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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
COMMISSION FILE NUMBER 0-24559
MULTEX.COM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 22-3253344
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
100 WILLIAM STREET, 7th FLOOR
NEW YORK, NEW YORK 10038
(212) 607-2400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock $.01 par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[X] Yes [] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
[ ] Yes [] No
The aggregate market value of voting stock held by non-affiliates of the
registrant as of March 6, 2000 was $603,273,823 (based on the last reported sale
price on the NASDAQ National Market on that date). The number of shares
outstanding of the registrant's common stock as of March 6, 2000 was 28,729,181.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents (or parts thereof) are incorporated by reference into
the following parts of the Form 10-K:
Certain information required in Part III of this Form 10-K is incorporated from
the registrant's Proxy Statement for its 2000 Annual Meeting of the
Stockholders.
The registrant's Annual Report on Form 10-K for the fiscal year ended December
31, 1999, as filed with the Securities and Exchange Commission on March 30,
2000, is hereby amended and restated in its entirety.
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MULTEX.COM, INC.
1999 FORM 10-K/A ANNUAL REPORT
TABLE OF CONTENTS
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PART I ....................................................................................................3
ITEM 1. BUSINESS............................................................................................3
ITEM 2. PROPERTIES.........................................................................................21
ITEM 3. LEGAL PROCEEDINGS..................................................................................22
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................................................22
PART II ...................................................................................................22
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS PRICE RANGE OF COMMON
STOCK..............................................................................................22
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA...............................................................23
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..............24
Item 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.........................................36
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...........................................50
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE...............50
PART III ...................................................................................................50
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.................................................50
ITEM 11. EXECUTIVE COMPENSATION.............................................................................54
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.....................................61
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.....................................................63
PART IV ...................................................................................................66
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K....................................66
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THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS BASED ON OUR CURRENT
EXPECTATIONS, ASSUMPTIONS, ESTIMATES AND PROJECTIONS ABOUT MULTEX.COM AND OUR
INDUSTRY. THESE FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES.
MULTEX.COM'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN
SUCH FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, AS MORE FULLY
DESCRIBED IN THIS SECTION AND ELSEWHERE IN THIS REPORT. MULTEX.COM UNDERTAKES
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.
PART I
ITEM 1. BUSINESS
Multex.com, Inc. (www.multex.com) is the Internet's leading financial e-
marketplace connecting buyers and sellers of financial services and information.
Multex.com is a global company that provides information and commerce enabling
technology and infrastructure, application services, Web hosting and online
community services to the major financial marketplace participants: brokerage
firms, investment banks, corporations, and individual and institutional
investors. Our services enable timely online access to over 2 million research
reports and other investment information on over 26,000 companies. These
reports are published by approximately 700 investment banks, brokerage firms and
third-party research providers worldwide. In the United States, we offer
research reports from 20 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, we offer research reports from 20 out of the 20 leading investment banks
and brokerage firms, as ranked by the Reuters Tempest survey, and in Asia, we
offer research reports from 20 out of the 20 leading investment banks and
brokerage firms, as ranked by Asia Money. Through various arrangements, more
than 3,000,000 individual investors, institutional investors and financial
professionals, including mutual funds managers, portfolio managers, brokers and
their clients, are able to use 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 institutional market and the
individual investor market.
For the individual investor market, Multex Investor is an Internet service
targeting the rapidly growing individual investor market. Multex Investor is an
interactive community for individual investors. Visitors to Multex Investor can
join as a "member" at no cost. Members of Multex Investor have free 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. As of December 31, 1999, we had over 1
million members of Multex Investor. We have established a number of strategic
distribution relationships to promote Multex Investor, including a strategic
distribution relationship with America Online to serve as the anchor tenant for
brokerage research on the AOL Personal Finance channel. America Online is also
a recent investor in Multex.com. In addition, we have established
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distribution relationships for Multex Investor with other Internet portals and
financial sites, including The Wall Street Journal Interactive, CNNfn, CBS
MarketWatch, Yahoo!, Intuit, and Quote.com.
On September 23, 1999, Multex.com acquired Market Guide Inc. Market Guide
compiles, integrates and distributes accurate, timely and objective corporate
and financial information on over 13,000 publicly traded corporations for
dissemination over the Internet and other distribution channels. Under the
terms of the acquisition, one share of Multex.com's common stock was exchanged
for each outstanding share of Market Guide stock. Multex.com issued
approximately 4.9 million shares of its common stock and assumed options to
purchase approximately 680,000 shares.
Industry Overview
In recent years, there has been substantial growth in the ownership of
equity and fixed income securities worldwide. The Investment Company Institute
reports that the percentage of US households owning stock directly, or through
mutual funds, rose from 19% in 1983 to 48% in 1999, a 153% increase. 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.
Individuals are showing strong preferences for transacting various 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 these
transactions can be faster, less expensive and more convenient than transactions
conducted through a human intermediary. We believe that these trends evidence a
fundamental change in the way many individual investors manage their financial
assets. As individual investors seek to independently manage their financial
assets, these investors are increasingly looking for investment research and
other financial reports online.
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
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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--including detailed company
information, Securities and Exchange Commission filings, 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 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 is inefficient because it not only
requires the recipient to open and view the e-mail messages, but it also lacks a
way for the recipient to differentiate one message from another. Also, e-mail
messages cannot be easily 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.
