to it
by Multex pursuant to this Agreement, except such software identified
in Exhibit C as may be perpetually licensed to Company hereunder.
5. Indemnity.
(a) Multex agrees to defend and/or handle at its own cost and expense any
claim or action against Company, its parent company, and its other
their subsidiaries and/or affiliated companies, for actual or alleged
infringement of any patent, copyright, trademark or other property
right (including, but not limited to, misappropriate of trade secrets)
("Infringement") based on Services, and/or other materials furnished
to Company by Multex pursuant to the terms of this Agreement
including, without limitation, Multex Software and the Third Party
Software included therein. Multex further agrees to indemnify and
hold Company, its parent company, and its or their subsidiaries and/or
affiliated companies, and any of their clients, harmless from and
against any and all liabilities, losses, damages, costs and expenses
(including, but not limited to, attorneys' fees, costs, and
disbursements) associated with any such claim or action resulting from
the Infringement. In the event of an Infringement, Multex may
immediately terminate this Agreement, or substitute non-infringing
equally functional Services or Software.
(b) Company shall indemnify, hold harmless, defend or settle, at its sole
expense, any action or claim brought against Multex based upon or
arising out of any
-3-
<PAGE>
infringement by the Documents of any patent, copyright or proprietary
rights of any third party. Company shall pay and indemnify Multex for
any costs, damages, expenses or liabilities (including reasonable
attorney fees) incurred by Multex as a result of any claim or action
which are attributable to such infringement. Multex agrees to notify
Company promptly in writing after it obtains notice of such claim. In
the event Multex is enjoined or otherwise prohibited from using the
Documents, Company may, at its sole expense, (a) procure for Multex
the right to continue using the Documents, or (b) substitute a non-
infringing version of the Documents in a manner satisfactory to Multex
so that the Documents becomes non-infringing version of the Documents
and still conforms to the technical specifications. In lieu of the
foregoing, Company may terminate the Agreement.
6. Confidential Information.
(a) "Confidential Information" shall mean (i) information which is marked
as confidential.
(b) Each party shall hold the Confidential Information of the other party
in trust and confidence for the other party and shall not reproduce,
disclose to any person, firm or enterprise, or use for its own
benefit, any such Confidential Information (except as specifically
permitted or contemplated by this Agreement).
(c) Without limiting the generality of the foregoing, "Confidential
Information" will not include information that (i) is already
rightfully known to a party at the time it is obtained from the other
party, free from any obligation to keep such information confidential;
(ii) is or becomes publicly known through no wrongful act of either
party; (iii) is rightfully received from a third party without
restriction and without breach of this Agreement; (iv) is
independently acquired or developed by a party without breach of any
obligation hereunder; or (v) is required to be disclosed pursuant to
law, governmental regulation, or court order, provided that the
disclosing party first notifies the other party in order to give such
party a reasonable opportunity to challenge the disclosure.
7. Limitation of Liability.
(a) Multex will use its reasonable best efforts to provide the Services to
the Company. However, Company understands that Multex cannot and does
not guarantee the content, accuracy, timeliness or availability of the
Documents or the accuracy, timeliness and availability of the
Services. Accordingly, Company agrees Multex shall not have any
liability or obligation to Company (whether caused directly or
indirectly) relating to the (i) interruption, delay or failure in the
transmission, delivery or distribution of the Services or
-4-
<PAGE>
Documents or (ii) the unavailability of Multex Software or the
Services or (iii) the accuracy of the Documents or (iv) the acts or
omissions of the Company; unless however any of the foregoing result
from the gross negligence, fraud or willful misconduct of Multex.
Multex's sole liability to Company for claims, notwithstanding the
form of such claims (e.g., contract, negligence or otherwise), arising
out of items (i) through (iv) above, shall be to use reasonable best
efforts to resume the Services and/or to make Multex Software
available to Company as promptly as reasonably practicable.
(b) Multex shall not have any obligation or liability to Company or any
third party (i) relating to, or arising out of the displaying or
furnishing of the Documents, including the information contained
therein, (ii) for errors or omissions in connecting, transmitting,
processing, disseminating, displaying or distributing the Documents,
or (iii) for the accuracy of the Documents or securities or
commodities information and prices displayed, carried or furnished by
or through the Services (iv) for the accuracy or display of Company's
data and information.
(c) Except for Multex's liability under Paragraph 6, Multex's maximum
liability hereunder for any other cause, not exculpated hereunder,
whether in tort or contract, shall not exceed the lesser of (i) actual
damages or (ii) one month's charges paid by the Company for the
services.
(d) As used in this paragraph, the term "Multex" or Multex Software shall
include each third party who provides Multex with any portion of the
Services. Such third party shall not have any direct or indirect
liability to Company for monetary damage on account of the Services
provided, or to be provided by Multex hereunder.
8. Ownership Rights.
(a) The Documents shall remain the sole property of the Company and Multex
shall not acquire any rights in the Documents.
(b) Multex Software shall remain the property of Multex. Company may use
the Software only in conjunction with the Services. Company shall use
the Software on no more than the number of concurrent users as may be
agreed to between Company and Multex. Company shall not copy, in
whole or in part, the Software or related documentation, whether in
the form of computer media, printed or in any other form.
(c) The license granted herein is for the limited purpose of enabling
Company to distribute the Documents within the Company.
-5-
<PAGE>
(d) COMPANY SHALL NOT MAKE ANY ALTERATION, CHANGE OR MODIFICATION TO THE
SOFTWARE. COMPANY MAY NOT RECOMPILE, DECOMPILE, DISASSEMBLE, OR
REVERSE ENGINEER THE SOFTWARE OR, MAKE OR DISTRIBUTE ANY OTHER FORM OF
THE SOFTWARE.
9. Warranties.
(a) Multex hereby represents and warrants to Company as follows:
(i) Multex is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York with full
authority to enter into this Agreement;
(ii) Multex Software and the Services provided to Company shall not
infringe upon the proprietary rights of any third party.
(iii) Multex has the legal right and authority to license Multex
Software (including, without limitation, the Third Party
Software included therein) to Company.
(iv) The medium on which Multex Software is furnished is warranted
to be free of defects in materials and workmanship under normal
use for a period of sixty (60) days from the date of delivery
of Multex Software.
(b) Company represents and warrants to Multex that:
(i) Company is the owner of and has the right to distribute the
Documents.
(ii) Company will comply with all laws and regulations applicable to
the use of the Services;
10. Limitation of Warranties.
COMPANY ACKNOWLEDGES AND AGREES THAT EXCEPT FOR THE WARRANTIES SPECIFIED IN
PARAGRAPH 9, MULTEX MAKES NO WARRANTIES WHATSOEVER, AND ARE IN LIEU OF ALL
OTHER WARRANTIES WRITTEN OR ORAL, EXPRESS OR IMPLIED OR STATUTORY,
INCLUDING WITHOUT LIMITATION, ANY WARRANTIES OF FITNESS FOR A PARTICULAR
PURPOSE OR MERCHANTABILITY, CONCERNING THIS AGREEMENT, THE SERVICES OR
EQUIPMENT (IF ANY) PROVIDED HEREUNDER, MULTEX SOFTWARE OR THE DOCUMENTS.
THE SERVICES PROVIDED HEREUNDER ARE PROVIDED "AS IS" WITH NO WARRANTIES
WHATSOEVER. MULTEX DOES NOT GUARANTEE THE ACCURACY,
-6-
<PAGE>
VALIDITY OR COMPLETENESS OF THE DOCUMENTS. MULTEX HEREBY DISCLAIMS ANY
LIABILITY FOR, AND UNDER NO CIRCUMSTANCES SHALL IT HAVE ANY LIABILITY FOR,
DIRECT, INDIRECT, COMPENSATORY, CONSEQUENTIAL, SPECIAL, LOST PROFITS
PUNITIVE, OR OTHER DAMAGES, COSTS OR EXPENSES OF ANY KIND ARISING FROM THIS
AGREEMENT EXCEPT AS SPECIFIED HEREIN. MULTEX AND ITS THIRD PARTY LICENSORS
DO NOT AND CANNOT WARRANT THE PERFORMANCE OR RESULTS COMPANY MAY OBTAIN BY
THE USE OF THE SOFTWARE OR SERVICES.
11. Insurance.
Multex shall procure and maintain for itself and its employees all
insurance coverages as required by Federal or State law, including workers'
compensation insurance. Multex shall procure and maintain for itself: (i)
Employers' Liability Insurance coverage including bodily injury coverage,
with a minimum of $100,000 for each employee; (ii) general liability
coverage of at least $1,000,000. Upon request, Multex shall provide
Company with a certificate of insurance evidencing such coverage. The
parties shall each insure their own property and neither party shall have
any liability to the other for any damage to the property of the other
unless such damage results from the fraud or willful misconduct.
12. Unlawful Use.
Company shall not use or permit anyone to use the Services or the Documents
for any unlawful purpose.
13. Reuse of Software.
Company is not authorized or permitted to furnish the Services to any
person or firm for re-use, redistribution or retransmission unless
otherwise provided in this Agreement without the prior approval of Multex.
14. Inaccuracy.
Company shall immediately notify Multex of any suspected inaccuracies in
the Documents or the Services.
15. Disposition of Software.
Promptly after the termination or expiration of this Agreement, the
Software (including the magnetic or other physical media on which it was
originally or subsequently recorded or fixed) and all related documentation
and all hardware and equipment owned by Multex or which is not paid for by
Company shall be returned
-7-
<PAGE>
by Company to Multex in good condition, reasonable wear and tear and damage
by the elements excepted. At the direction of Multex, the Software may be
completely deleted, erased or otherwise destroyed by Company.
16. Compliance with Law (Company)
(a) Company shall be responsible (i) for compliance with all laws and
governmental regulations affecting its business and (ii) for any use
it may make the Services or the Documents to assist it in complying
with such laws and governmental regulations, and Multex shall not have
any responsibility relating thereto (including, without limitation,
advising Company of Company's responsibilities in complying with any
laws or governmental regulations affecting Company's business). While
Multex shall not have any responsibility for Company's compliance with
the laws and regulations referred to above, Multex agrees to use
reasonable efforts to cause the applicable Services to be designed in
such a manner that they will be able to assist Company in complying
with its applicable legal and regulatory responsibilities, in no event
shall Company rely solely on its use of the Services in complying with
any laws and governmental regulations.
(b) If after the date hereof any modifications to the Services shall be
legally required, Multex shall, except to the extent such changes may
be beyond the capability of Multex to implement, modify the Services
appropriately. If providing any of the Services to Company hereunder
violates, or in Multex's opinion is likely to violate, any laws or
governmental regulations, Multex may, upon written notice to Company,
immediately cease providing the affected Services to Company.
17. Advertising.
Neither party shall use the name or marks of the other or its parent
company or any subsidiary or affiliated company in any publicity release,
advertising, or publicly displayed or distributed materials without
securing the prior written consent of the party whose name is to be used,
which consent shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, Multex may disclose the fact of this
Agreement.
18. Successors and Assigns.
Neither party may assign its rights or obligations hereunder without the
prior written approval of the other party. This Agreement shall be binding
upon the parties' respective successors and permitted assigns.
-8-
<PAGE>
19. Governing Law.
The validity of this Agreement, the construction and enforcement of its
terms, and the interpretation of the rights and duties of the parties shall
be governed by the laws of the State of California.
20. Modifications.
No modifications, amendment, supplement to or waiver of this Agreement or
any Schedule or Exhibit hereunder, or any of their provisions shall be
binding upon the parties hereto unless made in writing and duly signed by
both parties.
21. Waiver.
A failure or delay of either party to this Agreement to enforce at any time
any of the provisions hereof, or to exercise any option which is herein
provided, or to require at any time performance of any of the provisions
hereto shall in no way be construed to be a waiver of such provisions of
this Agreement.
22. Exhibits.
The terms and conditions of any all Exhibits and Schedules to this
Agreement are incorporated herein by this reference and shall constitute
part of this Agreement as if fully set forth herein.
23. Compliance with Law.
Multex shall comply with all applicable U.S., state and local laws and
regulations in its performance of its obligations hereunder and that the
Services will comply with applicable laws.
24. Headings.
The headings herein are for convenience of reference only and shall not
impact the meaning of this Agreement.
25. Entire Agreement.
This Agreement constitutes the entire Agreement between the parties
concerning and the subject matter hereof and shall supersede all prior
agreements or understandings concerning such subject matter.
-9-
<PAGE>
26. Survival.
Notwithstanding any termination of this Agreement, the provisions of
Section 5, 6, 7, 8, 9, 10, 11 and 22 shall survive termination.
27. Passwords.
Multex agrees that the Company clients for which a password has been issued
are proprietary to Company and Multex will not, without the approval of
Company, solicit Company's clients ("Clients") unless such Clients are
clients or prospective clients of Multex or clients of other companies with
whom Multex has or will develop a business relationship.
28. Escrow.
Multex covenants and agrees that as promptly as practicable following
execution and delivery hereof, it will deposit a copy of the Multex
Software in escrow with Data Securities International, Inc. (the "Escrow
Agent") pursuant to an escrow agreement among Multex, Company and the
Escrow Agent. In the event that Multex ceases to carry on its 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 while in bankruptcy, liquidation,
reorganization, winding-up, administration, trusteeship, receivership or
similar proceedings, Company shall have the right to acquire a copy of the
Multex Software Source Code for purposes of continuing the use and
enjoyment of the Multex Software in accordance with the rights and licenses
granted under this Agreement. Company shall be responsible for the
expenses of the Escrow Agent which is not expected to exceed $2,500.00 a
year.
29. Access.
Company shall provide Multex with reasonable access to its premises to
perform the obligations set forth herein. Multex shall abide by the site
regulations and security procedures applicable to each site.
30. Confidentiality.
The prices and terms contained herein are confidential information and are
not to be disclosed to any third party (other than by court order or
government requirement) including without limitation any firm, corporation,
or partnership outside the Company, nor to any employee of the Company
except those who require the information to administer this Agreement.
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto, each acting under due and proper
authority, have executed this Agreement as of the date first above written.
ROBERTSON, STEPHENS MULTEX SYSTEMS, INC.
& COMPANY LLC
By: /s/ Dante DeWitt By: /s/ Morton Zeidman
---------------- ------------------
Name: Dante DeWitt Name: Morton Zeidman
Title: Vice President - Director IT Title: Vice President
-11-
<PAGE>
EXHIBIT A
---------
(Revised 4/22/97)
Fees for the Services
The Company shall pay the following fees for the services.
1. Employees of the Company: [****] for user passwords for all of Company's
employees not exceeding [****] user passwords. This fee must be paid and is
not included in the fees charged for item 2.
2. Clients of the Company: The Company has the following three alternatives.
A. Up to [****] user passwords to clients of the Company at [****] per
passwords per year.
B. [****] user passwords to clients of the Company at [****] per password
per year.
C. [****] user password to clients of the Company at [****] per password
per year.
The Company must preselect either alternative A, B, or C and the fees charged
are based on that selection whether or not Company actually uses the amount of
passwords associate with that section.
3. Company shall pay for all taxes applicable to the Services. Company shall
pay for telecommunication costs between Multex and Company, local server,
third party software licenses, support and maintenance of Company's
equipment at Company's location.
4. Multex shall provide free of charge, maintenance updates and revisions
("Updates") to Multex Software as commercially released by Multex. Any
enhancements or modifications made specifically for Company shall be paid
for by Company on a time and material basis.
5. Users Accessing the Company's Research from other websites: Access to
Company's Research on websites other than Company's ("Third Party
Websites") will be subject to mutual approval by Multex and Company which
approval shall not be unreasonably withheld by Multex. Multex's charges
for such Third Party Website access is as follows:
1) Fixed Costs. Actual cost of additional hardware, software, or other
equipment purchased by Multex in support of the Third Party Website
shall not exceed [****] for the first [****]
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933,
as amended.