The Multex.com Solution
Our investment research and financial information services provide users
with online access to a wide range of research and other investment information
from corporations, leading investment banks, brokerage firms and third-party
research providers worldwide. Our 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 our 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, we enable 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. Our
services provide the following key benefits:
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Extensive Database of Research and Financial Information. We provide
investors with access to extensive online databases of research reports,
fundamental financial data and other investment information on over 26,000
companies. We typically add reports to our database at the rate of more than
20,000 new reports each week. Research reports in our database include all
text, charts, graphs, tables, color and document formatting contained in the
original report. We continually update and maintain our database of detailed
financial and corporate data on almost every publicly-traded US corporation.
For some of our customers, we also provide access to delayed stock quotes and
real-time Securities and Exchange Commission filings as part of their
subscription.
Efficient, Cost-Effective Research Distribution. We enable 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. Our
services permit research to be distributed to multiple locations simultaneously.
By using these services, research providers can target investors worldwide,
monitor investor requests for research reports and determine who has accessed
their reports. Because our services are distributed over the Internet or
intranets, research providers save printing and mailing costs and can more
easily target their research to their customers. Our services are password-
protected and research included in our database can be accessed only by
authorized users.
Comprehensive Search Capabilities. We have incorporated extensive search
capabilities into our 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. We also enable users to
create searchable, customized research profiles and portfolios, to further
facilitate finding and retrieving the document.
Ease and Efficiency of Use. Our services are designed to facilitate the
electronic contribution and online distribution of investment research, as well
the efficient dissemination of financial and corporate data over the Internet.
Our proprietary software allows sell-side research departments and third-party
information providers to easily contribute research reports, financial models,
graphic presentations and other documents in real-time directly to our database.
Research providers can use existing word processing and desktop publishing
software, including 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, our proprietary technology
incorporates a graphical user interface and provides access through leading
browser technologies to simplify finding, retrieving, viewing and printing
research reports.
Strategy
Our objective is to be the leading provider of online investment research,
financial information and related technology services for the individual and
institutional investment community. We use leading Internet technologies to
provide a unique, integrated platform for
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the efficient distribution of investment research and financial information
worldwide. The following are the key elements of our strategy:
Provide Extensive Investment Research and Financial Information. We intend
to continue to leverage our success as an investment research and financial
information source for institutional and individual investors. We continuously
target leading investment banks and brokerage firms in an effort to add their
research to our research database. Through our acquisition of Market Guide we
now have the ability to provide accurate, timely and objective financial,
descriptive and other information on publicly-traded corporations. Through our
Multex Data Group subsidiary, we also now are able to provide proprietary
earnings estimates. By establishing relationships with other third-party
providers of investment and financial information, including Morningstar,
Standard & Poor's, ValueLine, Quote.com and others, we can offer extensive
third-party investment research and information. We believe that by continually
incorporating additional sources of investment and financial information into
our database, we will be well positioned to become the premier source of high-
value investment information.
Expand Distribution Channels. We employ a broad array of distribution
channels for our services and are continuously identifying and developing new
channels. For distribution of investment research into the institutional
investor market, we have entered into agreements with leading third-party
distributors, including Bloomberg, Disclosure, Dow Jones and Reuters. In order
to enhance the distribution of investment research to individual investors, we
have entered into an agreement with America Online to be an anchor tenant on the
investment research area within the AOL Personal Finance channel, and have also
entered into agreements to distribute our services with a number of leading
Internet-based financial Web sites and distributors, including Yahoo!, CNNfn,
Data Broadcasting Corporation, which includes CBS MarketWatch, Disclosure, and
TheStreet.com. Through our acquisition of Market Guide, we distribute detailed
corporate and financial information to over 135 Web sites and information
service vendors, including, Yahoo!, America Online, Ameritrade, Charles Schwab,
E*Trade, the Motley Fool, Reuters, Business Wire and FactSet.
Increase Awareness of the Multex.com Family of Brands. We believe that
increasing the brand name awareness of Multex.com and our services in the
financial community will contribute to our future success. We have successfully
built a brand name among institutional investors, research providers and the
consumers of financial information and are targeting our marketing efforts to
expand the recognition of our brand names through advertising, direct mail,
trade shows, seminars and conferences as well as joint marketing initiatives
with information providers and distributors. We seek to incorporate our branded
logo on each Web site that utilizes our information or technology to increase
the brand name awareness of the Multex.com family of brands.
Target Individual Investor Market. Through Multex Investor, we are
targeting the expanding individual investor market. We intend to expand our
related sales and marketing efforts in order to increase traffic on Multex
Investor and expand our member base. In addition, to address the individual
investor market, we intend to capitalize on our arrangements with America
Online, The Wall Street Journal Interactive, CNNfn, CBS MarketWatch, Yahoo!,
Intuit, Quote.com, Hoover's and EDGAR Online, and to develop links to Multex
Investor from other
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leading Internet portals and personal finance Web sites. We are also seeking to
expand the amount of research available to individual investors on Multex
Investor from leading investment banks and brokerage firms. We believe that
Multex Investor will significantly increase individual investors' access to
institutional quality research and enhance our position as a leading online
provider of this research.
Extend Global Presence. To provide U.S. and foreign investors with access
to financial information and investment research obtained from corporations or
prepared by leading investment banks and brokerage firms throughout the world,
we target international corporations, contributors and subscribers from our
headquarters in New York, and from offices in London and Hong Kong. We intend
to open offices in other leading financial centers. We believe 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 corporations, 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. We intend to continuously develop and
incorporate new technologies to enhance our services. We intend to maintain our
leadership position by continuing to improve our technology through investment
in research and development activities, use of new Internet, intranet and
extranet technologies and integration of each of our services. In particular,
we are extending the available document formats to support spreadsheets,
presentation applications, HTML-based pages, URL references, XML forms and audio
and video files. We are currently developing intelligent categorization, which
provides context and "learning" from the publishing habits of over 35,000
analysts. Using our technological capabilities and expertise, we focus on
enhancing our scalable and open architecture. Our architecture is based on
industry leading software, hardware and communications components, together with
in-house built applications, protocols, systems and tools.
Focus on Multiple Revenue Opportunities. We continue to pursue multiple
revenue opportunities for future growth with a particular focus on establishing
a recurring revenue stream from licensing fees, subscriptions and development,
maintenance and hosting fees. We believe that subscriptions, license fees, pay-
per-view transactions, advertising and development and other professional
service fees represent key opportunities. By expanding the number of research
providers and the scope of financial and corporate information available, we
believe that we can generate additional revenue from new and enhanced services.
In addition, we believe that by targeting individual investors and corporations,
we may be able to increase the pay-per-view revenues from Multex Research-On-
Demand and Multex Investor. We expect to continue to increase advertising,
sponsorship and other revenue from Multex Investor, marketguide.com and our
other Web sites. We also expect continued revenue growth from our MultexEXPRESS
Web site development and hosting products.
Services
The following table sets forth information concerning our principal service
offerings:
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Multex.com Service Offerings
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Name of Service Description Target Market
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MultexNET Access to real-time, commingled Buyside institutions and corporations
research
MultexEXPRESS Development, hosting and real-time Sellside investment banks and
distribution of research and other brokerage firms, buyside
information on customized Web sites institutions, and other financial
for institutional clients services companies
Multex Access to commingled, pay-per-view Corporations, financial institutions
Research-On-Demand research on a delayed basis and advisors, institutional
investors, other professional service
firms and libraries
Multex Investor Financial destination Web site with Individual investors
access to free and pay-per-view
research on a delayed basis, as
well as other financial data
Market Guide Financial and corporate information Financial institutions, institutional
database and reports on over 13,000 publicly investors, corporations, Web sites,
traded companies individual investors and other
consumers of financial information
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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. Over
11,000 mutual fund managers, portfolio managers and other institutional
investors, as well as research analysts and other financial services
professionals, are able to use MultexNET, which offers timely online access to
over 2,000,000 research reports and other investment information from
approximately 700 information providers. Subscribers to MultexNET are offered
advanced searching and filtering capabilities, and the ability to retrieve
investment research reports over the Internet. Our proprietary software enables
us to distribute a particular research or other financial report only to those
users who have been authorized or entitled to access the 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 these reports through Multex Research-On-Demand on a pay-per-
view basis after the typical 15-day embargo period has ended.
Features of MultexNET include real-time access to high-quality multimedia
and rich text research reports, the ability to utilize advanced searching
features which permit searches by
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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. We also provide access to delayed
stock quotes and real-time filings with the Securities and Exchange Commission
filings as part of the MultexNET subscription. In addition, subscribers may
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 our servers and made available through the Internet.
MultexNET requires subscribers to have an Internet connection, or a connection
to an extranet maintained by us, 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 is our applications service provider business ("ASP") that
enables investment banks, brokerage firms and other financial institutions to
distribute their own proprietary financial research, as well as 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 actually access 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 70 investment banking and brokerage
firms, with more than 1,500,000 users at December 31, 1999. This compares to 18
MultexEXPRESS installations, with more than 500,000 users at December 31, 1997.
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.
Multex Research-On-Demand
Multex Research-On-Demand gives corporations, financial institutions and
advisors, institutional investors, other professional service firms and
libraries, the ability to access more than 750,000 research reports and other
information from over 400 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 employees and customers. This service is
available either on a stand- alone basis, through strategic distribution
channels or as a part of MultexNET, MultexEXPRESS or Multex Investor. While the
majority of the reports available on Multex Research-On-Demand relate to U.S.
equities and investment opportunities, we are 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 criteria. 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, including Standard & Poor's, Disclosure and Value Line Mutual Fund
Survey, is also available for purchase, as well reports from the Market Guide
database. 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 $10.00 to $300.00, based on the length and type of document. We
share the pay-per-view fees generated from the sale of documents with the
investment bank, brokerage firm or third-party research provider that authored
the original research report, and the distributor through which the purchase was
initiated. There is no registration or subscription fee for use of this
service. Some of our users have purchased an annual subscription that enables
them to purchase individual research reports at a discounted price. We are also
adding analysis from leading third-party advisory services.
Multex Investor
Multex Investor is an Internet service targeting the rapidly growing
individual investor market. Multex Investor is an interactive community for
individual investors. Visitors to Multex Investor can join as a "member" at no
cost. Members of Multex Investor can download, view and print at no cost a wide
range of investment research reports and investment content from us, sponsoring
brokerage firms and investment banks, as well as member-generated content.
Members also have access to over 500,000 premium "pay-per-view" investment and
brokerage research reports from over 300 brokerage firms, investment banks and
third-party information providers. We have established a number of strategic
distribution relationships to promote Multex Investor, 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, we have
established distribution relationships for Multex Investor with other Internet
portals and financial sites, including The Wall Street Journal Interactive,
CNNfn, CBS MarketWatch, Intuit and Quote.com.
We generate revenue from Multex Investor through the sale of sponsorships
to 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
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other financial reports. To date, we have signed sponsorship agreements with
Merrill Lynch, Salomon Smith Barney, Prudential, Morgan Stanley Dean Witter,
Robertson Stephens, J.P. Morgan and Gruntal & Co.