<PAGE>
users who are capable of accessing Company's research on the Third
Party Website, and thereafter not to exceed an additional [****] for
each additional [****] users or a fraction thereof.
2) Annual Costs. [****] per log-in/password per year based upon a minimum
of [****] log-ins/passwords. Fewer than [****] passwords will be
charged at [****] per log-in/password per year with a minimum of
[****] passwords.
6. Payment for Item 1. above shall be paid as follows: one half upon the
execution of this agreement and the balance upon Multex providing at least
[****] user passwords to Company.
Payment for Item 2, above shall be paid upon Multex providing on [****] of
the passwords as selected by the Company. The provisioning of the passwords
by Multex to the Company shall not depend on whether the Company has at the
time the actual users for such passwords.
Payment to be made within 15 days after invoice.
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933,
as amended.
<PAGE>
EXHIBIT B
---------
Services
Multexnet is an Intranet application accessible via a Netscape 2.0 or higher or
Microsoft Explorer 3.0 or higher browser.
The service consists of proprietary and third party software.
The service includes:
1. User passwords for all of the company's employees not to exceed a
combination of [****] users and/or passwords.
2. User passwords to the retail clients of the Company not to exceed
[****] user passwords.
3. User passwords for users accessing the Company's Research from third party
websites.
4. The fee for the services is set forth in exhibit A.
5. (a) Multex will provide and Company will receive the number of user
passwords selected by the Company as provided in this Agreement. The
Company has the responsibility of distributing the passwords to qualified
users to be used in accordance with this Agreement. Multex represents that
only those passwords that have been issued to the Company will be able to
access the services. Multex will use reasonable efforts to verify that its
entitlement procedures as specified in this paragraph 5(a) is provided to
and maintained on behalf of the Company.
(b) The Services provide security and control for the Company's documents.
Before a User can access and view the Company's Documents the User must
provide a user ID and password. The ID and password is verified as one of
those issued to the Company and the User is permitted to access the system.
The ID is then passed to the entitlement filter. The entitlement filter
gives the Company control over which group or groups of Documents a User is
permitted to view.
6. MULTEXNET as an Internet/Intranet solution, in which the Company will have
a connection via a dedicated link (approximately six weeks to install and
test) to Multex in New York. This link will provide a private connection
to the MULTEXNET server/database infrastructure.
7. Pending the installation of a dedicated link to Company, a URL link will be
provided
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933,
as amended.
<PAGE>
so that Company's web server may access the Multex database via Multex's
own web server. This will enable a virtual immediate start-up and test of
Company's web server using Multex research. Customization of this access
(logo, banner, etc.), is available, and has been completed. The dedicated
link will be used for predictable and higher bandwidth access.
8. All workstations will connect to Company's own web server over Company's
own WAN or the Internet, which in turn will redirect any inquiries for
research to Multex's web server. These connections are via a browser
(HTTP) of Company's choice (Netscape, Explorer, etc.) and over secure (port
443) or unsecured (port 80), as you wish. All requests issued will be
resolved at Multex's central site and all matching headlines returned to
the workstation as a linked HTML page.
9. The Multex Internet servers are shared among several clients, with
dedicated hardware available for an additional fee. When a document is
queried, it is copied from Multex's central site to the workstation. Thus
the file copy is exposed to the speed of the slowest link between Multex
and the desktop. (E.G. private connection, Company's WAN, desktop LAN
speed, etc.). Centralized file caching is available on Company's site with
additional hardware.
10. A search engine which combines keyword search capabilities with fixed field
searches like ticker symbol or industry.
11. Administrative Requirements: Multex shall provide a single User Name and
Password, allowing Company employees to gain access to the Company intranet
site, without each individual end user having to key in a user name and
password. Multex shall provide specific User Names and Passwords for up to
[****] Company employees, as designated by Company, allowing this user
group to gain access to the Company intranet site, via a newly created,
specified URL.
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933,
as amended.
<PAGE>
EXHIBIT C
---------
THIRD PARTY SOFTWARE
--------------------
1. Fulcrum Technologies Searchtool
2. Adobe Systems Acrobat Reader, Exchange and Distiller
EXHIBIT D
---------
PERPETUAL LICENSES
------------------
None.
- -----
<PAGE>
EXHIBIT E
---------
1. MULTEX PROVIDED EQUIPMENT: None.
2. COMPANY PROVIDED EQUIPMENT:
A. HARDWARE
1 HP laserjet 4M or better printer or equivalent (for non-postscript printers 8
Meg of memory is required.
COMPANY network
Communications (between COMPANY AND Multex central site) (based on Company's
network design and access requirements a minimum of 1 Wiltel dedicated 56kb line
including routers, modems,
B. SOFTWARE
All required Netscape (2.0 or above) or Internet explorer (3.09 or above)
Browsers.
TCP/IP
Desktop operating system (Windows NT or 95)
OPTIONAL - Based on the Company's network design, the addition of proxy servers
could optimize the usage of Company's internal WAN and reduce the traffic across
the line between the Company and Multex.
At the option of the Company Multex will purchase and supply the above equipment
and Company will Reimburse Multex for the cost of the equipment.
Upon the expiration of the term of this Agreement, Multex upon the written
request of the Company shall return to Company at Company's sole cost and
expense all of Company's equipment in Multex's possession. The cost may include
without limitation all costs associated with preparing, disconnecting, and
shipping the equipment.
<PAGE>
ATTACHMENT A
THIRD PARTY LICENSE REQUIREMENTS FOR END USERS
The Software developed by Multex incorporates or may incorporate or utilize
software licensed from third parties including Adobe Systems Incorporated
("Adobe") and Fulcrum Technologies Inc. ("Fulcrum") ("Licensors"). (Multex
Software, the Adobe Software, and the Fulcrum Software and related documentation
are collectively called the "Software"; the Fulcrum Software is referred to as
the "Fulcrum Software". The Adobe Software (which consists of Adobe/TM/
Acrobat/TM/ Exchange, Acrobat Reader and Acrobat Distiller/TM/) is referred to
as the "Adobe Software". Multex, its Licensors and its suppliers retain title to
and exclusive ownership of the Software (including reproductions thereof) and
any patent, trademark or copyrights associated with the Software and its related
documentation.
Pursuant to the Software license agreement between Multex, Fulcrum and Adobe,
Multex is required by such agreement to incorporate certain terms and conditions
in each end user agreement.
The following terms and conditions shall apply to the Software:
1) Pursuant to the terms and conditions of this Agreement, MULTEX grants to
Licensee a non-exclusive, non-transferable, limited license to use the
Software (generally in the form of packaged computer software programs in
object code and its related documentation for the period set forth in the
Agreement).
2) Each copy of the Software is licensed for use only in the manner and for
the number of enabled users as provided in the Agreement. For the purposes
of this Agreement, "enabled user license" means the number of individual,
non-concurrent users licensed to use the Software.
3) MULTEX warrants that the Software and its Related Documentation are
property of, or are under license of MULTEX. THE WARRANTIES AND
LIMITATIONS SET FORTH IN THE PARAGRAPH 3 CONSTITUTE THE ONLY WARRANTIES OF
MULTEX AND LICENSORS WITH RESPECT TO THE SOFTWARE.
4) THE WARRANTIES SET FORTH HEREIN ARE IN LIEU OF ALL OTHER WARRANTIES,
WRITTEN OR ORAL, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, BUT NOT LIMITED
TO THOSE OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-
INFRINGEMENT OF THIRD PARTY RIGHTS. THIS WARRANTY IS MADE IN LIEU OF ALL
OTHER WARRANTIES, STATUTORY OR OTHERWISE. MULTEX AND ITS LICENSORS DO NOT
AND CANNOT WARRANT THE PERFORMANCE OR RESULTS LICENSEE MAY OBTAIN BY USE OF
THE SOFTWARE OR DOCUMENTATION.
<PAGE>
LIMITATION OF LIABILITY: THE REMEDIES OF LICENSEE SHALL BE LIMITED TO THOSE
PROVIDED IN THE AGREEMENT TO THE EXCLUSION OF ANY AND ALL OTHER REMEDIES.
IN NO EVENT SHALL MULTEX OR ITS LICENSORS BE LIABLE TO CUSTOMER FOR LOSS OF
PROFITS OR SPECIAL, INDIRECT, CONSEQUENTIAL, OR EXEMPLARY DAMAGES,
INCLUDING LEGAL FEES AND LITIGATION COSTS ARISING IN CONNECTION WITH THE
SUPPLY, USE, OR PERFORMANCE OF THE SOFTWARE OR ANY WORK OR SERVICE
PERFORMED BY MULTEX, ITS LICENSORS, OR THEIR EMPLOYEES EVEN IF THE
REPRESENTATIVES OF ANY SUCH THIRD PARTY HAVE BEEN RELIEVED OF THE
POSSIBILITY OF SUCH DAMAGES. NO AGREEMENTS VARYING OR EXTENDING THE
WARRANTIES, REMEDIES OR LIMITATIONS CONTAINED IN THIS PARAGRAPH WILL BE
BINDING UNLESS IN WRITING AND AGREED TO BY MULTEX.
5) INDEMNIFICATION: MULTEX will defend any action brought against Licensee to
the extent that it is based upon a claim that the Software and Related
Documentation used within the scope of this Agreement infringes upon a
copyright, patent, or third-party right, and MULTEX will pay any reasonable
costs, attorney fees and damages attributable to such claim which are
awarded against Licensee (or which MULTEX agrees to pay in any settlement)
provided that Licensee promptly notifies MULTEX in writing of the claim and
that MULTEX has complete control of the defense and/or settlement of such
claim. In lieu of any such indemnification either party may cancel the
agreement in the event LICENSEE receives a notice of infringement (optional
if Licensee requests indemnification).
6) This agreement and/or license does not grant licensee any right (whether by
license, ownership or otherwise) in or to intellectual property with
respect to the Software.
7) Trademarks, if used by Licensee shall be used in accordance with accepted
trademark practice, including identification of the trademarks owner's name
. Trademarks can only be used to identify printed output produced by the
Software. The use of any trademark as herein authorized does not give
Licensee rights of ownership in that trademark.
8) Licensee agrees that it will not:
a) copy the Software or related documentation for any reason other than
for duly licensed reproduction or for archival or emergency restart
purposes or program error verification. Any copy of the Software
shall contain the copyright and other proprietary notice which appears
on and in the Software. Should the Software become inoperable,
Licensee may use the Software on a backup system for a period not to
exceed thirty (30) days. Licensee shall notify Multex of any such use
within five (5) days. Should there be a requirement to
<PAGE>
permanently transfer the Software from the licensed configuration to
an alternate configuration, Licensee shall first obtain the written
consent of Multex, which shall not be unreasonably withheld;
b) permit more users to use or install the Software other than as
provided in this Agreement;
c) offer the Software for loan, rent, lease, sub license, or for other
forms of exchange;
d) modify, adapt, translate, decompile or reverse engineer, dissemble or
otherwise attempt to discover the source code of the Software; and
e) assign any rights under this Agreement without the prior written
consent of Multex;
f) Licensee will not export or re-export the Software without the
appropriate United States or foreign government licenses, and only
with the consent of Multex;
g) install a backup copy on any machine if Licensee's primary copy is
installed.
Applicable to the Fulcrum Software:
9) Licensee acknowledges that
a) title and ownership of the Fulcrum Software and all rights related
thereto, including patent, trademark and copyright related thereto are
the exclusive property of Fulcrum Technologies, Inc. or its Licensees;
b) Licensee shall only acquire the right to use the Software in
accordance with this Agreement; and
c) Licensee shall take necessary steps to ensure that all intellectual
property underlying the binary version of the Software remain
confidential.
Applicable to the Abode Software:
10) Multiple Environment Software. If this package contains two or more
versions of the Adobe Software (e.g., DOS, Macintosh(R) and Windows/TM/),
the total number of copies of all versions of the Adobe Software with
Licensee may make may not exceed the number of permitted computers except
that Licensee may also possess one back-up copy, in accordance with the
terms of this Agreement, for each version of the Software it uses.
<PAGE>
11) Notice to Government End Users: If this product is acquired under the terms
of a: GSA Contract: Use, reproduction or disclosure is subject to the
restrictions set forth in the applicable ADP Schedule contract. DoD
contract: Use, duplication or disclosure by the Government is subject to
restrictions as set forth in subparagraph (c)(1)(ii) of 252.227-7013.
Civilian agency contract: Use, reproduction, or disclosure is subject to
52.227-19(a) through (d) and restrictive set forth in the accompanying end
user agreement. Unpublished-rights reserved under the copyright laws of
United States.
12) Licensee is hereby notified that Adobe Systems Incorporated, a California
corporation located at 1585 Charleston Road, Mountain View, California
94039-7900 ("Adobe") is a third-party beneficiary to this Agreement to the
extent that this Agreement contains provisions which relate to Licensee's
use of the Adobe Software, the Documentation and the trademarks licensed
hereby. Such provisions are made expressly for the benefit of Adobe and
are enforceable by Abode in addition to Licensor.
13) Adobe is a trademark of Adobe Systems Incorporated which may be registered
in certain jurisdictions. Macintosh is a registered trademark of Apple
Computer, Inc. Windows is trademark of Microsoft Corporation.
14) Title to and ownership of the Adobe Software and Documentation and any
reproduction thereof shall remain with Adobe and its suppliers; the
structure, organization and code are the valuable trade secrets of Adobe
and its suppliers.
<PAGE>
Exhibit 10.9
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS EXHIBIT
PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
AMENDMENT NO. 1 TO THE AGREEMENT
THIS AMENDMENT NO. 1 dated as of March 9, 1998 to the Agreement for
Internal Electronic Distribution Services dated April 10, 1997 (the
"Agreement"), by and between BANCAMERICA ROBERTSON STEPHENS (formerly known as
Robertson, Stephens & Company LLC), a Delaware corporation with offices at 555
California St., 26th Floor, San Francisco CA 94104 (hereinafter referred to as
"Company"), and MULTEX SYSTEMS, INC., a Delaware corporation with offices at 33
Maiden Lane, New York, New York 10038 (hereinafter referred to as "Multex").
Multex and Company shall be referred to herein sometimes as the "Parties."
Unless otherwise defined herein, the terms defined in the Agreement
shall be used herein as therein defined.
SECTION 1. Amendments to the Agreement.
Pursuant to Section 20 of the Agreement, it is hereby agreed by the Parties as
follows:
1. A. The Agreement is hereby amended by including a new section 1A
thereto that shall read as follows:
"1A. Company Research Sales.
(a) Company will deliver Research (as defined below) to Multex in soft
copy.
(b) Multex shall have the right to resell and make available Research
only to customers located in the United States.
(c) Following a period of 15 days after the release of Research by
Company to its own clients (the "Delay Period"), Multex shall have the right to
resell and make available Research only to institutional investors, consulting
firms and other entities that are not classified as "retail investors." Multex
has the ability to screen potential clients and will not allow retail investors
to access Research on Multex's Research-On-Demand (as defined below).
(d) Multex may sell and make available the Research with the research
of other research contributors, and may be provided to third parties either
directly by Multex or through a Third Party Data Provider, such as Telerate,
Reuters, Quotron, Bloomberg and ADP.
<PAGE>
(e) Notwithstanding anything herein to the contrary, Company may, at
its sole discretion, elect not to provide certain Research documents to Multex
for sale or distribution by Multex under this Agreement ("Excluded Documents");
provided that Company will not provide for sale or distribution such Excluded
Documents to any other vendor or third party distributor, including, without
limitation, any other research or document distributor.
(f) Multex shall pay to Company the following royalties (the
"Royalties") with respect to the sale or distribution of Research:
[****] of the Net Fees (as defined below) received by Multex for the
Research.