Market Guide database
Market Guide acquires, integrates, condenses and publishes accurate, timely
and objective financial, descriptive and other information on publicly-traded
corporations. Market Guide markets this information along with proprietary
software to the professional and individual investment communities, through the
Internet (www.marketguide.com) and other distribution channels in a cost-
-------------------
effective manner. Market Guide maintains one of the largest U.S. public company
databases with over 13,000 companies traded on the major U.S. markets. Market
Guide has also created widely used and well-regarded proprietary industry and
sector groupings and assigns companies to these industries and sectors. Market
Guide then adds value by computing ratios, peer group comparisons, growth rates
and other statistics, which are presented as fielded information in various time
tested report formats that follow a recommended analytic process and are
supported by extensive educational content. Market Guide also has a historical
database of daily pricing and other information going back to 1983 and a new
product providing business description, officer and director information and
business and geographical segment information.
Market Guide adds value and distinguishes itself from competition by its:
. flexible database design which presents financial statements in the
same detail as issued by each corporation. This gives users important
insights no available in competitive databases, thereby enabling them
to make better informed investment decisions;
. mapping the financials into standardized formats to allow consistent
calculations and cross company comparisons;
. inclusion of auxiliary information such as earnings estimates, price
performance, relative price performance, summary insider and
institutional ownership statistics, bond ratings, corporate profile
information and short interest statistics, giving users a complete
perspective on each company;
. calculation of over 500 popular financial ratios, growth rates and
averages computed for the users' convenience; and
. carefully planned, market tested display formats, including company to
industry and sector comparisons, that allow users to quickly and
efficiently make considered investment decisions.
The targeted markets for Market Guide's data and related products include
investment managers, investment research departments, financial planners,
investment counselors, investment bankers, banks, stockbrokers and brokerage
firms, individual investors, financial Web sites and other Internet sites.
12
<PAGE>
Other Services
Through Multex Data Group, we maintain an earnings estimate database and
generate related, proprietary financial reports, which are resold through
various distributors. These reports, which combine information from our
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 Multex Investor, and may be offered in the future on a subscription basis.
Research and Information Providers
We have dedicated substantial resources to develop relationships with an
extensive range of domestic and international investment banks, brokerage firms
and third-party research providers, and we have a dedicated sales force which is
continually recruiting research providers. We manage our relationship with each
major research provider through our staff of account representatives.
Set forth below is a representative list of our research and information
providers:
Selected North American Information Providers
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO Chicago Corporation J.P. Morgan Securities Raymond James & Associates*
A.G. Edwards & Sons* Janney Montgomery Scott* Robinson-Humphrey*
Robertson Stephens* Jefferies & Co.* Salomon Smith Barney*
Bear Stearns & Co. Inc.* Legg Mason Wood Walker* Sanford Bernstein
Brown Brothers Harriman* Merrill Lynch* Schroder & Co., Inc.
BT Alex. Brown* Morgan Keegan & Company* SG Cowen*
CIBC World Markets* Morgan Stanley Dean Witter* U.S. Bancorp Piper Jaffray*
CS First Boston NationsBanc Montgomery Securities Warburg Dillon Read*
Dain Rauscher Wessels* PaineWebber Wedbush Morgan Securities, Inc.*
Goldman Sachs & Co. Prudential Securities* William Blair & Company*
Gruntal & Co.* Ragen McKenzie* WIT Soundview*
Hambrecht & Quist*
ING Barings
J.C. Bradford & Co.* Associates*
Selected International Information Providers
ABN AMRO Commerzbank AG Dresdner Kleinwort Benson
Alfred Berg Credit Lyonnais Europe* Fox Pitt, Kelton*
Auerbach Grayson* Credit Suisse First Boston Goldman Sachs International
Bankers Trust Australia Limited Daiwa Institute of Research Ltd.* HSBC James Capel
Cazenove & Co. Deutsche Morgan Grenfell Indosuez WI Carr*
Clarion Securities
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ING Barings PaineWebber International* Salomon Smith Barney
Jardine Fleming Holdings Ltd. Paribas Santander Investment Securities*
JP Morgan Securities Ltd. Prudential-Bache International Limited* SBC Warburg Dillon Read
Merrill Lynch International* RBC Dominion Securities Inc. Schroder Securities Limited*
Morgan Stanley International Robert Fleming & Co. SG Securities PTE
Union Bank of Switzerland
Yorktown Securities*
Selected Third-Party Information Providers
Baseline* Instinet Research* The Red Chip Review*
CNBC/Dow Jones* IPO Maven* Value Line*
Duff & Phelps Credit Rating* Renaissance Capital* Wall Street Transcript*
Gartner Group* SNL Securities* ZONA Research*
Standard & Poor's*
</TABLE>
- ----------------------
* Also provides research and information for Multex Research-On-Demand
Customers
Multex.com 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 9,000 financial institutions and corporations,
MultexEXPRESS is used by 45 of the world's leading brokerage firms, and
thousands of users access Multex Research-On-Demand. Multex Investor, which was
launched in November 1998, had more than one million registered members as of
December 31, 1999.
Set forth below is a representative list of our institutional customers:
<TABLE>
<CAPTION>
<S> <C> <C>
AIM Advisors Dresdner/RCM Global Investors Heidrick & Struggles
Alliance Capital Management Ernst & Young Hewlett-Packard
Arthur Andersen & Company Fidelity Capital Markets Management Invesco Asset Management
AXA Fleet Investment Advisors--Equity Partners J.C. Bradford & Co.
Robertson Stephens Franklin Research and Development J.P. Morgan Asset Management
Barclays Global Investors Gabelli Asset Management Jefferies & Co.
BT Alex. Brown GE Capital John Hancock Advisors
Carson Group Goldman Sachs & Co. Kleinwort Benson Investment
Citibank Global Asset Management Gruntal & Co. Legg Mason Wood Walker
Dain Rauscher Wessels McKinsey & Co.
Delaware Management Merrill Lynch Asset Management
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Morgan Stanley Asset Management Ragen McKenzie Schroeders Investment Management
Oppenheimer Funds Salomon Smith Barney Asset Management T. Rowe Price
PaineWebber SBC Warburg Dillon Read UBS Securities
Piper Jaffray SG Cowen Vanguard
Putnam Investments WIT Soundview
</TABLE>
Strategic Distribution Relationships
Multex.com has established a number of strategic distribution relationships
to provide marketing and additional distribution for its services, to build
traffic on our Web sites and to increase investor awareness of our services and
the Multex.com brand name. These strategic relationships target both
institutional investors and individual investors.
We have entered into agreements and strategic relationships with Bloomberg,
Bridge, Disclosure, Dow Jones, FactSet and Reuters to assist us in marketing our
services to institutional investors. In each case, we share 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. On January 1, 1999
we renewed our strategic relationship with Reuters for a five-year term. See
"Certain Relationships and Related Transactions."
In order to enhance the distribution of investment research to the
individual investor market, we have entered into an agreement with America
Online. This agreement is for an initial two-year term and is automatically
renewable unless either party gives advance notice of its intention not to
renew. Under our agreement with AOL, we have secured a position as an anchor
tenant for brokerage research on the AOL Personal Finance channel as well as
integrated links on other screens within the AOL service, with links from those
locations back to Multex Investor.
In addition to the strategic relationships described above, we have entered
into agreements with numerous other distributors, including Yahoo!, Big Charts,
CBS Marketwatch, CNNfn, Hoover's, Intuit, Quote.com, Bloomberg, SmartMoney.com
and Ziff Davis Interactive Investor, as well as 300 affiliates, to further
attract traffic to the Multex Investor and our other Web sites.
Sales and Marketing
Multex.com's sales organization grew from 19 professionals at the end of
1998 to 54 by year-end 1999. Our sales force is organized into geographic teams
focused on sales of all Multex.com product lines. There are eight teams in
North and South America, four teams in UK/Europe and one in Asia. For each of
our business units, a senior sales executive is responsible for insuring that
every geographic team contains the professional sales personnel capable of
developing sales presentations, demonstrating our products and services, and
executing a complete successful sales cycle.
15
<PAGE>
Currently, our sales personnel are located in our offices in New York and
London, and recently our new Hong Kong office. Our plans include expanding sales
personnel into our San Francisco office, and into Tokyo.
In addition to our direct sales efforts, Multex.com's services continue to
be sold over a growing number of third-party channels, including Reuters,
Bloomberg, Factset, and Disclosure, collectively reaching individual and
institutional investors around the world. We believe that our presence on these
channels also serves as a significant and continuous source of marketing for our
services and the Multex.com brand name.
Supporting our sales force is our marketing organization of five Multex.com
professionals who leverage their significant skills by working with a total of
six outside creative, public relations, investor relations and advertising firms
representing 32 account team members at those firms. Our marketing in 1999
included virtually every kind of campaign in every media type both in the U.S
and the UK. We launched a full calendar of Internet, television, radio, direct
mail, outdoor, and print advertisements. We also hosted and participated in
trade shows and conferences, and our executives frequently appeared on financial
television shows as well as a wide variety of panel discussions. Our
concentration on editorial placement paid off with hundreds of articles and
mentions in magazines and other press around the world. We continued to utilize
our Web sites to create awareness, generate leads and sell services. The
Multex.com Web sites (www.multex.com, www.multexinvestor.com,
-------------- ----------------------
www.marketguide.com ) as well as our co-branded affiliate Web sites are
- -------------------
continually updated with new information about our products and services, and
provide links and other registration opportunities for our prospects as well as
our clients' prospects. And finally, our ASP business continues to gain global
branding benefits from the "Powered by Multex.com" logo which is displayed on
the MultexEXPRESS Web sites which we host for our clients and is seen by
hundreds of thousands of their end users.
Research and Development
Our future success will depend upon our ability to maintain and develop
competitive technologies, to continue to enhance our current services and to
develop and introduce new services in a timely and cost-effective manner that
meets changing conditions, including evolving customer needs, new competitive
service offerings, emerging industry standards and rapidly changing technology.
We have a dedicated research and development organization that develops new
features and functionality for our 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, 1999, we had 66
employees engaged in research and development. Research and development
expenses were $6.3 million in 1999, $3.2 million in 1998 and $2.9 million in
1997. We expect to continue making substantial expenditures on research and
development in the future.
The market for the electronic distribution of investment research and
related services 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
16
<PAGE>
introductions and enhancements. There can be no assurance that we 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
individual and institutional investors. Any failure by us 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 our services and would have a material and adverse effect
on our business, results of operations and financial condition. See "Risk
Factors-- Multex.com's business would be materially and adversely affected if
the emerging market for online investment research does not continue to grow."
Customer Service and Network Support
Multex.com is committed to providing a high level of service and support to
its customers. Because our services are available to users 24 hours-a-day, 7
days-a-week, our network support services are likewise continuously available.