Notwithstanding the foregoing, the Company shall in no event receive a royalty
percentage that is less than the royalty percentage received by similar
brokerage firm providers to Multex for Multex Research-On-Demand in terms of
reports and notes generated, including, for example, [****]. The term "Net Fees"
shall be defined to mean the gross revenues received by Multex for the Research,
less any discounts, allowances, adjustments, distribution of pass through fees,
taxes or other charges paid or incurred by Multex in connection with the sale of
the Research.
(g) Multex will determine the price to be paid by its customers for
Research; provided that Multex will price the Research as the same price as
other comparable research that is sold by Multex. Multex shall be entitled to
provide the Research without a fee for a period of time (such period of time not
to exceed 60 days) as a concession or promotion.
(h) Multex shall pay to Company the Royalties with respect to each
calendar month in arrears, within 45 days after the end of such calendar month.
Multex shall provide to Company with the Royalty payment a report showing
Multex's sales of Research and/or third-party usage of the Research during the
relevant month.
(i) Multex shall be responsible for the conversion of the Research to
a format that is suitable for Multex's distribution of the Research. Except as
provided in the preceding sentence, Multex shall have no right to modify, alter
or excerpt the content of any Research document.
(j) Notwithstanding anything to the contrary in this Agreement, (i) if
Multex is in material breach of this Agreement or (ii) Company determines to
cease distribution and availability of any Research to its own customers, Multex
will, as soon as practicable after notice from Company, withdraw any Research
from availability to Multex's customers.
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933,
as amended.
-2-
<PAGE>
(k) The Parties agree that it is not intended that Company will become
an investment advisor with respect to Multex's customers. Multex represents and
warrants that it has notified its current customers, and will notify its future
customers, that the use of Research purchased by such customers is at such
customers' sole risk.
(l) Multex will determine whether it is required to register as an
investment advisor with respect to its customers that receive Research and, if
so required, will take all necessary action to register as an Investment advisor
prior to disseminating Research pursuant to this Agreement.
(m) The Research shall remain the exclusive property of Company, and
Multex shall not acquire any rights in the Research. The Research (and whatever
medium that Multex uses to sell or distribute the Research) shall contain such
disclaimers as are determined by Company. Multex represents and warrants that
it has notified its current customers, and will notify its future customers,
that such customers are customers of Multex, and not of Company.
(n) For purposes of this Agreement, Research shall mean equity
research prepared by the Robertson Stephens division of Company consisting (i)
First Calls with Financial Models, (ii) Company Reports, (iii) Industry Reports,
(iv) First Fax: AM and PM editions, and (v) Companies Under Coverage. Research
shall not include (i) debt research or (ii) research by BankAmerica Corporation
and its affiliates, other than the Robertson Stephens division of the Company."
B. The Agreement is hereby further amended by including a new section 1B
thereto that shall read as follows:
"1B. Multex Research-On-Demand
(a) Commencing the date hereof, Multex shall make available to Company
for internal distribution exclusively for Company employees selected historical
investment research, business, economic and financial news and related
information contained in the Multex Research-On-Demand database ("Multex
Research-On-Demand"). Multex shall make Multex Research-On-Demand available to
Company via a customized website that has previously been furnished and accepted
by Company (the "Website"). The Website may currently be accessed by 10 end-
users, which number may be increased by mutual agreement between the Parties.
Multex represents and warrants to Company that Multex has full legal right and
authority to provide Company access to Multex Research-On-Demand and doing so
will not result in a breach by Multex of any copyright, license or other
obligation of Multex.
(b) A detailed description of the additional services that are to be
provided by Multex with regard to providing Multex Research-On-Demand to Company
are set forth in Exhibit A to this Agreement.
-3-
<PAGE>
(c) Multex Research-On-Demand shall be subject to all of Multex's
restrictions, moratoria and/or limitations on availability regarding the
research or documents included therein which are now, or may in the future be,
imposed by Multex's contributors of such research or documents.
(d) The right to access Multex Research-On-Demand shall be personal to
Company and belong solely to Company for internal distribution to internal
users. Company may not sell or redistribute to any third party the Multex
Research-On-Demand (including any of the Services connected therewith or any
content or research or documents therein) in any manner (including for
promotional purposes, marketing with third parties or the creation or marketing
with third parties or co-branded or private branded websites). Company agrees
that it shall not sublicense or authorize any non-Company employee or any entity
to use the Multex Research-On-Demand without the prior written consent of
Multex.
(e) Company shall pay to Multex the following fees with respect to
Company's utilization of Multex Research-On-Demand:
i) Company shall pay for Multex Research-On-Demand on a per
report basis as set forth in Exhibit B hereto, which exhibit is
incorporated herein by reference. It is understood by the Parties
that Exhibit B may be modified or amended from time to time; provided
that the prices set forth in Exhibit B may not be increased during the
Trial Period or the First Year (as such terms are defined below). All
references to usage of Multex Research-On-Demand shall be calculated
on a per report basis.
ii) For the period beginning the date hereof and ending
May 31, 1998 (the "Trial Period"), Company shall not be required to
pay any fee for its usage of Multex Research-On-Demand; provided that
Company's usage during the Trial Period does not exceed [****] in
which case Company shall pay to Multex for its usage of Multex
Research-On-Demand in excess of [****].
iii) For the period beginning June 1, 1998 and ending May 31,
1999 (the "First Year"), Company shall pay a minimum fee of [****] per
month (each a "Monthly Minimum Fee") on or before the first day of
each month during the First Year. The total of the Monthly Minimum
Fees to be paid during the First Year shall be [****].
iv) [****]
v) [****]
(f) In the event of any termination of this Agreement, Company shall
have
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933,
as amended.
-4-
<PAGE>
the right to keep and use all research and other materials obtained from Multex
Research-On-Demand for which the Company has paid, or does pay.
C. The Agreement is hereby further amended by deleting Section 4(a)
thereto in its entirety and replacing it with a new Section 4(a) that shall read
as follows:
"(a) The term of this Agreement shall run until May 31, 2001.
Thereafter, this Agreement shall automatically renew for successive
one-year periods unless either Multex or Company terminates the Agreement
thirty (30) days prior to the commencement of the renewal period. In
addition, this Agreement may be terminated in its entirety (or Sections 1,
1A and/or 1B may be terminated individually) by either Multex or Company at
any time subsequent to May 31, 1999 upon 60 days prior written notice to
the non-terminating party; provided that in the event that Multex
terminates this Agreement in its entirety (or Section 1B individually) for
any reason other than for Company's failure to pay to Multex any fees or
charges owed to Multex under this Agreement within 15 days following notice
by Multex of such non-payment, Multex shall be obligated to pay to Company
any Credit owed to Company under Section 1B hereto. In addition, Company
may, at its sole discretion, terminate Sections 1A and/or 1B of this
Agreement at any time during the Trial Period."
D. The Agreement is hereby further amended inserting a new Section 4(d)
thereto that shall read as follows:
"(d) This Agreement may be suspended for a 45-day period by either
Party without prior notice in the event that such Party, upon the advice of
outside legal counsel, reasonably believes that the other Party is in
violation of a law, order, rule, regulation, writ, injunction, judgment or
decree of any court, government or governmental agency or body, domestic or
foreign, having jurisdiction over such Party or its properties and such
violation is material to the business or operations of the such Party or
there is pending or threatened a material action, suit, claim or proceeding
against the other Party or any of its officers or any of its properties,
assets or rights before any court, government or governmental agency or
body, domestic or foreign, having jurisdiction over such Party or any of
its officers or properties; provided that if the condition giving rise to
the suspension under this Section 4(d) is not removed or cured within the
45-day period, this Agreement may be terminated."
E. The Agreement is hereby further amended inserting a new Section 31
thereto that shall read as follows:
"31. Due Diligence; Audit Rights.
(a) Multex shall make available to Company and its representatives
such
-5-
<PAGE>
documents and information and access to such persons as Company shall reasonably
deem necessary to insure compliance by Company with all applicable securities
laws, including, without limitation, issues relating to suitability of customers
receiving Research.
(b) Company will have the right, not more than two times in any
calendar year (and one time within four months following termination of this
Agreement), to have an independent public accountant, reasonably acceptable to
Multex, examine Multex's relevant books, records and accounts for the purpose of
verifying the accuracy of payments made to Company as required under this
Agreement. Company acknowledges and agrees that such accountant shall have
access to the names of Multex's customers solely on the condition that the
accountant not disclose such identities to Company. Each audit will be
conducted at Multex's place of business, or other place mutually agreed to by
Company and Multex, during Multex's normal business hours and with at least five
days prior written notice to Multex. Company will pay all fees and expenses of
the accountant for the examination."
F. The Agreement is hereby further amended inserting a new Section 32
thereto that shall read as follows:
"32. Notice. All notices hereunder shall be in writing, and
If sent to Company:
Stuart Brogan
BancAmerica Robertson Stephens
555 California Street
San Francisco, CA 94104
Tel: (415) 676 2505
Fax: (415) 676 2578
If sent to Multex:
Office of the President
(copy to General Counsel)
Multex Systems, Inc.
33 Maiden Lane
5th Floor
New York, NY 10038
Tel: (212) 859 9826
Tel: (212) 859 9810"
G. The Agreement is hereby further amended by amending the definition of
"Services" contained in Exhibit B to the Agreement to include Multex Research-
On-Demand.
-6-
<PAGE>
SECTION 2. Reference to and Effect on the Agreement. On and after the
effective date of this Amendment No. 1, each reference to "this Agreement",
"hereunder", "hereof" or words of like import referring to the Agreement shall
mean and be a reference to the Agreement as amended by this Amendment No. 1.
The Agreement, as amended by this Amendment No. 1, is and shall continue to be
in full force and effect and is hereby is all respects ratified and confirmed.
SECTION 3. Execution in Counterparts. This Amendment No. 1 may be
executed in any number of counterparts, each of which counterparts shall be an
original and all of which taken together shall constitute one and the same
Amendment No. 1.
SECTION 4. Governing Law. This Amendment No. 1 shall be governed by,
and construed in accordance with, the laws of the State of California, without
giving effect to such state's principles of conflict of law.
IN WITNESS WHEREOF, the Parties have executed this Amendment No. 1 as
of the day and year first above written.
BANCAMERICA ROBERTSON MULTEX SYSTEMS, INC.
STEPHENS
By: /s/ John P. Rohal By: /s/ Philip Callaghan
------------------------------ -------------------------
Name: John P. Rohal Name: Philip Callaghan
Title: Managing Director, Research Title: Chief Financial Officer
-7-
<PAGE>
EXHIBIT A
---------
SERVICES
Service(s) Description
The Multex Research On-Demand database presently consists of at least 150,000
historical research reports from brokerage firms and third parties, which are
made available for purchase and which may be subject to certain embargo periods
prior to release and sale as determined solely by Multex and its contributors.
Service Update
Multex shall continue to update the Services with additional reports on a
periodic basis as new reports are provided by Multex's contributing sources
(e.g., brokerage firms). Multex shall provide to Company on a periodic basis a
revised indexed listing of reports available as part of Multex Research-on-
Demand; such listing shall be revised to reflect new and/or deleted reports from
Multex Research-on-Demand.
Service Format
Multex shall make the reports available in Adobe Acrobat format and any such
additional format that Multex may later choose to support as part of its
Services.
-8-
<PAGE>
EXHIBIT B
SUGGESTED LIST PRICES AND TERMS FOR SERVICES
--------------------------------------------
Multex's Suggested List Price for retrieval of Document by Company.
Multex Research on Demand:
-------------------------
Report Size Suggested Retail Price
----------- ----------------------
1-5 pages [****] per report
6-12 pages [****] per report
13-20 pages [****] per report
21-40 pages [****] per report
41-60 pages [****] per report
61+ pages [****] per report
**** Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933,
as amended.
-9-
<PAGE>
EXHIBIT 10.10
Amendment No. 2
To
Multex Electronic Distribution Services Agreement
This AMENDMENT No. 2 to Multex Electronic Distribution Services Agreement dated
April 10, 1997 (the "Agreement") by and between BancAmerica ROBERTSON STEPHENS
("Bank") and Multex Systems Inc., ("Supplier") is entered into this 29th day of
July, 1998 ("Amendment Date").
The Agreement is hereby amended by adding the following as new text:
1. Bank and Supplier acknowledge and agree that their continued business
relationship requires that Supplier's performance not be adversely affected
by the fact that some computer systems may not be able to recognize and
properly process dates falling in the year 2000 and later ("Year 2000
Problem").
2. Supplier represents and warrants that, unless scheduled on Exhibit A to this
Amendment, Services delivered or used pursuant to the Agreement (referred to
in this Amendment as "Complaint Product") shall be "Year 2000 Complaint" as
of the Compliance Date.
3. "Year 2000 Complaint" means that
(a) Complaint Product will accept, process and output data containing any
dates falling in the range from 1900 through 2037 without loss of any
functionality or any other processing anomalies, e.g. error or
interruption, arising from or relating to the fact that a date occurs
on or after September 9, 1999;
(b) Compliant Product will correctly interpret and process every date that
other software/hardware may deliver to the Complaint Product in the
cause of processing data, as long as the date delivered conforms to the
requirements of the Complaint Product, and it will deliver to
interfacing software/hardware data that conform to a four-digit date
format unless otherwise agreed; and
(c) The determination of whether a year is a leap year is made in
accordance with the Gregorian calendar.
4. Supplier shall notify Bank, within 60 days after the Amendment Date, of the
first date ("Compliance Date") on which all Compliant Product it has
supplied or will supply to Bank or any of its Affiliates in fact will be
Year 2000 Complaint, which shall be no later than September 15, 1998.
Supplier's representation and warranty shall be renewed as of the Compliance
Date and be a continuing warranty for any Service, Software, or Equipment
Supplier provides Bank.
<PAGE>
5. Within 15 days after Bank's written request, but not more frequently than
four times per year, Supplier shall report in writing its progress (a)
toward making Compliant Product in fact Year 2000 Compliant by Compliance
Date and (b) in carrying out its plan to be Year 2000 Ready (as defined
below), including its then-current assessment of the date that it will be
Year 2000 ready.
6. Supplier shall notify Bank, within 60 days after the Amendment Date, of the
date format Supplier will use externally to achieve Year 2000 Compliance,
which shall be four-digit year format unless otherwise agreed.
7. Notwithstanding any liability limitations set forth in this Agreement,
Supplier shall provide Bank, at no additional charge, with any new versions,
upgrades or releases, including engineering changes, etc. of Compliant
Product which prevent or correct a breach of the warranties in this Section.
8. Supplier represents and warrants that it has implemented a plan and process
to ensure that Supplier will be year 2000 ready no later than December 31,
1998. "Year 2000 Ready" means that Supplier will be able, notwithstanding
the year 2000 Problem, to fulfill its obligations under this Agreement
before and after the change from the 20th to the 21st century without delay
or degradation of performance or quality.
9. Within 15 days after the Amendment Date, Supplier shall deliver to Bank in
writing a copy of its plan for becoming Year 2000 Ready, including milestone
dates and requirements, if any, for testing its systems with Bank. Unless
otherwise agreed, this plan shall be Confidential Information.
10. Supplier shall inform Bank, within 15 days after the Amendment Date, of the
Date format Supplier will use for any automated interface with Bank, which
shall be a four-digit year, or two-digit month and two-digit day, unless
otherwise expressly agreed.
Except as herein expressly amended, all provisions of the Agreement remain in
full force and effect.
2
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the Amendment
Date.
BANCAMERICA ROBERTSON
Multex Systems, Inc. STEPHENS
______________________ ("Bank")
("Supplier")
By: /s/ Phil Callaghan By: /s/ Stuart Brogan
___________________ _________________
Phil Callaghan Stuart Brogan
_______________________ ______________________
Print Name Print Name
CFO Title: Vice President
________________________ ______________________
Title
By: __________________
_______________________
Print Name
Title: _______________
<PAGE>
EXHIBIT 10.11
CONFIDENTIAL TREATMENT HAS BEEN SOUGHT
FOR PORTIONS OF THIS EXHIBIT PURSUANT TO
RULE 406 UNDER THE SECURITIES EXCHANGE
ACT OF 1933, AS AMENDED
AMENDMENT NO. 3 TO THE AGREEMENT
THIS AMENDMENT No. 3 dated as of September 10, 1998 to the Agreement
for Internal Electronic Distribution Services dated April 10, 1997 as amended by
Amendment No. 1 dated March 9, 1998 and Amendment No. 2 dated July 29, 1998 (the
"Agreement"), by and between BANCBOSTON ROBERTSON STEPHENS INC. (formerly known
as BancBoston Robertson Stephens, and prior to that as Robertson Stephens &
Company LLC), a Massachusetts corporation with offices at 555 California Street,
26th Floor, San Francisco, CA 94104 (hereinafter referred to as "Company"), and
MULTEX SYSTEMS, INC., a Delaware corporation with offices at 33 Maiden Lane, 5th
Floor, New York, New York 10038 (hereinafter referred to as "Multex"). Multex
and Company shall be referred to herein sometimes as the "Parties".
Unless otherwise defined herein, the terms defined in the Agreement
shall be used herein as therein defined.
WHEREAS, Company has developed a public website currently in operation
known as "internetstocks.com" (the "internetstocks Website");
WHEREAS, Multex is in the business of reselling and making available
research prepared by third parties, including First Calls with Financial Models,
Company Reports, Industry Reports, First Fax and Companies Under Coverage;
WHEREAS, Multex seeks to resell and otherwise make available (i)
Research (as defined in the Agreement) and (ii) Additional research (as defined
below), in each case through access to the internetstocks Website; and
WHEREAS, the Parties have agreed to do so on the terms and conditions
set forth herein.
NOW, THEREFORE, it is agreed as follows:
SECTION 1. Amendments to the Agreement.
Pursuant to Section 20 of the Agreement, it is hereby agreed by the
Parties as follows:
<PAGE>
A. The Agreement is hereby amended by deleting Section 1A(n) thereto in its
entirety and replacing it with a new Section 1A(n) that shall read as follows:
"(n) For purposes of this Agreement, Research shall mean equity or
debt research prepared by Company, BancBoston Robertson Stephens
International Ltd. or the Emerging Markets activities of BankBoston
Corporation consisting of (i) First Calls with Financial Models, (ii)
Company Reports, (iii) Industry Reports; (iv) First Fax: AM and PM
editions; and (v) Companies Under Coverage."
B. The Agreement is hereby further amended by including a new section 1C
thereto that shall read as follows:
"1C. Resales through internetstocks Website
--------------------------------------
(a) Company shall provide to Multex access to the internetstocks
Website for the purpose of reselling and otherwise making available (i)
Research and (ii) Additional Research, and Multex shall use its access to
the internetstocks Website solely for such purpose. Such access shall take
the form of allowing Multex to establish a [sub-website] within the
interenetstocks Website (the "Multex Sub-Website").
(b) Multex shall be responsible for developing the Multex Sub-Website
and the Multex Sub-Website shall be solely the responsibility of Multex,
provided that Company may require Multex to include, and Multex agrees to
include, such disclaimers or legends as Company may reasonably request,
including, but not limited to, disclaimers and legends clearly marking that
the Multex Sub-Website is a Multex product/service and is not a
service/product of the Company. In consideration for Multex developing the
Multex Sub-Website, Company agrees to pay Multex a one-time fee of [****]
within 15 days of the Multex Sub-Website going live. Company is currently
considering establishing sister websites to the internetstocks Website,
each with a high technology subject matter (each a "Sister Website"),
including a software stocks website and a semiconductor stocks website.
Company agrees to allow Multex to establish a Multex Sub-Website on each
Sister Website. In consideration for Multex developing the Multex Sub-
Website for such Sister Websites, Company agrees to pay Multex a one-time
fee of [****] within 15 days of each such additional Multex Sub-Website
going live.
- -------------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF
1933, AS AMENDED.
2
<PAGE>
(c) [Include description of Multex labeling within the internetstocks
Website and presentation of Multex Sub-Website.]
(d) In consideration for allowing Multex to establish the Multex Sub-
Website, Multex agrees to pay to Company the following fees:
(i) For resales of Research through the Multex Sub-Website, the fee
(the "Research Resale Fee") shall be [****] of Gross Revenues
(as defined below) received by Multex from such resales; and
(ii) For resales of Additional Research through the Multex Sub-
Website, the fee (the "Additional Research Fee") shall be [****]
of the Gross Revenues received by Multex from such resales.
The Research Resale Fee and the Additional Research Fee shall be paid to Company
within 60 days of receipt by Multex of the corresponding Gross Revenues.
(e) Multex's ability to resell and make available Research pursuant to
this Section 1C shall be subject to the terms and conditions of Section 1A
except as follows: (i) resales of Research through the Multex Sub-Website
shall be subject to the Research Resale Fee and shall not be subject to the
Royalties; (ii) resales of Research through the Multex Sub-Website may be
made to "retail investors."
(f) For purposes of this Agreement, Additional Research shall mean the
following third-party research products: (i) Investment Review; (ii) Stock
Snapshot; (iii) ACE Report; (iv) ACE Pro Report; and (v) Standard & Poors'
research reports.
(g) For purposes of this Agreement, Gross Revenues shall mean the
amounts received by Multex from the resales of Research and Additional
Research.
C. This Agreement is hereby further amended by deleting Section 4(a) thereto in
its entirety and replacing it with a new Section 4(a) that shall read as
follows:
"(a) The term of this Agreement shall run until May 31, 2001.
Thereafter, this Agreement shall automatically renew for successive one-
year periods unless either Multex or Company terminates the Agreement
thirty (30) days prior to the commencement of the renewal period. In
addition, this
- ----------------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF
1933, AS AMENDED.
3
<PAGE>
Agreement may be terminated in its entirety (or Sections 1, 1A, 1B and/or
1C may be terminated individually) by either Multex or Company at any time
subsequent to May 31, 1999 upon 60 days prior written notice to the non-
terminating party; provided that in the event that Multex terminates this
Agreement in its entirety (or Section 1B individually) for any reason other
than for Company's failure to pay to Multex any fees or charges owed to
Multex under this Agreement within 15 days following notice by Multex of
such non-payment, Multex shall be obligated to pay to Company any Credit
owed to Company under Section 1B hereto. In addition, Company may, at its
sole discretion, terminate Sections 1A and/or 1B of this Agreement at any
time during the Trial Period."
SECTION 2. Reference to and Effect on the Agreement. On and after the
----------------------------------------
effective date of this Amendment No. 3, each reference to "this Agreement",
"hereunder", "hereof" or words of like import referring to the Agreement shall
mean and be a reference to the Agreement, as amended by this Amendment No. 3.
The Agreement as amended by this Amendment No. 3, is and shall continue to be in
full force and effect and is hereby in all respects ratified and confirmed.
SECTION 3. Execution in Counterparts. This Amendment No. 3 may be
-------------------------
executed in any number of counterparts, each of which counterparts shall be
an original and all of which taken together shall constitute one and the same
Amendment No. 3.
SECTION 4. Governing Law. This Amendment No. 3 shall be governed by,
-------------
and construed in accordance with, the laws of the State of California, without
giving effect to such state's principles of conflicts of law.
IN WITNESS WHEREOF, the Parties have executed this Amendment No. 3 as
of the day and year first above written.
BANCBOSTON ROBERTSON MULTEX SYSTEMS, INC.
STEPHENS INC.
By: /s/ Stuart Brogan By: /s/ P. Callaghan
------------------- ----------------
Name: Stuart Brogan Name: P. Callaghan
Title: VP Title: CFO
4
<PAGE>
EXHIBIT 10.12
CONFIDENTIAL TREATMENT HAS BEEN SOUGHT
FOR PORTIONS OF THIS EXHIBIT PURSUANT TO
RULE 406 UNDER THE SECURITIES EXCHANGE
ACT OF 1933, AS AMENDED
AGREEMENT FOR ELECTRONIC DISTRIBUTION SERVICES
THIS AGREEMENT FOR ELECTRONIC DISTRIBUTION SERVICES ("Agreement"), dated as of
June 30, 1998, is between CIBC Wood Gundy Securities, Inc., with offices at BCE
Place, 161 Bay Street, P.O. Box 500, Toronto, Ontario M5J 2S8 (hereinafter
referred to as the "Company"), and MULTEX SYSTEMS, INC., a Delaware Corporation
with offices at 33 Maiden Lane, New York, NY 10038 (hereinafter referred to as
"Multex").
WHEREAS, The Company and/or its independent branches and subsidiaries,
create, produce and develop various documents including but not limited to
Market Data, Morning Meeting Notes and/or Published Research Reports and other
financial documents.
WHEREAS, The Company desires that its financial documents be distributed
and made available to third parties such as institutional investors, funds and
other "buy side" entities;
WHEREAS, Multex provides research distribution services to institutional
investors, funds, and other "buy" side entities using its proprietary software;
and
WHEREAS, The Company desires that Multex provide document distribution
services, as more fully described in this Agreement, in order to enable the
company to distribute the documents as described above.
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter contained, the parties hereto agree as follows:
1. Scope of Services.
-----------------
(a) The Company and/or its independent branches and subsidiaries create,
produce and develop various documents including but not limited to Market Data,
Morning Meeting Notes and/or Published Research Reports and other financial
documents covering, among others, the fixed income, equity, foreign and global
financial markets (all such documents being hereinafter collectively referred to
as "Research"). The Company agrees to provide and contribute to Multex the
Research that the Company provides to its other vendors or third party
distributors concurrently with the publication or distribution by the Company of
such Research to any other third party, including another Data Provider (as
defined below). The Company grants to Multex the nonexclusive, royalty free,
worldwide right to receive, obtain, store, market and distribute the Research to
(i) any entity, except as provided in Section 1(c), which has subscribed to and
is receiving research distribution services from Multex (collectively, the
"Subscribers") and/or (ii) third party data providers ("Data Providers") for the
purpose of redistributing the Research to the clients of such Data Providers
("Data Provider Clients"). The
<PAGE>
Data Providers may include, but are not limited to, ADP, Bloomberg, Bridge,
Disclosure, Dow Jones and Reuters. Notwithstanding anything herein to the
contrary, Company may at its sole discretion elect not to contribute certain
Research documents to Multex for distribution hereunder ("Excluded Documents"),
provided, however, that the Company will not contribute for distribution said
Excluded Documents to any other vendor (excluding Company's affiliates) or third
party distributor including without limitation any other research or document
distributor. Furthermore, Company may withdraw any Research previously provided
subject to Company withdrawing said Research from any other vendor or third
party distributor including without limitation, any other research or document
distributor (excluding Company affiliates).
(b) Multex agrees to receive the Research from the Company and to
distribute the Research to its Subscribers, the Data Providers and the Data
Provider Clients (collectively, the "Services"). As part of the Services, Multex
grants to the Company a non-exclusive, non-transferable license to use Multex's
proprietary software (the "Multex Software") solely for the purpose of
contributing the Research as provided in Section 1(a) above.
(c) Upon execution of this Agreement, Multex shall provide Company with a
list of its current Subscribers, Data Providers and Data Provider Clients.
Company shall review such list and advise Multex in writing of the entities
listed therein that it desires entitled and those entities it wants de-entitled
so that no Research shall be transmitted to any entity until it is entitled. The
Company may from time to time, but not more often than once in any calendar
month, request in writing a list of the current Subscribers, Data Providers and
Data Provider Clients accessing the Company's Research and Multex will provide
such list within 10 days after its receipt of the Company's written request. The
Company may upon at least 7 days prior written notice request that a Subscriber
or Data Provider be de-entitled from access to its Research, and may upon at
least 30 days prior written notice request that an entity be entitled, either as
a Subscriber of Multex or as a Data Provider Client, for purposes of receiving
the Company's Research. The Company may not request that a Subscriber be de-
entitled unless such Subscriber is also de-entitled from receiving the Research
from all other Data Providers or other third party research distribution vendors
to which the Company provides its Research. Multex shall use its best efforts to
effect such entitlements or de-entitlements within the applicable time frames,
provided that Multex shall not provide the Services to any entity that refuses
to execute, or which is in breach of, a Multex Customer Agreement or similar
agreement with a Data Provider. Multex shall not provide such services to any
Subscriber that refuses to execute, or that executes and then violates either
the Multex Customer Agreement, the Reuters Subscriber Agreement or Data Provider
Agreement.
2. Fees; Costs.
-----------
(a) The Company shall be solely responsible for the costs relating to (i)
the preparation and development of the Research and (ii) the contribution and
delivery of the Research to Multex. Such costs include, but are not limited to,
costs for telecommunication
2
<PAGE>
lines, telephones, modems, computers, magnetic tape, magnetic tape delivery and
messenger services. This shall not include any equipment necessary for Multex to
receive the documents.
(b) Multex shall be solely responsible for all costs associated with
Multex Software and providing the Services.
3. Term; Termination; Remedies Upon Default.
----------------------------------------
(a) The initial term ("Initial Term") of this Agreement shall commence on
the date of this Agreement and continue for a period of twelve (12) months from
the date that the Services are first provided under this Agreement (the
"Commencement Date"). Thereafter, this Agreement shall renew for successive one-
year periods, unless terminated by either party by written notice delivered at
least ninety (90) days prior to the expiration of the Initial Term or any
renewal period. Following the expiration of the Initial Term, the Company may
terminate this Agreement on thirty (30) days notice to Multex.
(b) Either party, by written notice to the other party, may terminate this
Agreement prior to the expiration of the Initial Term or any renewal term upon
the occurrence of an "Event of Default" by the other party. An "Event of
Default" shall mean: (i) the failure by a party to perform or observe any
material term, covenant, agreement or warranty contained in this Agreement
("Material Default") which is not cured within 30 days after written notice
thereof; provided, that if the Material Default cannot reasonably be cured
within 30 days and the defaulting party has commenced performance during such
thirty (30) day period and diligently pursues curing such default, the time for
curing such default shall be extended for such period as may be necessary to
cure the default but in no event more than an additional 30 days; or (ii) either
party ceasing to do business or the filing of a petition in bankruptcy
(voluntary or involuntary) with respect to a party, which in the case of an
involuntary petition, is not vacated within 60 days.
(c) The remedies contained in this Paragraph 3 are cumulative and are in
addition to all other rights and remedies available to either party under this
Agreement and the Exhibits hereto, by operation of law or otherwise.
4. Indemnity.
---------
(a) Multex shall indemnify and hold the Company harmless from and against
any costs, damages, expenses or liabilities (including reasonable attorney fees)
incurred by the Company as a result of any claim or action brought against the
Company based upon or arising out of any claim that the Company's use of the
Software in accordance with this Agreement infringes any patent, copyright or
proprietary right of any third party, and Multex shall defend or settle, at its
sole expense, any such claim; provided that (i) the Company shall have promptly
notified Multex in writing of such claim; (ii) Multex shall have sole control of
the defense and settlement of such claim; and (iii) the Company shall cooperate
fully with Multex in the defense of such claim. In the event that the Company is
enjoined or otherwise prohibited from using the Software, Multex shall, at its
option, substitute non-infringing, equally functional Software, procure for the
Company the right to continue using the Software, or terminate this Agreement.
3
<PAGE>
(b) The Company shall indemnify and hold Multex harmless from and against
any costs, damages, expenses or liabilities (including reasonable attorney fees)
incurred by Multex as a result of any claim or action brought against Multex
based upon or arising out of (a) any claim that Multex's use of the Research in
accordance with this agreement infringes any patent, copyright or proprietary
right of any third party; (b) any libelous or slanderous statements contained in
the Research; or (c) a violation of any of the securities laws of the United
States (or any other jurisdiction in which the Services are provided) arising
out of the Research or the furnishing thereof to any party, and Company shall
defend or settle, at its sole expense, any such claim or action; provided that
(i) the Company shall have sole control of the defense and settlement of any
action; and (ii) Multex shall cooperate fully with the Company in the defense of
such action. In the event Multex is enjoined or otherwise prohibited from using
any Research document, Company shall, at its sole expense, procure for Multex
the right to continue using such document or substitute a non-infringing or non-
violating version of such document or remove that particular Research document.