Our New York Customer Service Center is generally available 24 hours-a-day
Sunday evening through Friday evening. We also have a Customer Service Center
in London which is generally available from 7 a.m. until 6 p.m. Monday through
Friday. Inquiries come in through our Web sites and via e-mail and telephone.
At December 31, 1999, we had 27 employees engaged in customer service and
network support.
System Architecture and Technology
We believe that our system architecture and proprietary technology provide
us with an important competitive advantage. We use only open standard
components, including Microsoft Windows NT, Microsoft Internet Information
Server, Microsoft SQL Server and Fulcrum Server. The infrastructure of our
production site is built to provide continuous availability of service to both
contributors and users 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. Our infrastructure
is scalable, allowing us to quickly adjust to our expanding client and research
information database.
Our operations are dependent on our ability to maintain our computer and
telecommunications systems in effective working order and to protect our systems
against damage from fire, natural disaster, power loss, telecommunications
failure or similar events. We operate two data centers in downtown Manhattan,
one at 33 Maiden Lane and the other at 100 William Street. In addition, Multex
is building a new, state-of-the-art data center, to replace the one at Maiden
Lane. This new data center will be five times larger than the one it is
replacing. This measure will not eliminate the significant risk to our
operations from a natural disaster. In addition, any failure or delay in the
timely transmission or receipt of feeds and computer downloads from our
information providers, due to system failure of the information providers, the
public network or other failures, could disrupt our operations.
Competition
The market for the electronic distribution of investment research and
related services is intensely competitive and this competition is expected to
continue to increase. We believe that our ability to compete will depend upon
many factors both within and beyond our control,
17
<PAGE>
including continuing 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. Further, we encounter direct and indirect competition from a number of
sources, including traditional media, companies that provide investment
research, including investment banks and brokerage firms, many of whom 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, Value Line investment research reports, Media General
Financial Services and Disclosure, all of which are available from public
libraries, on the Internet and from the companies to which these reports relate,
and industry research appearing in financial periodicals.
We believe 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 this 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. We believe 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. We believe that the
principal competitive factors in attracting advertisers will include the number
of subscribers, the demographics of these subscribers and the "pre-
qualification" features that can be offered to investment banks and brokerage
firms. There can be no assurance that we will be able to compete favorably with
respect to these or any other competitive factors.
Our MultexNET and Multex Research-On-Demand services compete with large and
well-established distributors of financial information, including First Call,
Investext and I/B/E/S. Our MultexEXPRESS service competes with services
provided by in-house management information services personnel and independent
systems integrators. Our Multex Investor service competes with Web sites that
offer personal finance information, including Microsoft Investor and Yahoo!
Finance, and Web sites hosted by investment banks and brokerage firms, such as
DLJ Direct and Prudential Securities, offer a particular firm's research reports
online either exclusively to their customers or more generally to the public.
Numerous other competitors, including 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 our services. Many of our existing
and prospective competitors have longer operating histories, greater name
recognition, larger customer bases and significantly greater financial,
technical and marketing resources than we do. As a result, they may be able to
respond more quickly to new or emerging technologies and changes in investor
requirements, or devote greater resources to the development, promotion and sale
of their services than we can. These 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--
Multex.com's business could be materially and adversely affected by increased
competition."
18
<PAGE>
Intellectual Property
Our future success will depend, in significant part, on our intellectual
property, and we rely upon copyright, patent, trade secret and trademark laws in
the United States and other jurisdictions to protect our proprietary rights. We
own copyrights in the computer software and online materials that we have
developed or acquired, and currently hold limited licenses to use and distribute
software in which third parties own copyrights, including software for
electronic document and database management. We have also entered into limited
license agreements with the majority of the investment banks, brokerage firms
and other third-party research providers that own the copyrights in research
reports that we distribute electronically. We distribute other research reports
without the benefit of written licenses with the providers of those reports,
solely on the basis of implied licenses that we believe these providers have
granted. There can be no assurance that we will be able to maintain our
licenses for research content or of third-party software, that we will be able
to obtain these licenses in the future on commercially reasonable terms, if at
all, that we will be able to continue to distribute those research reports for
which we do not have written licenses or that our competitors will not be able
to independently develop competing software or on-line materials that avoid
infringing our copyrights. Also, because none of our licenses of third-party
software and research content are exclusive, this software and content is and
will be available to our current and future competitors. Failure on our part to
protect or secure ownership of, or to maintain licensed rights to use and
distribute software and content of others, and the ability of our competitors to
obtain rights to distribute the same research reports that we distribute, could
have a material and adverse effect on our business, results of operations and
financial condition.
We have been issued U.S. patents which claim certain aspects of an
information delivery and authentication system that provides entitlement and
electronic distribution of research documents over the Internet. These patents
expire in 2016 and 2017. We have filed applications for four additional U.S.
patents covering various aspects of our core technology. We have also filed
patent applications under the international Patent Cooperation Treaty and in
Canada and the United Kingdom corresponding to our US patents and patent
applications. There can be no assurance that any of our pending patent
applications will be allowed, that any patents will be issued to us even if the
respective applications have been or will be allowed, or that any patents that
are issued to us will not be successfully challenged by others or invalidated
through agreements with employees, representatives, advisors and others. We also
rely on trade secrets and proprietary know-how for certain unpatented aspects of
our business information and technology. To protect such information, we
generally require all employees, consultants and licensees to enter into
confidentiality agreements limiting the disclosure and use of such information.