5. Confidential Information.
------------------------
(a) "Confidential Information" shall mean the Multex Software and any other
information concerning Multex or the Company which is marked as confidential or
which, under the circumstances, should be treated as confidential.
(b) Each party shall hold the Confidential Information of the other party
in trust and confidence and shall not reproduce, disclose to any person, firm or
enterprise, or use for its own benefit, any such Confidential Information
(except as specifically permitted or contemplated by this Agreement). Each party
shall ensure that its employees and agents are aware of this clause, and shall
by instruction, agreement or otherwise cause such employees and agents to abide
by the terms of this clause.
(c) "Confidential Information" will not include any information that (i) is
already rightfully known to a party at the time it is obtained from the other
party, free from any obligation to keep such information confidential; (ii) is
or becomes publicly known through no wrongful act of either party; (iii) is
rightfully received from a third party without restriction and without breach of
this Agreement; (iv) is independently acquired or developed by a party without
breach of any obligation hereunder; (v) is required to be disclosed pursuant to
law, governmental regulation, or court order; or (iv) is in the public domain.
6. Limitation of Liability.
-----------------------
(a) MULTEX WILL MAKE EVERY REASONABLE EFFORT TO PROVIDE THE SERVICES, IT
BEING ACKNOWLEDGED AND AGREED THAT MULTEX CANNOT AND DOES NOT GUARANTEE THE
CONTENT, ACCURACY, TIMELINESS OR AVAILABILITY OF THE SERVICES OR THE RESEARCH AS
DISPLAYED OR PROVIDED THROUGH THE SERVICES. ACCORDINGLY, EXCEPT FOR MULTEX'S
FRAUD, WILLFUL MISCONDUCT OR GROSS NEGLIGENCE (INCLUDING IF THE DOCUMENTS ARE
ALTERED OR CHANGED AS A RESULT OF FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
THE COMPANY AGREES THAT MULTEX SHALL NOT HAVE ANY LIABILITY OR OBLIGATION TO THE
COMPANY OR ANY
4
<PAGE>
THIRD PARTY (WHETHER CAUSED DIRECTLY OR INDIRECTLY) RELATING TO OR ARISING OUT
OF (i) THE INTERRUPTION, DELAY OR FAILURE IN THE TRANSMISSION, DELIVERY OR
DISTRIBUTION OF THE SERVICES OR RESEARCH; (ii) THE UNAVAILABILITY OF MULTEX
SOFTWARE OR THE SERVICES; (iii) THE ACCURACY OF THE RESEARCH OR SECURITIES OR
COMMODITIES INFORMATION AND PRICES AS DISPLAYED, CARRIED OR FURNISHED BY OR
THROUGH THE SERVICES; (iv) ERRORS OR OMISSIONS IN CONNECTING, TRANSMITTING,
PROCESSING, DISSEMINATING, DISPLAYING OR DISTRIBUTING THE RESEARCH OR THE
INFORMATION CONTAINED THEREIN; OR (v) THE DISPLAYING OR FURNISHING OF THE
RESEARCH, INCLUDING THE INFORMATION CONTAINED THEREIN. MULTEX'S SOLE LIABILITY
TO COMPANY FOR ANY CLAIMS, NOTWITHSTANDING THE FORM OF SUCH CLAIMS (E.G.,
CONTRACT, NEGLIGENCE OR OTHERWISE), ARISING OUT OF ITEMS (i) THROUGH (iv) ABOVE,
SHALL BE TO USE REASONABLE EFFORTS TO RESUME THE SERVICES AND/OR TO MAKE THE
MULTEX SOFTWARE AVAILABLE TO COMPANY AS PROMPTLY AS REASONABLY PRACTICABLE.
(b) IN NO EVENT SHALL EITHER PARTY HAVE ANY LIABILITY FOR LOST PROFITS,
INDIRECT, CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES, OF ANY FINK ARISING OUT
OF OR ATTRIBUTABLE TO THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF THE
SAME.
(c) Multex agrees that it will not alter any Research in any way without
first obtaining the written consent of the Company. Otherwise, the content,
accuracy and completeness of the Research is the sole responsibility of the
Company. Multex conducts no review whatsoever and exercises no editorial control
over the Research, and accordingly, Multex shall have no liability whatsoever
(whether in contract or tort) for the content, completeness or accuracy of the
Research (including, without limitation, any security or commodity price
information contained in the Research). The foregoing sentence does not apply to
any alterations Multex makes to the Research without the Company's consent.
(d) Except for Multex's liability under Paragraphs 4 and 5, and any
liability arising from Multex's fraud, gross negligence or willful misconduct,
or breach of Multex's confidentiality obligation hereunder, Multex's maximum
liability hereunder for any cause, not exculpated hereunder, whether in tort or
contract, shall not exceed the lesser of (i) actual damages or (ii) $25,000.
(e) As used in this paragraph, the term "Multex" or Multex Software shall
include each third party who provides Multex with any portion of the Services.
Such third party shall not have any direct or indirect liability to Company for
monetary damage on account of the Services provided or to be provided by Multex
hereunder.
(f) The parties acknowledge and agree that the limitations of liability set
forth in this Section 6 are a condition of this Agreement, and that the
consideration for the Services reflects the allocations of risk set forth in
this Section 6.
7. Ownership Rights.
----------------
5
<PAGE>
(a) The Research is unique to the Company and shall remain the sole
property of the Company and Multex shall not acquire any rights in the Research,
other than the right to distribute the Research as set forth herein.
(b) The Software shall remain the sole property of Multex or its licensors.
The Company may use the Software only in conjunction with the Services. The
Company shall not copy, in whole or in part, the Software or related
documentation, whether in the form of computer media, printed or in any other
form; provided, however, that Company may make a reasonable number of copies of
the Software for back-up purposes only. Any copy of the Software shall contain
the copyright and other proprietary notice which appears on and in the Software.
(c) The Company is not authorized or permitted to furnish the Software to
any person or firm for re-use, redistribution or retransmission without the
prior written approval of Multex.
(d) THE COMPANY SHALL NOT MAKE ANY ALTERATION, CHANGE OR MODIFICATION TO
THE SOFTWARE. COMPANY MAY NOT RECOMPILE, DECOMPILE, DISASSEMBLE, OR REVERSE
ENGINEER THE SOFTWARE, OR OTHERWISE CREATE OR DERIVE SOURCE CODE FROM THE
SOFTWARE, OR MAKE OR DISTRIBUTE ANY OTHER FORM OF THE SOFTWARE.
(e) The Company may use the trademarks of Multex or its licensors, if at
all, only to identify printed output produced by the Software and only in
accordance with accepted trademark practice, including identification of the
relevant trademark owner's name. The use of any trademark as authorized herein
does not give the Company any rights of ownership or other rights relating to
the trademark, and all goodwill resulting from any such use shall inure to the
benefit of the relevant trademark owner.
(f) Multex may use the trademarks of the Company only in accordance with
such permission as may be granted from time to time. The use of any trademark as
authorized herein does not give Multex any rights of ownership or other rights
relating to the trademark, and all goodwill resulting from any such use shall
inure to the benefit of the relevant trademark owner.
(g) The Company will not export (or re-export) the Software without the
appropriate United States or foreign government licenses, and the consent of
Multex.
8. Warranties.
----------
(a) Multex hereby represents and warrants to Company as follows: (i) Multex
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware with full authority to enter into this Agreement;
(ii) the Multex Software and the Services do not infringe the proprietary rights
of any third party; (iii) Multex has the legal right and authority to license
the Multex Software to Company; (iv) the medium on which the Software shall be
free of defects in materials and workmanship under normal use for a period of
thirty (30) days from the date of delivery; and (v) the Multex Software will,
under normal use and service, record, store, process and present calendar dates
falling on or after January 1, 2000, in the same manner, and with the same
functionality, data integrity and performance, as the Multex Software records,
stores, processes and presents calendar dates on or before December
6
<PAGE>
31, 1999; will lose no functionality with respect to the introduction of records
containing dates falling on or after January 1, 2000, and will be interoperable
with other software used by the Company which may deliver records to, or
interact with, the Multex Software, including but not limited to back-up and
archived data.
(b) The Company represents and warrants to Multex that (i) the Company is
the owner of and has the right to provide the Research to Multex for
distribution as provided herein; (ii) the Research does not contain any libelous
or slanderous statements, and does not infringe the proprietary rights of any
third party; and (iii) the Company will comply with all laws and regulations
applicable to the creation and distribution of the Research and its use of the
Services, including without limitation all securities law of the United States
and any other jurisdiction in or into which the Services are to be provided.
Except as to warranties set forth above, Multex accepts the Research on an "as
is" basis.
9. Limitation of Warranties.
------------------------
THE COMPANY ACKNOWLEDGES AND AGREES THAT EXCEPT FOR THE WARRANTIES
SPECIFIED IN PARAGRAPH 8, MULTEX MAKES NO OTHER WARRANTIES WHATSOEVER, WRITTEN
OR ORAL, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION, ANY
WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY, CONCERNING
THIS AGREEMENT, THE SERVICES OR EQUIPMENT, THE MULTEX SOFTWARE, THIRD PARTY
SOFTWARE OR THE DOCUMENTATION. MULTEX DOES NOT GUARANTEE THE ACCURACY, VALIDITY
OR COMPLETENESS OF THE RESEARCH AS DISPLAYED OR PROVIDED THROUGH THE SERVICES.
MULTEX AND ITS THIRD PARTY LICENSORS DO NOT AND CANNOT WARRANT THE PERFORMANCE
OR RESULTS THE COMPANY MAY OBTAIN BY THE USE OF THE SOFTWARE OR SERVICES.
MULTEX ACKNOWLEDGES AND AGREES THAT EXCEPT FOR THE WARRANTIES SPECIFIED IN
PARAGRAPH 8. THE COMPANY MAKES NO OTHER WARRANTIES WHATSOEVER, WRITTEN OR ORAL,
EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION, ANY WARRANTIES OF
FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY, CONCERNING THIS AGREEMENT
OR THE RESEARCH. THE COMPANY DOES NOT GUARANTEE THE ACCURACY, VALIDITY OR
COMPLETENESS OF THE RESEARCH AS DISPLAYED OR PROVIDED THROUGH THE SERVICES. THE
COMPANY DOES NOT AND CANNOT WARRANT THE PERFORMANCE OR RESULTS MULTEX, ITS
SUBSCRIBERS, DATA PROVIDERS OR THEIR CLIENTS MAY OBTAIN BY THE USE OF THE
RESEARCH.
10. Inaccuracy.
----------
(a) The Company shall notify Multex promptly after discovery by Company of
any suspected inaccuracies in the Research or the Services.
(b) Multex shall notify the Company promptly after discovery by Multex of
any suspected inaccuracies in the Research or the Services.
7
<PAGE>
11. Compliance with Law.
-------------------
(a) The Company shall be responsible (i) for compliance with all laws and
governmental regulations affecting its business and (ii) for any use it may make
of the Services or the Research to assist it in complying with such laws and
governmental regulations, and Multex shall not have any responsibility relating
thereto (including, without limitation, advising the Company of its
responsibilities in complying with any laws or governmental regulations
affecting the Company's business). The Company shall not use or permit anyone to
use the Services, the Software or the Research for any unlawful purpose.
(b) Multex shall comply with all applicable laws and regulations in its
performance of its obligations hereunder.
(c) If after the date hereof any modifications to the Services shall be
legally required, Multex shall, except to the extent such changes may be beyond
the capability of Multex to implement, modify the Services appropriately. If
providing any of the Services to the Company hereunder violates, or in Multex's
opinion is likely to violate, any laws or governmental regulations, Multex may,
upon written notice to Company, immediately cease providing the affected
Services to the Company.
12. Advertising.
-----------
Neither party shall use the name or marks of the other or its parent
company or any subsidiary or affiliated company in any publicity release,
advertising, or publicly displayed or distributed materials without securing the
prior written consent of the party whose name is to be used, which consent shall
not be unreasonably withheld or delayed. Notwithstanding the foregoing, Multex
and the Company may disclose the fact of this Agreement.
13. Independent Contractors.
-----------------------
Multex and the Company are independent contractors. Personnel supplied by
Multex hereunder, if any, are not Company's personnel or agents, and Multex
assumes full responsibility for their acts. Multex shall be solely responsible
for the payment of compensation, benefits, insurance and taxes relating to
Multex's employees assigned to perform services hereunder. Notwithstanding the
foregoing, Multex (and its employees) shall abide by Company rules and
regulations while visiting Company's premises.
14. General.
-------
(a) Neither party may assign its interest in this Agreement without first
obtaining the written consent of the other. Otherwise, this Agreement shall be
binding upon the parties' respective successors and permitted assigns.
(b) The validity of this Agreement, the construction and enforcement of
its terms, and the interpretation of the rights and duties of the parties shall
be governed by the laws of the State of New York.
8
<PAGE>
(c) No modification, amendment, supplement to or waiver of this Agreement
or any Schedule or Exhibit hereunder, or any of their provisions shall be
binding upon the parties hereto unless made in writing and duly signed by both
parties.
(d) A failure or delay of either party to this Agreement to enforce at any
time any of the provisions hereof, or to exercise any option which is herein
provided, or to require at any time performance of any of the provisions hereto
shall in no way be construed to be a waiver of such provisions of this
Agreement.
(e) The terms and conditions of any and all Exhibits and Schedule to this
Agreement are incorporated herein by this reference and shall constitute part of
this Agreement as if fully set forth herein.
(f) The headings herein are for convenience of reference only and shall
not impact the meaning of this Agreement.
(g) The provisions of Sections 4, 5, 6, 7, 8 and 9 shall survive
termination or expiration of this Agreement.
(h) Company shall provide Multex with reasonable access to its premises to
perform the obligations set forth herein. Multex shall abide by the site
regulations and security procedures applicable to each site.
(i) This Agreement constitutes the entire Agreement between the parties
concerning and the subject matter hereof and shall supersede all prior
agreements or understandings concerning such subject matter.
(j) Multex will not change any Research without first obtaining the
written consent of the Company.
IN WITNESS WHEREOF, the parties hereto, each acting under due and proper
authority, have executed this Agreement as of the date first above written.
MULTEX SYSTEMS, INC. CIBC WOOD GUNDY SECURITIES INC.
By: /s/ Philip Callaghan By: /s/ Peter Martin
---------------------------- --------------------------------
Name: P. Callaghan Name: Peter Martin
--------------------------- -------------------------------
Title: CFO Title: Managing Director-Economic &
-------------------------- Financial Markets Research
----------------------------
Date: July 8, 1998 Date: July 7, 1998
--------------------------- -------------------------------
CIBC WOOD GUNDY SECURITIES INC.
By: /s/ Phipps Lansbery
---------------------------------
9
<PAGE>
Name: Phipps Lansbery
-------------------------------
Title: Managing Director
------------------------------
Date: July 7, 1998
-------------------------------
10
<PAGE>
EXHIBIT 10.13
CONFIDENTIAL TREATMENT HAS BEEN SOUGHT
FOR PORTIONS OF THIS EXHIBIT PURSUANT TO
RULE 406 UNDER THE SECURITIES EXCHANGE
ACT OF 1933, AS AMENDED
MASTER SERVICES AGREEMENT
Dated as of November 23, 1998
Between
MULTEX SYSTEMS, INC.
and
DAIN RAUSCHER INCORPORATED
EXHIBITS
A Third Party Software; Third Party License Requirements
for End Users page 9
SCHEDULES (check all that apply)
x Electronic Contribution and Distribution Schedule of
___ Services (Broker Dealer) page 10
Electronic Contribution and Distribution Schedule of
___ Services (Data Provider)
x Royalty Schedule (Broker Dealer) page 12
___
Royalty Schedule (Data Provider) page 12
___
x Multex Express Schedule of Services page 13
___
<PAGE>
MASTER SERVICES AGREEMENT ("Agreement'') dated as of November, 23, 1998, DAIN
RAUSCHER INCORPORATED with offices at 60 South Sixth St. Minneapolis, MN 55402-
4422, (hereinafter referred to as the "Company"), and MULTEX SYSTEMS, INC., a
Delaware Corporation with offices at 33 Maiden Lane, New York, NY 10038
(hereinafter referred to as "Multex").
The parties hereby agree as follows:
1. Definitions. As used herein, the following terms shall have the meanings
-----------
set forth below:
(a) Data Providers shall mean third party research providers who are in the
--------------
business of producing or procuring research reports, market data and other
financial documents for sale or resale to the financial and corporate
markets.
(b) Documents shall mean any digitized or electronically transmitted document
---------
which is transmitted to Multex by the Company and/or distributed by Multex
to the Company and Users as part of the Services. The particular formats,
types and contents of the Documents covered by this Agreement shall be as
set forth in the Schedules.
(c) Equipment shall mean the hardware and software (e.g., workstations,
---------
servers, operating software) required in order for the Company to access
the Services, as more fully described in the Schedule.
(d) External Users shall mean persons or entities other than employees of the
--------------
Company to whom the Documents are provided by means of the Services.
(e) Internal Users shall mean the investment professionals and other employees
--------------
of the Company to whom the Documents are provided by means of the Services.
(f) Multex Software shall mean Multex's proprietary software which is used to
---------------
receive and distribute Documents and otherwise to provide the Software, and
which includes certain software licensed from third parties (the "Third
Party Software"). The Multex Software and the Third Party Software are
sometimes hereinafter referred to as the "Software".
(g) Schedule or Schedules shall mean one or more Schedules attached to this
---------------------
Agreement and made a part hereof which set forth the Services to be
provided by Multex to the Company, and any of the terms and conditions
related to such Services
(h) Services shall have the meaning ascribed thereto in Section 2(a) below.
--------
(i) Users shall mean either the Internal Users or External Users.
-----
2. Scope of Services; Company Obligations; Equipment.
-------------------------------------------------
(a) Multex agrees to provide to the Company and the Company agrees to receive
from Multex in accordance with the terms and conditions of this Agreement
and the Schedules hereto ( the document distribution and related services
described in the Schedule(s) entered into by the parties and attached
hereto and made a part hereof; and (ii) the licenses granted herein or
<PAGE>
in the Schedules (collectively the "Services"). The Services are subject to
the Company performing its obligations as set forth herein and in the
Schedules.
(b) Multex grants to the Company a non-exclusive, non-transferable license to
use the Multex Software. Company agrees to abide by the Third Party
License Requirements for End Users relating to the Third Part Software, as
set forth in Exhibit A attached hereto and incorporated herein.
(c) The Company agrees to provide to Multex and grants to Multex the non-
exclusive right to obtain from the Company the Documents described in the
Schedules in accordance with the terms set forth herein and in the
Schedules, including any terms relating to the timeliness of the Company's
delivery of the Documents to Multex.
(d) The Company agrees to install the recommended Equipment configuration
described in the Schedule.
(e) Multex shall provide to the Company free of charge, maintenance updates and
revisions ("Updates") to Multex Software as commercially released by
Multex. Any enhancements, modifications, software development, operation
and technical support, customization or integration not included in the
Services or the Updates, or which are made specifically for or at the
Request of the Company shall be paid for by Company on a time and material
basis. Multex's time and materials rates are from U.S. $150.00 to U.S.
$200.00 per hour, per person depending on the skill and level of such
person.
3. Fees; Costs.
-----------
(a) The Fees for the Services, if any, are set forth in the Schedules. All
overdue amounts shall be subject to interest at the rate of 1.5% per month,
or the highest amount permitted by law.
(b) The Company shall be solely responsible for the all costs relating to the
preparation and development of the Documents, the delivery of the Documents
to Multex, and any other costs specified in the Schedules. Such costs
include, but are not limited to, costs for telecommunication lines,
telephones, modems, computers, magnetic tape, magnetic tape delivery and
messenger services.
4. Term; Termination.
(a) The term of this Agreement shall commence on the date of this Agreement and
shall continue until all Schedules have expired, unless this Agreement and
the Schedules are sooner terminated as provided herein. The term of each
Schedule shall be as set forth therein.
- -----------------
3
<PAGE>
(b) Either party, by written notice to the other party, may terminate this
Agreement and the Schedules prior to the expiration of the term of this
Agreement or the Schedules upon the occurrence of an "Event of Default" by
the other party. An "Event of Default" shall mean:
(i) the failure by a party to perform or observe any material term,
covenant, agreement or warranty contained in this Agreement ("Material
Default"), which is not cured within 30 days after written notice thereof;
provided, that if the Material Default cannot reasonably be cured within 30
days and the defaulting party has commenced performance during such thirty
(30) day period and diligently pursues curing such default, the time for
curing such default shall be extended for such period as may be necessary
to cure the default;
(ii) either party ceasing to do business or the filing of a petition in
bankruptcy (voluntary or involuntary) with respect to a party, which in the
case of an involuntary petition, is not vacated within 60 days, or
(iii) the failure by the Company to pay any amount due hereunder, which
is not cured within 30 days after written notice thereof.
(c) In addition to Multex's right to terminate this Agreement and the Schedules
as provided in subsection (b) above, if an Event of Default by the Company
occurs, then Multex may at its option, (i) declare all amounts due and to
become due under this Agreement to be immediately due and payable, (ii)
whether or not this Agreement is terminated, take immediate possession of
any or all of the items of Equipment owned by Multex not fully paid for,
wherever situated and for such purpose enter upon any premises without
liability for so doing, (iii) without prejudice to its right to terminate
this Agreement, suspend performance of any of its obligations under this
Agreement and the Schedules until such failure is remedied; and/or (iv)
sell, dispose of, hold, use or lease any items of Equipment not fully paid
for, as Multex, in its sole discretion, may decide. Company agrees to
reimburse Multex for any and all expenses Multex may incur, including
reasonable attorney fees, in taking any of the foregoing actions.
(d) If the parties have entered into an Electronic Contribution and
Distribution Schedule of Services as a part of this Agreement, then the
parties acknowledge and agree hat the Research (as such term is defined in
such Schedule) is unique to the Company, and that if the Company fails to
provide the Research in the manner as described in such Schedule, Multex
would suffer irreparable harm for which the remedies at law would be
inadequate and/or would suffer damages the amount of which would be
difficult or impossible to determine. Accordingly, if the Company fails to
contribute the Research in a timely manner, then, in addition to Multex's
right to terminate this Agreement and the Schedules as provided in this
Section 4, Multex shall be entitled to injunctive relief, without posting a
bond or other security.
(e) The remedies contained in this Paragraph 4 are cumulative and are in
addition to all other rights and remedies available to either party under
this Agreement and the Schedules, by operation of law or otherwise.
(f) Promptly after the termination or expiration of this Agreement, the
Software (including the magnetic or other physical media on which it was
originally or subsequently
4
<PAGE>
recorded or fixed) and all related documentation and all Equipment owned by
Multex or which has not been paid for by the Company shall be returned by
Company to Multex in good condition, reasonable wear and tear excepted. At
the direction of Multex, the Software may be completely deleted, erased or
otherwise destroyed by Company.
5. Indemnity.
---------
(a) Multex shall indemnify and hold the Company harmless from and against any
costs, damages, expenses or liabilities (including reasonable attorney
fees) incurred by the Company as a result of any claim or action brought
against the Company based upon or arising out of the infringement by the
Software as used in accordance with this Agreement of any patent, copyright
or proprietary right of any third party, and Multex shall defend or settle,
at its sole expense, any claim attributable to such infringement; provided
that (i) the Company shall have promptly notified Multex in writing of such
claim; (ii) Multex shall have sole control of the defense and settlement of
such claim; and (iii) the Company shall cooperate fully with Multex in the
defense of such claim. In the event that the Company is enjoined or
otherwise prohibited from using the Software, Multex shall, at its option,
substitute non-infringing, equally functional Software, procure for the
Company the right to continue using the Software, or terminate this
Agreement.
(b) The Company shall indemnify and hold Multex harmless from and against any
costs, damages, expenses or liabilities (including reasonable attorney
fees) incurred by Multex as a result of any claim or action brought against
Multex based upon or arising out of (a) the infringement by any of the
Documents of any patent, copyright or proprietary right of any third party;
(b) any libelous or slanderous statements contained in the Documents; or
(c) a violation of any of the securities laws of the United States (or any
other jurisdiction in which the Services are provided) arising out of the
Documents or the furnishing thereof to any party, and Company shall defend
or settle, at its sole expense, any such claim or action; provided that (i)
the Company shall have sole control of the defense and settlement of any
action: and (ii) Multex shall cooperate fully with the Company in the
defense of such action. In the event Multex is enjoined or otherwise
prohibited from using any Document. Company shall, at its sole expense,
procure for Multex the right to continue using such Document or substitute
a non-infringing or nonviolating version of such Document.
6. Confidential I information.
--------------------------
(a) "Confidential Information" shall mean the Multex Software, the Third Party
Software, any other software, hardware, systems or data bases used by
Multex in the conduct of its business (including the configurations
thereof), and any other information concerning Multex or the Company which
is marked as confidential or which, under the circumstances, should be
treated as confidential.
(b) Each party shall hold the Confidential Information of the other party in
trust and confidence and shall not reproduce, disclose to any person, firm
or enterprise, or use for its own benefit, any such Confidential
Information (except as specifically permitted or contemplated by this
Agreement). Each party shall ensure that its employees and agents are
aware of this clause,
5
<PAGE>
and shall by instruction, agreement or otherwise cause such employees and
agents to abide by the terms of this clause.
(c) "Confidential Information" will include any information that (i) is already
rightfully known to a party at the time it is obtained from the other
party, free from any obligation to keep such information confidential; (ii)
is or becomes publicly known through no wrongful act of either party; (iii)
is rightfully received from a third party without restriction and without
breach of this Agreement; (iv) is independently acquired or developed by a
party without breach of any obligation hereunder; (v) is required to be
disclosed pursuant to law, governmental regulation, or court order; or (vi)
is in the public domain.
7. Limitation of Liability.
-----------------------
(a) MULTEX WILL MAKE EVERY REASONABLE EFFORT TO PROVIDE THE SERVICES TO THE
COMPANY, IT BEING ACKNOWLEDGED AND AGREED THAT MULTEX CANNOT AND DOES NOT
GUARANTEE THE CONTENT, ACCURACY, TIMELINESS OR AVAILABILITY OF THE SERVICES
OR THE DOCUMENTS AS DISPLAYED OR PROVIDED THROUGH THE SERVICES.
ACCORDINGLY, EXCEPT FOR MULTEX'S FRAUD, WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE, THE COMPANY AGREES THAT MULTEX SHALL NOT HAVE ANY LIABILITY OR
OBLIGATION TO THE COMPANY OR ANY THIRD PARTY (WHETHER CAUSED DIRECTLY OR
INDIRECTLY) RELATING TO OR ARISING OUT OF (i) THE INTERRUPTION, DELAY OR
FAILURE IN THE TRANSMISSION, DELIVERY OR DISTRIBUTION OF THE SERVICES OR
DOCUMENTS; (ii) THE UNAVAILABILITY OF MULTEX SOFTWARE OR THE SERVICES;
(iii) THE ACCURACY OF THE DOCUMENTS OR SECURITIES OR COMMODITIES
INFORMATION AND PRICES AS DISPLAYED, CARRIED OR FURNISHED BY OR THROUGH THE
SERVICES; (iv) ERRORS OR OMISSIONS IN CONNECTING, TRANSMITTING, PROCESSING,
DISSEMINATING, DISPLAYING OR DISTRIBUTING THE DOCUMENTS OR THE INFORMATION
CONTAINED THEREIN; OR (v) THE DISPLAYING OR FURNISHING OF THE DOCUMENTS,
INCLUDING THE INFORMATION CONTAINED THEREIN. MULTEX'S SOLE LIABILITY TO
COMPANY FOR ANY CLAIMS, NOTWITHSTANDING THE FORM OF SUCH CLAIMS (E.G.,
CONTRACT, NEGLIGENCE OR OTHERWISE), ARISING OUT OF ITEMS (i) THROUGH (iv)
ABOVE, SHALL BE TO USE REASONABLE EFFORTS TO RESUME THE SERVICES AND/OR TO
MAKE THE MULTEX SOFTWARE AVAILABLE TO COMPANY AS PROMPTLY AS REASONABLY
PRACTICABLE.
(b) IN NO EVENT SHALL EITHER PARTY HAVE ANY LIABILITY FOR LOST PROFITS,
INDIRECT, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES, OF ANY KIND ARISING
OUT OF OR ATTRIBUTABLE TO THIS AGREEMENT, EVEN IF ADVISED OF THE
POSSIBILITY OF THE SAME.
(c) The content, accuracy and completeness of the Documents is the sole
responsibility of the Company. Multex conducts no review whatsoever and
exercised no editorial control over the Documents, and accordingly, Multex
shall have no liability whatsoever (whether in contract or tort) for the
content, completeness or accuracy of the Documents
6
<PAGE>
(including, without limitation, any security or commodity price information
contained in the Documents.)
(d) Except for Multex's liability under Paragraph 5, Multex's maximum liability
hereunder for any other cause, not exculpated hereunder, whether in tort or
contract, shall not exceed the lesser of (i) actual damages or (ii) one
month's Fees paid by the Company for the Services (or, if no Fees are
payable under the Schedule for such Services, US$5,000).
(e) As used in this paragraph, the term "Multex" or Multex Software shall
include each third party who provides Multex with any portion of the
Services. Such third party shall not have any direct or indirect liability
to Company for monetary damage on account of the Services provided or to be
provided by Multex hereunder.
(f) The Company shall immediately notify Multex of any suspected inaccuracies
in the Documents or the Services.
(g) The parties acknowledge and agree that the limitations of liability set
forth in this Section 7 are a condition of this Agreement, and that the
Fees reflect the allocations of risk set forth in this Section 7.
8. Ownership Rights.
----------------
(a) The Documents shall remain the sole property of the company and Multex
shall not acquire any rights in the Documents, other than the right to
distribute the Documents as set forth herein.
(b) The Software shall remain the sole property of Multex or its licensers.
The Company may use the Software only in conjunction with the Services.
The Company may permit the Software to be used or accessed by no more than
the number of concurrent users set forth in the Schedule, or as may be
agreed to by the Company and Multex. The Company shall not copy, in whole
or in part, the Software or related documentation, whether in the form of
computer media, printed or in any other form; provided, however, that
Company may make one (1) of copy of the Software for back-up purposes only.
Any copy of the Software shall contain the copyright and other proprietary
notice which appears on and in the Software. Should the Software become
inoperable, the Company may use the Software on a backup system for a
period not to exceed thirty (30) days. The Company shall notify Multex of
any such use within five (5) days. Should there be a requirement to
permanently transfer the Software from the licensed configuration to an
alternate configuration, the Company shall first obtain the written consent
of Multex, which shall not be unreasonably withheld.
(c) The license granted herein is for the limited purposes of enabling the
Company to contribute the Documents to Multex and to receive and access the
Services. The Company is not authorized or permitted to furnish the
Software or the Services to any person or firm for re-use, redistribution
or retransmission without the prior written approval of Multex.