There can be no assurance that these agreements provide meaningful protection or
that they will not be breached, that we will have adequate remedies for any such
breach, or that our trade secrets, proprietary know-how, and technological
advances will not otherwise become known to others. In addition, there can be no
assurance that, despite precautions we have taken, others have not obtained or
will not obtain access to our proprietary technology. Further, there can be no
assurance that third parties will not independently develop substantially
equivalent or better technology or acquire equivalent business information.
We rely upon and seek to protect the trademarks and service marks that we
currently use, and those that we intend to use in the future, through
registration in the United States and other
19
<PAGE>
jurisdictions. We have been granted United States federal and German
registrations for MultexNET, and two MultexNET logos, as trademarks and service
marks, and have applied for registration of the same marks in Japan, Taiwan,
Hong Kong, the United Kingdom and the European Union. We also use the following
trademarks and service marks: Multex, Multex.com, the Multex.com logo,
MultexEXPRESS, Multex Research-On-Demand, Multex Investor and The Online
Investment Research Network. United States registrations have been granted for
Multex.com, and United States applications are pending for the other marks.
Applications for Multex and Multex Investor have also been made in the European
community, Japan, Hong Kong, Taiwan, the United Kingdom, Canada and Australia.
There can be no assurance that our use of and interest in these trademarks and
service marks will be subject to any legal protection in any of the
jurisdictions in which we now do business or might do business in the future,
nor that they, or any of the registrations that have already been granted to us,
will not be successfully challenged by others and invalidated through
administrative process or litigation. As our business is dependent on brand
recognition in the marketplace, any failure to maintain and protect our
trademarks and service marks could have a material and adverse effect on our
business, results of operations and financial condition.
We have licensed and expect to license some of our proprietary technology
to third parties, including joint ventures with third parties, in connection
with the establishment of our international business operations, which may be
controlled by these third parties. While we will attempt to ensure that our
proprietary rights will be protected by our business partners, no assurances can
be given that these partners will not take actions that could materially and
adversely affect the value of our proprietary rights or the reputation of our
services and technologies. We currently license some aspects of our text search
functionality and relational database technologies from third parties. Our
failure to maintain these licenses, or to find a replacement for these
technologies in a timely and cost-effective manner, could have a material
adverse effect on our business, results of operations and financial condition.
Legal standards relating to the validity, enforceability and scope of
protection of 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 of our proprietary rights or other companies within the industry.
See "Risk Factors--If Multex.com fails to adequately protect its intellectual
property rights or faces a claim of intellectual property infringement by a
third party, it could lose its intellectual property rights or be liable for
significant damages."
Government Regulation
We are subject, both directly and indirectly, to various laws and
governmental regulations relating to our business. There are currently few laws
or regulations directly applicable to 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. These laws and regulations may cover issues including, for example,
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 including, for example, property ownership, libel
and personal privacy is uncertain and could expose us to substantial liability.
Any new
20
<PAGE>
legislation or regulation or the application of existing laws and regulations to
the Internet could have a material and adverse effect on our business, results
of operations and financial condition.
As our services are available over the Internet anywhere in the world, and
as we intend to offer services specifically aimed at jurisdictions outside the
United States, multiple jurisdictions may claim that we are required to qualify
to do business as a foreign corporation in each of those jurisdictions. Failure
by us to qualify as a foreign corporation in a jurisdiction where we are
required to do so could subject us to taxes and penalties for the failure to
qualify. It is possible that state and foreign governments might also attempt
to regulate our transmissions of content on our Web sites or prosecute us 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 we
might not unintentionally violate these laws or that these laws will not be
modified, or new laws enacted, in the future.
Employees
At December 31, 1999, we employed 336 persons, compared to 246 persons at
December 31, 1998. Our future success will depend in substantial part upon our
ability to attract and retain highly qualified employees. Competition for
personnel, in particular information technology professionals, is intense, and
there can be no assurance that we will be able to retain our senior management
or other key employees, or that we will be able to attract and retain additional
qualified personnel in the future. Our employees are not represented by any
collective bargaining organization and we consider our relations with our
employees to be good. See "Risk Factors That May Affect Future Results--The
loss of any of Multex.com's key personnel could have a material and adverse
effect."
ITEM 2. PROPERTIES
Our corporate headquarters are located in New York, New York. We occupy
approximately 40,000 square feet, under a lease that expires in 2010. This
space includes our corporate headquarters and one of our data centers. We also
lease 15,000 square feet of space in New York City where we are currently
constructing a data center. This lease expires in 2012. This data center is
expected to be completed and operational by fourth quarter 2000. We currently
have approximately 20,000 square feet leased in a third location that must be
vacated by December 2000. This space also includes a data center. We also have
approximately 19,000 square feet of space located on Long Island, New York under
a lease that expires in 2005.
In San Francisco, California we currently lease approximately 6,000 square
feet of office space under a lease that expires in 2004. In London we will be
vacating our current space (approximately 2,000 square feet) and moving into
approximately 8,500 square feet of office space. This new lease expires in 2010
with an option to terminate the lease in 2005. This move will be completed in
the second quarter 2000. In Hong Kong we currently lease approximately 500
square feet. This lease renews every six months.
We are currently seeking additional facilities and believe that we will be
able to obtain additional space as needed on commercially reasonable terms.
21
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
We are not a party to any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At our special meeting held on September 22, 1999 in connection with our
acquisition of Market Guide Inc., we submitted the following matters to a vote
of our stockholders through a proxy solicitation:
. To consider and vote upon a proposal to approve the issuance of our shares
of common stock pursuant to a merger agreement by and among Multex.com,
MarketGuide and Merengue Acquisition Corp.