(d) THE COMPANY SHALL NOT MAKE ANY ALTERATION, CHANGE OR MODIFICATION TO THE
SOFTWARE. COMPANY MAY NOT RECOMPILE, DECOMPILE, DISASSEMBLE, OR
REVERSE ENGINEER THE SOFTWARE, OR
7
<PAGE>
OTHERWISE CREATE OR DERIVE SOURCE CODE FROM THE SOFTWARE, OR MAKE OR
DISTRIBUTE ANY OTHER FORM OF THE SOFTWARE.
(e) The Company may use the trademarks of Multex or its licensers, if at all,
only to identify printed output produced by the Software and only in
accordance with accepted trademark practice, including identification of
the relevant trademark owner's name. The use of any trademark as
authorized herein does not give the Company any rights of ownership or
other rights relating to the trademark, and all goodwill resulting from any
such use shall inure to the benefit of the relevant trademark owner.
(f) The Company will not export or re-export the Software without the
appropriate United States or foreign government licenses, and the consent
of Multex.
9. Warranties.
----------
(a) Multex hereby represents and warrants to Company as follows: (i) Multex is
a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware with full authority to enter into this
Agreement; (ii) the Multex Software and the Services do not infringe the
proprietary rights of any third party; (iii) Multex has the legal right and
authority to license the Multex Software and the Third Party Software to
Company; (iv) the medium on which the Software shall be free of defects in
materials and workmanship under normal use for a period of thirty (30) days
from the date of delivery; and (v) the Multex Software will, under normal
use and service, record, store, process and present calendar dates falling
on or after January 1, 2000, in the same manner, and with the same
functionality, data integrity and performance, as the Multex Software
records stores, processes and presents calendar dates on or before December
31, 1999, will lose no functionality with respect to the introduction of
records containing dates falling on or after January 1, 2000, and will be
interoperable with other software used by the Company which may deliver
records to, or interact with, the Multex Software including but not limited
to back-up and archived data.
(b) The Company represents and warrants to Multex that: (i) the Company is the
owner of and has the right to provide the Documents to Multex for
distribution as provided herein; (ii) the Documents do not contain any
libelous or slanderous statements, and do not infringe the proprietary
rights of any third party; and (iii) the Company will comply with all laws
and regulations applicable to the creation and distribution of the
Documents and its use of the Services, including without limitation all
securities law of the United States and any other jurisdiction in or into
which the Services are to be provided..
10. Limitation of Warranties.
------------------------
THE COMPANY ACKNOWLEDGES AND AGREES THAT EXCEPT FOR THE WARRANTIES
SPECIFIED IN PARAGRAPH 9, MULTEX MAKES NO OTHER WARRANTIES WHATSOEVER, WRITTEN
OR ORAL, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION, ANY
WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY CONCERNING
THIS AGREEMENT, THE SERVICES OR EQUIPMENT, THE MULTEX SOFTWARE, THE THIRD PARTY
SOFTWARE OR THE DOCUMENTATION. MULTEX DOES NOT
8
<PAGE>
GUARANTEE THE ACCURACY, VALIDITY OR COMPLETENESS OF THE DOCUMENTS AS DlSPLAYED
OR PROVIDED THROUGH THE SERVICES. MULTEX AND ITS THIRD PARTY LICENSORS DO NOT
AND CANNOT WARRANT THE PERFORMANCE OR RESULTS THE COMPANY MAY OBTAIN BY THE USE
OF THE SOFTWARE OR SERVICES.
11. Compliance with Law.
-------------------
(a) The Company shall be responsible (i) for compliance with all laws and
governmental regulations affecting its business and (ii) for any use it may
make of the Services or the Documents to assist it in complying with such
laws and governmental regulations, and Multex shall not have any
responsibility relating thereto (including, without limitation, advising
the Company of its responsibilities in complying with any laws or
governmental regulations affecting the Company's business). The Company
shall not use or permit anyone to use the Services, the Software or the
Documents for any unlawful purpose.
(b) Multex shall comply with all applicable U.S., state and local laws and
regulations in its performance of its obligations hereunder.
(c) If after the date hereof any modifications to the Services shall be legally
required, Multex shall, except to the extent such changes may the beyond
the capability of Multex to implement, modify the Services appropriately.
If providing any of the Services to the Company hereunder violates, or in
Multex's opinion is likely to violate, any laws or governmental
regulations, Multex may, upon written notice to Company, immediately cease
providing the affected Services to the Company.
12. Advertising.
-----------
Neither party shall use the name or marks of the other or its parent
company or any subsidiary or affiliated company in any publicity release,
advertising, or publicly displayed or distributed materials without securing the
prior written consent of the party whose name is to be used, whose consent shall
not be unreasonably withheld or delayed. Notwithstanding the foregoing, Multex
may disclose the fact of this Agreement as part of an information list of
clients and a tombstone representation, both substantially in forms as attached.
13. Independent Contractors.
-----------------------
Multex and the Company are independent contractors. Personnel supplied by
Multex hereunder, if any, are not Company's personnel or agents, and Multex
assumes full responsibility for their acts. Multex shall be solely responsible
for the payment of compensation, benefits, insurance and taxes relating to
Multex's employees assigned to perform services hereunder. Notwithstanding the
foregoing, Multex (and its employees) shall abide by Company rules and
regulation while visiting Company's premises.
14. General.
-------
(a) This Agreement shall be binding upon the parties' respective successors and
permitted assigns.
9
<PAGE>
(b) The validity of this Agreement, the construction and enforcement of its
terms, and the interpretation of the rights and duties of the parties shall
be governed by the laws of the State of New York.
(c) No modification, amendment supplement to or waiver of this Agreement or any
Schedule or Exhibit hereunder, or any of their provisions shall be binding
upon the parties hereto unless made in writing and duly signed by both
parties.
(d) A failure or delay of either party to this Agreement to enforce at any time
any of the provisions hereof, or to exercise any option which is herein
provided, or to require at any time performance of any of the provisions
hereto shall in no way be construed to be a waiver of such provisions of
this Agreement.
(e) The terms and conditions of any and all Exhibits and Schedule to this
Agreement are incorporated herein by this reference and shall constitute
part of this Agreement as if fully set forth herein.
(f) The headings herein are for convenience of reference only and shall not
impact the meaning of this Agreement.
(g) The provisions of Sections 5, 6, 7, 8, 9 and 10 shall survive termination
or expiration of this Agreement.
(h) Company shall provide Multex with reasonable access to its premises to
perform the obligations set forth herein. Multex shall abide by the site
regulations and security procedures applicable to each site.
(i) This Agreement constitutes the entire Agreement between the parties
concerning and the subject matter hereof and shall supersede all prior
agreements or understandings concerning such subject matter.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto, each acting under due and proper
authority, have executed this Agreement as of the date first above written.
<TABLE>
<CAPTION>
MULTEX SYSTEMS INC.
<S> <C>
Name: P. Callaghan Name: Mary Zimmer
--------------------------- -------------------------------
Title: CFO Title: Director, DRW Finance & Admin.
--------------------------- -------------------------------
Signature: /s/ Philip Callaghan Signature: /s/ Mary Zimmer
--------------------------- -------------------------------
Date: 11/30/98 Date: 11/23/98
--------------------------- -------------------------------
Name: Marcia L. Hanson
-------------------------------
Title: Vice President
-------------------------------
Signature: /s/ Marcia L. Hanson
-------------------------------
Date: 11/24/98
-------------------------------
</TABLE>
11
<PAGE>
EXHIBIT A
THIRD PARTY SOFTWARE
THIRD PARTY LICENSE REQUIREMENTS FOR END USERS
Third Party Software
- --------------------
Fulcrum Technologies Search tool (the "Fulcrum Software")
Third Party Software License Requirements for End Users
- -------------------------------------------------------
The Company acknowledges and agrees that: (a) title to and ownership of the
Fulcrum Software and all rights related thereto, including patent, trademark and
copyright related thereto are and shall remain the exclusive property of Fulcrum
Technologies, Inc. or its licensees; (b) Customer shall only acquire the right
to use the Fulcrum Software in accordance with this Agreement; and (c) Customer
shall take all necessary steps to ensure that all intellectual property
underlying the binary version of the Fulcrum Software remains confidential.
12
<PAGE>
ELECTRONIC CONTRIBUTION AND DISTRIBUTION
SCHEDULE OF SERVICES
to
MASTER SERVICES AGREEMENT DATED November 23,1998
THIS ELECTRONIC CONTRIBUTION AND DISTRIBUTION SCHEDULE OF SERVICES dated
November 23, 1998 between Multex Systems, Inc. ("Multex") (the "Company") is a
Schedule to and a part of the Master Services Agreement dated November 23, 1998
(the Master Agreement") between Multex and the Company. All terms used herein
and not defined shall have the meanings set forth in the Master Agreement. In
the event of a conflict or inconsistency between the terms of the Master
Agreement and the terms of this Schedule the terms of this Schedule shall
control.
Multex and the Company agree as follows:
1. Services: The Services to be provided under this Schedule consist of
--------
the collection and distribution of the Documents identified below to
Subscribers, Data Providers and Data Provider Clients, as more particularly
described in this Schedule
IT IS SPECIFICALLY UNDERSTOOD THAT THIS SCHEDULE SETS FORTH ALL OF THE SERVICES
TO BE PROVIDED BY MULTEX UNDER THIS SCHEDULE, AND THAT NO OTHER SERVICES,
SOFTWARE DEVELOPMENT, ENHANCEMENTS, MODIFICATIONS, SUPPORT CUSTOMIZATION OR
INTEGRATION ARE INCLUDED IN THE SERVICES COVERED BY THIS SCHEDULE.
2. Documents: The Documents covered by this Schedule are as follows:
---------
____ Research: financial documents, including but not limited to Market
Data, Earnings Estimates, Morning Meeting Notes and/or Published
Research Reports produced by the equity division of Company. Company
may at its sole discretion elect not to contribute certain Research
Documents to Multex for distribution pursuant to this Schedule
("Excluded Documents"), provided, however, that the Company will not
contribute for electronic distribution such Excluded Documents to any
other vendor, including without limitation, any other research or
document distributor.
____ Other Documents (specify:)_____________________________________
3. Term: The initial term ("Initial Term) of this Schedule and the
----
Services shall commence on the date of this Schedule and continue for a period
of three (3) years from the date that the Services are first provided to the
Company (the "Commencement Date"). Thereafter, this Schedule shall renew for
successive one-year periods, unless terminated by either party by written notice
delivered at least 60 days prior to the expiration of the Initial Term or any
renewal period.
13
<PAGE>
4. Fees: Company shall pay Multex a fee of [****] per annum for the
----
services set forth herein which fee shall be paid quarterly in advance. If
Company elects the Royalty Schedule and provided said Schedule remains in full
force and effect with Company in compliance therewith, this fee shall be reduced
to [****] per annum to be paid quarterly in advance. If Company executes the
Express Schedule of Services, Multex shall waive the aforesaid fee in its
entirety.
5. Terms and Conditions.
--------------------
(a) Contribution of Research. The Company agrees to provide and contribute to
Multex all of the Company's Research concurrently with the first publication or
distribution by the Company of such Research in any medium including its
distribution of such Research to its own clients or to any other third party,
including another Data Provider (as defined below). The Company grants to Multex
the nonexclusive, royalty free worldwide right to receive, obtain, store, market
and distribute the Research to (i) any entity, except as provided in Section
3(c), which has subscribed to and is receiving research distribution services
from Multex (collectively, the "Subscribers") and/or (ii) Data Providers for the
purpose of redistributing the Research to the clients of such Data Providers
("Data Provider Clients")
(b) Distribution of Research. Multex agrees to receive the Research from the
Company and to distribute the Research to its Subscribers, the Data Providers
and the Data Provider Clients.
(c) Entitlements. The Company may from time to time, but not more often than
once in any calendar month, request in writing a list of the current Subscribers
and Data Provider Clients and Multex will provide such list within 10 days after
its receipt of the Company's written request. The Company may upon at least 7
days prior written notice request that a Subscriber or Data Provider be de-
entitled from access to its Research, and may upon at least 30 days prior
written notice request that an entity be entitled, either as a Subscriber of
Multex or as a Data Provider Client. for purposes of receiving the Company's
Research. The Company may not request that a Subscriber be de-entitled unless
such Subscriber is also de-entitled from receiving the Research from all other
Data Providers or other third party research distribution vendors to which the
Company provides its Research. Multex shall use its best efforts to effect such
entitlements or de-entitlements within the applicable time frames, provided that
Multex shall not be obligated to provide the Services to any entity that refuses
to execute, or which is in breach of, a Multex Customer Agreement or similar
agreement with a Data Provider.
(d) Other Documents. If Documents other than Research are covered by this
Schedule, then the Company will provide for the timely contribution and delivery
to Multex of all such Documents, and Multex will receive and distribute such
Documents to Subscribers, Data Providers and Data Provider Clients.
- ----------------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.
14
<PAGE>
MULTEX SYSTEMS INC.
Name: P. Callaghan Name: Mary Zimmer
--------------------------- -------------------------------
Title: CFO Title: Director, DRW Finance & Admin.
--------------------------- -------------------------------
Signature: /s/ Philip Callaghan Signature: /s/ Mary Zimmer
--------------------------- -------------------------------
Date: 11/30/98 Date: 11/23/98
--------------------------- -------------------------------
15
<PAGE>
ROYALTY SCHEDULE(BROKER DEALER)to
MASTER SERVICES AGREEMENT DATED November 23, 1998
THIS ROYALTY SCHEDULE dated November 23, 1998 between Multex Systems, Inc.
("Multex") and DAIN RAUSCHER INCORPORATED ("Company") is a Schedule to and a
part of the Master Services Agreement dated November 17, 1998 (the "Master
Agreement") between Multex and Company. All defined terms used herein and not
otherwise defined shall have the meanings set forth in the Master Agreement or
in the Electronic Contribution and Distribution Schedule of Services (the
Contribution Schedule ) between Company and Multex. In the event of a conflict
or inconsistency between the terms of the Master Agreement and the terms of this
Schedule, the terms of this Schedule shall control.
Multex and Company hereby agree as follows:
1) Company agrees that commencing 48 hours after the "Morning Notes" and 90 days
after the Industry Reports, and 7 days after all other Research was first
published or distributed in any medium by the Company (the "Embargo Period"),
Multex may market, license and sell the Research ("Embargoed Research") to
any third party including, but not limited to, retail customers which would
be individual consumers, and the Embargoed Research shall not be subject to
the entitlement provisions of Paragraph 3(c) of the Contribution Schedule.
The Embargoed Research may be sold alone or aggregated with the research of
other research contributors, and may be provided to third parties either
directly by Multex or through a Data Provider. Notwithstanding anything
herein to the contrary. Company may at its sole discretion elect not to
contribute certain Research documents to Multex for distribution by Multex
under this Addendum ("Excluded Documents"), provided, however, that the
Company will not contribute for electronic distribution such Excluded
Documents to any other vendor, including without limitation, any other
research or document distributor. The Embargoed Research shall be the same
Research contributed by Company under the Electronic Contribution and
Distribution Schedule executed contemporaneously herewith excluding industry
wide Reports.
2) Multex shall pay to Company the following royalties (the "Royalties"):
[****] of the Net Fees (as defined below) received by Multex in respect of
the sale or usage of the Company's Embargoed Research, whether such Embargoed
Research is sold separately by Multex or as part of an aggregated product
sold through a Data Provider.
"Net Fees" shall mean the gross revenues received by Multex for Embargoed
Research, less any discounts, allowances adjustments, distribution or pass
through fees, taxes or other charges paid or incurred by Multex in connection
with the Embargoed Research.
3) To the extent any third party is provided the Embargoed Research without a
fee for a period of time (not to exceed 60 days) ("Concession Period") as a
concession or promotion, then
-----------------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933,
AS AMENDED.
16
<PAGE>
Multex shall not be obligated to pay any Royalties during such Concession
Period and Royalties shall commence after the Concession Period has
terminated.
4) Royalties shall be paid quarterly in arrears, within 45 days after the end
of each quarter of each year of the Term (Initial Term plus any renewals of
this Schedule). Company shall receive a report with the Royalty payment
showing Multex's sales of Company's Embargoed Research and/or bird party
usage during the previous quarter.
5) During the Term of this Addendum and for a period of four (4) months
thereafter, Multex shall, upon reasonable notice from Company, make
available for inspection by Company's independent auditors ("Auditor") at
Multex's offices, Multex's bodies and records relating to Royalty payments
by Multex to Company, provided however, that Multex shall not be required to
submit to such audit more than once in any calendar year. During any such
audit, Multex shall dispose the identities of the Clients to the Auditors
solely on the condition that the Auditor not disclose such identifies to
Company.
MULTEX SYSTEMS INC.
Name: P. Callaghan Name: Mary Zimmer
---------------------------- ----------------------------
Title: CFO Title: Director DRW Finance
---------------------------- ----------------------------
and Administration
---------------------------- ----------------------------
Signature: /s/ P. Callaghan Signature: /s/ Mary Zimmer
---------------------------- ----------------------------
Date: 11/30/98 Date: 11/23/98
---------------------------- ----------------------------
17
<PAGE>
MULTEX EXPRESS SCHEDULE OF SERVICES
to
MASTER SERVICES AGREEMENT DATED November 23, 1998
THIS MULTEX EXPRESS SCHEDULE OF SERVICES dated November 23, 1998 between Multex
Systems, Inc. ("Multex") and DAIN RAUSCHER INCORPORATED (the "Company") is a
Schedule to and a part of the Master Services Agreement dated November 17, 1998
(the "Master Agreement") between Multex and the Company. All terms used herein
and not defined shall have the meanings set forth in the Master Agreement. In
the event of a conflict or inconsistency between the terms of the Master
Agreement and the terms of this Schedule, the terms of this Schedule shall
control.
Multex and the Company agree as follows:
1. Services: The Services to be provided under this Schedule consist of
--------
the design and development of a private label Company research and document web
site, both Internet and intranet, (the "Company Web Site(s)") and the electronic
distribution of the Documents to Users via the Company Web Site, as more
particularly described in this Schedule and the Fee Exhibit attached hereto.
The Company Web Site(s) will be co-branded with Multex's logo and will be
substantially similar in look, feel, navigation and function to Multex's
MultexNET research web site.
IT IS SPECIFICALLY UNDERSTOOD THAT THIS SCHEDULE SETS FORTH ALL OF THE SERVICES
TO BE PROVIDED BY MULTEX UNDER THIS SCHEDULE, AND THAT NO OTHER SERVICES,
SOFTWARE DEVELOPMENT, ENHANCEMENTS, MODIFICATIONS, SUPPORT CUSTOMIZATION OR
INTEGRATION ARE INCLUDED IN THE SERVICES COVERED BY THIS SCHEDULE.
2. Documents: The Documents covered by this Schedule are as follows:
---------
____ Internal Documents: The same Research contributed under the Electronic
Contribution and Distribution Schedule executed contemporaneously
herewith plus research contributed by Company's Private Client Group.
____ Sell Side Research: research reports and other documents received by the
Company from "Sell Side" brokers, excluding the research products or
other financial documents of Data Providers.
____ Third Party Documents: Research reports and other financial documents
received by the Company from Data Providers.
____ General Business/Marketing Materials: Any business documents such as
forms, marketing brochures or broadcast memos subject to Company's sole
discretion.
____ Other Documents (specify):
3. Term: The initial term ("Initial Term") of this Schedule and the
----
Services shall commence on the date of this Schedule and continue for a period
of three (3) years from the date
18
<PAGE>
that the Services are first provided to the Company (the "Commencement Date").
Thereafter this Schedule shall renew for successive one-year periods, unless
terminated by either party by written notice delivered at least 60 days prior to
the expiration of the Initial Term or any renewal period.
After the first year provided Company is not in default in payment of any Fees
and further provided Company pays Multex the discounts as set forth in the Fee
Exhibit attached hereto that Company was granted as a consideration of entering
into a three (3) year Term. Company may cancel this Schedule on at least thirty
(30) days prior written notice to Multex and neither party shall have any
further liability to the other under this Schedule.
4. Software/Hardware Requirements for the Services.
-----------------------------------------------
(a) Configuration. In order to access the Services, the Company must have the
following minimum configuration:
Hardware: 1 HP laserjet 4M or better printer or equivalent (for non-
--------
postscript printers 8 Meg of memory) is required.
Software: Netscape Navigator (3.0 or higher) or Microsoft Internet Explorer
--------
(3.02 or above) browser; TCP/IP; Windows NT or Windows 95 operating system.
For those stations using the Multex Contribution software, the operating
system must be Windows NT (4.0 or higher) or Windows 95.
Optional Equipment/Software: Based on the Company's network design, the
---------------------------
addition of proxy servers could optimize the usage of Company's internal
WAN and reduce the traffic across the line between the Company and Multex.
(b) Costs. All equipment, software and data communications facilities set
-----
forth above shall be provided by the Company at its sole expense. However,
in order to ensure compatibility and efficient installation, Multex after
receiving the approval of Company to any such expenditure will purchase and
supply the equipment and software required for the Services, and will
invoice the Company for all costs associated therewith. Company agrees to
pay such invoices within 30 days after receipt thereof.
5. Terms and Conditions.
--------------------
(a) Rights to Obtain Documents. The Company agrees to provide to Multex and
grants to Multex the non-exclusive right to obtain from the Company the
Internal Documents and the Sell Side Research. The Company further grants
to Multex the right to distribute the Documents to Internal Users and/or
External Users, all as more particularly described herein. The
distribution of Documents to Internal Users is hereinafter referred to as
"Internal Distribution", and the distribution to External Users, if
applicable, is hereinafter referred to as "External Distribution".
(b) Timely Contribution The Company will maintain, monitor, and provide for
the timely contribution of all Documents contributed by Company to Multex.
19
<PAGE>
(c) Costs. The Company shall be responsible for all costs associated with
distribution of the Documents within the Company. In addition, if the Sell
Side Research is not as of the date hereof being contributed to Multex for
Internal and/or External Distribution, then the Company will be responsible
for obtaining permission from and arranging for the contribution of the
Sell Side Research to Multex.
(d) Users. The Company will provide to Multex, in writing, the name, address,
fax and e-mail address of each User, with instructions regarding which
Document groups to entitle for each User. The Company shall designate
specific contacts for the purpose of providing entitlement information to
Multex. The Company shall be solely responsible for determining which
Users are to be entitled for the Services and for individual Documents
groups. In consideration of the User ID Administration Fee paid by Company
to Multex as set forth in the Fee Exhibit. Multex shall be responsible for
the administration of the entitlement system subject to the Company's
obligations as heretofore set forth. Multex's responsibilities shall be as
followers:
(i) to issue all User ID's for the Company in accordance with the
Company instructions issued by the Company designated persons;
(ii) to reset User ID's on request;
(iii) to generate reports to Company on a quarterly basis to be
mutually determined by Company and Multex showing User ID's used as well
as by individual broker, by branch, by ticker symbol and by viewing
source;
(iv) to provide training in User ID administration to designated Company
trainers.
(e) User Fees. The Company shall be responsible for invoicing and collecting
any fee which the Company charges Users for access to the Company Web Site.
(f) User IDs. Multex will create User ID's and associated passwords
(collectively, "User IDs") to be issued by the Company to Users. Multex
will provide the number of User ID's requested by the Company. If the
Services include External Distribution, then External User IDs may not be
issued to Internal Users or for Internal Distribution. User ID's will be
generated in a customized format as mutually agreed to by Multex and
Company at no extra charge. Each User ID shall be in effect for the entire
month in which it is issued; there shall be no prorating with regard to
User ID's.
(g) Sell Side Research. If the Documents include Sell Side Research, then
Multex will as part of the Service distribute the Sell Side Research to
Company, subject to the consent and approval of the brokers and any
restrictions or limitations imposed by the broker. The Company is
responsible for obtaining the approval of each broker for the Company to
(i) contribute the Sell Side Research to Multex and (ii) permit Multex to
distribute the Sell Side Research to Users. Once the approval referred to
in subsection (i) has been obtained Multex will cooperate with the Company
to set up and install the broker for contribution of its Sell Side research
to Multex.
20
<PAGE>
(h) Records/Audit. The Company will keep accurate books and records relating
to Users, Passwords and its use of the Services. During the term of this
Agreement and for a period of one (1) year thereafter, Company shall, upon
reasonable notice from Multex, but not more often than twice in any 12-
month period, make the Company's books and records or other materials
relating to the number of Passwords issued by the Company available for
inspection by Multex. In the event such audit reveals that additional fees
are due Multex, Company shall pay such fees within 10 days after notice.
(i) Co-Mingled Research. If the Documents include co-mingled broker or third
party research, then the Company may provide access to such co-mingled
research only to Internal Users.
6. Fees; Payments; Taxes.
---------------------
(a) Fees. The Fees for the Services are set forth in the Fee Exhibit attached
hereto.
(b) Payments. Except for the Fee set forth in 1 of the Fee Exhibit attached,
Multex shall invoice the Company for the Fees quarterly in advance and the
Company agrees a pay all invoices within 30 days after receipt by the
Company.
(c) Taxes. Company shall be responsible for and pay all taxes applicable to
the Services.
7. Service Guaranty.
-----------------
If Multex fails to provide the Services for more than two (2) consecutive hours
during any business day during the hours of 7 a.m. to 7 p.m. then for each hour
over said two hours during said day that such failure occurs, Company shall be
entitled to a credit against the next Fees due and owing equal to the total
monthly Fees multiplied by a fraction, the numerator of which is the number of
hours after the initial two hours and the denominator is 264 (Computed on the
basis of 22 business days a month with a 12 hour business day from 7 a.m. to 7
p.m.). Company may request a Service up-time report based on Company's or
Multex's knowledge of service down time.
MULTEX SYSTEMS INC.
Name: P. Callaghan Name: Marcia L. Hanson
--------------------------- ----------------------------
Title: CFO Title: Vice President
--------------------------- ----------------------------
Signature: /s/ Philip Callaghan Signature: /s/ Marcia L. Hanson
--------------------------- ----------------------------
Date: 11/30/98 Date: 11/24/98
--------------------------- ----------------------------
21
<PAGE>
Fee Exhibit
Services Cost
1. Initial site development setup fee (one time charge) [****]
This one time charge to be payable as follows: within 30 days of
invoice after commencement of production of the Company Web Site (s),
which includes the following:
(a) development of production website including necessary testing
and of Company feedback regarding the design and feel of website
to Company's satisfaction
(b) creation of Document groups and User groups as required
(c) entitlement of User groups to appropriate Document group(s)
(d) contributing of Company Research documents and other content to
Document groups
2. Unlimited User I.D.'s is subject to B and C below [****]
3. Annual Site License and Support Fee [****]
4. Annual Web Hosting Fee [****]
5. User ID Administration Fee [****]
6. Multex waives the Fees as set forth in paragraph 4 of the
Electronic Contribution and Distribution Schedule.
Total Fees for first year (excluding [****]) [****]
Recurring Annual Fees (excluding [****]) [****]
[****] on recurring web hosting [****]
[****] on recurring Annual Fees [****]
One Time Fee [****]
Total Yearly Recurring Fees (including [****]) [****]
A. The web hosting [****] and [****] as set forth above are granted with the
understanding that the Express Schedule shall be in effect for 3 years. If
the Express Schedule is terminated
- ------------------------------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.
22
<PAGE>
prior to expiration of the Initial Term for any reason other than Multex's
default, then Multex shall be entitled to repayment of the total discounts as
part of its damages.
B. User ID's are limited to clients and employees of the Company as the Company
is currently constituted. In the event of a merger or acquisition in which
the client base or employee base of the Company is materially increased, then
Multex reserves the right to renegotiate a new annual Fee for 2 above which
shall be mutually agreeable to both parties.
C. In the event that the total number of User ID's reach a level where the
aggregate use of Multex's system resources results in a measurable decrease
in performance which is significant to Multex or the Company, then Company
shall be responsible for the purchase of additional hardware, software and/or
telecommunications line capacity in order to restore performance of the
Services to levels which are mutually satisfactory. Such additional
purchases shall be subject to the Company approving the invoices in advance
and said invoices shall reflect the actual cost to Multex of the purchases
plus a 10% administrative charge.
23
<PAGE>
Exhibit 11.1
Multex.com, 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 1,379,583 273 1,379,583
Exercise of options..... 1/1/97 2,500 273 2,500
1/2/97 1,250 272 1,245
1/6/97 8,333 268 8,180
1/28/97 2,083 246 1,877
3/11/97 3,750 204 2,802
3/21/97 833 194 592
7/25/97 68 5,189
8/25/97 37 508
Stock issued for servic-
es..................... 4/17/97 833 167 510
--------- ---------
September 30, 1997...... 1,423,748 1,402,986 (7,893,253) (5.63)
========= =========
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 1,630,000 273 1,630,000
Exercise of options..... 1/2/98 1,667 272 1,661
1/20/98 8,333 254 7,753
3/9/98 8,333 206 6,288
</TABLE>
<PAGE>
<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>
4/1/98 87,917 183 58,933
4/12/98 29,167 172 18,376
4/16/98 14,167 168 8,718
4/17/98 1,667 167 1,020
4/22/98 2,083 162 1,236
4/23/98 2,083 161 1,228
4/27/98 2,083 157 1,198
4/28/98 2,500 156 1,429
4/29/98 5,417 155 3,076
4/30/98 25,000 154 14,103
5/1/98 3,750 153 2,102
5/14/98 3,333 140 1,709
5/20/98 11,250 134 5,522
5/22/98 10,833 132 5,238
5/25/98 167 129 79
5/29/98 833 125 381
6/5/98 8,333 118 3,602
6/6/98 2,500 117 1,071
6/18/98 750 105 288
6/24/98 625 99 227
6/25/98 33,334 98 11,966
6/26/98 10,708 97 3,805
6/27/98 8,333 96 2,930
6/28/98 20,000 95 6,960
6/29/98 36,834 94 12,683
6/30/98 417 93 142
Sale of stock in
connection with
acquisition of certain
assets of Multex Data
Group, Inc. ........... 3/27/98 50,000 188 34,432
--------- ---------
September 30, 1998...... 2,022,417 1,848,156 (8,190,825) (4.43)
========= =========
</TABLE>
2
<PAGE>
Exhibit 21.1
Multex Systems International (Delaware)
Multex Data Group, 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 January , 1999, in the Registration Statement (Form S-1 No. 333-
) and related Prospectus of Multex.com, Inc.
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 and the requisite Board and stockholder
approval of the name change described in Note 13 to the financial statements.
Ernst & Young LLP
New York, New York
January 15, 1999
<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> (25,700)
<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> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<CASH> 5,307
<SECURITIES> 0
<RECEIVABLES> 2,689
<ALLOWANCES> 125
<INVENTORY> 0
<CURRENT-ASSETS> 222
<PP&E> 6,274
<DEPRECIATION> 4,052
<TOTAL-ASSETS> 10,439
<CURRENT-LIABILITIES> 5,017
<BONDS> 0
39,243
0
<COMMON> 20
<OTHER-SE> (32,273)
<TOTAL-LIABILITY-AND-EQUITY> 10,439
<SALES> 9,321
<TOTAL-REVENUES> 9,321
<CGS> 2,129
<TOTAL-COSTS> 2,129
<OTHER-EXPENSES> 12,606
<LOSS-PROVISION> 125
<INTEREST-EXPENSE> 360
<INCOME-PRETAX> (6,216)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,216)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,216)
<EPS-PRIMARY> (.68)
<EPS-DILUTED> (.68)
</TABLE>