. To authorize an amendment to Multex.com's certificate of incorporation to
increase the size of Multex.com's board of directors from a maximum of
seven (7) directors to a maximum of eleven (11) directors.
. To authorize an amendment to the Multex.com 1999 Stock Option Plan to
increase the number of shares of Multex.com common stock reserved for
issuance under such plan by an additional 2,500,000 shares.
. To transact such other business as may properly come before the special
meeting or any adjournment or postponement thereof.
The results of the voting at the special meeting were as follows:
<TABLE>
<CAPTION>
Affirmative Votes
Proposal Votes Against Abstentions Broker Non-Votes
- -------- ----- ------- ----------- ----------------
<S> <C> <C> <C> <C>
Share Issuance 16,098,221 51 100 24,416
Certificate
Amendment 16,121,477 1,021 290 0
Option Plan
Amendment 16,110,121 352 12,315 0
</TABLE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
PRICE RANGE OF COMMON STOCK
Multex.com's common stock has traded on the Nasdaq National Market under
the symbol "MLTX" since March 17, 1999. The following table sets forth the
range of high and low sales prices reported on the Nasdaq National Market for
Multex.com common stock of the periods indicated.
22
<PAGE>
<TABLE>
<CAPTION>
Calendar Year 1999: High Low
------------------------- ----------------------
<S> <C> <C>
First Quarter $66.375 $25.625
(Commencing March 17, 1999)
Second Quarter 71.50 22.125
Third Quarter 28.625 12.75
Fourth Quarter 39.44 12.56
</TABLE>
On March 6, 2000 the last reported sale price of our common stock on the
NASDAQ National Market was $27.19.
HOLDERS
As of March 6, 2000, there were approximately 6,500 holders of record of
our common stock.
UNREGISTERED STOCK SALES
There were no unregistered stock sales in 1999. Unregistered stock has
been issued during the first quarter of 2000 in connection with the purchase of
Sage Online, Inc., a transaction with Merrill Lynch & Co., Inc., and as a result
of exercise of warrants previously issued to FleetBoston Financial Corporation
in connection with a credit facility.
USE OF PROCEEDS
On March 17, 1999, the Securities and Exchange Commission declared
effective our Registration Statement on Form S-1 (File No. 333-70693). Pursuant
to this Registration Statement, and the Abbreviated Registration Statement filed
on March 17, 1999 pursuant to Rule 462(b) promulgated under the Securities Act
of 1933, as amended, we completed our initial public offering of 3,283,500
shares of our common stock at an initial public offering price of $14 per share.
Our initial public offering was managed by BancBoston Robertson Stephens, CIBC
Oppenheimer and Dain Rauscher Wessels. Proceeds to us from our initial public
offering, after calculation of the underwriters discount and commission of
approximately $2.9 million and offering costs of $1.5 million, totaled
approximately $41.6 million. None of the expenses incurred in our initial
public offering were direct or indirect payments to our directors, officers,
general partners or their associates, to persons owning ten percent or more of
any class of our equity securities or to our affiliates. As of December 31,
1999, we have used approximately $4.7 million of the proceeds from our initial
public offering toward general corporate purposes, including working capital,
and toward the expansion of our international operations and sales and marketing
capabilities. None of these expenses were direct or indirect payments to our
directors, officers, general partners or their associates, to persons owning ten
percent or more of any class of our equity securities or to our affiliates.
DIVIDEND POLICY
We have not declared or paid any cash dividends on our capital stock since
inception. We intend to retain any future earnings to finance the operation and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future. Consequently, stockholders will need to sell shares of
common stock in order to realize a return on their investment, if any.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated historical financial data is qualified
by reference to, and should be read in conjunction with, the historical
financial statements of Multex.com and the notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere herein.
On September 23, 1999, Multex.com acquired Market Guide Inc. in a
transaction accounted for as a pooling of interests. All selected consolidated
financial data below reflect the results of Multex.com and Market Guide as if
they had always been combined.
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(in thousands, except share and per share data)
Statement of Operations Data:
<S> <C> <C> <C> <C> <C>
Revenues................................. $ 40,850 $ 22,021 $ 12,616 $ 7,423 $ 5,005
Costs of revenues........................ 10,569 5,083 2,720 2,659 2,318
---------- --------- --------- --------- ---------
Gross profit............................. 30,281 16,938 9,896 4,764 2,687
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Operating expenses:
Sales and marketing..................... 26,379 8,667 4,568 2,444 1,980
Research and development................ 6,301 3,167 2,873 2,560 2,039
General and administrative.............. 18,414 12,550 10,426 6,752 3,964
---------- --------- --------- --------- ---------
Total operating expenses............... 51,094 24,384 17,867 11,756 7,983
Loss from operations..................... (20,813) (7,446) (7,971) (6,992) (5,296)
Net interest income (expense)............ 2,245 (186) 60 16 (10)
Other income (expense)................... (5,712) (716) -- -- --
---------- --------- --------- --------- ---------
Loss from continuing operations before (24,280) (8,348) (7,911) (6,976) (5,306)
income taxes............................
Income taxes............................. 1,030 276 7 (2) 1
---------- --------- --------- --------- ---------
Loss from continuing operations.......... (25,310) (8,624) (7,918) (6,974) (5,307)
Discontinued operations.................. 331 (214) (1,087) (115) --
---------- --------- --------- --------- ---------
Net loss................................. $ (24,979) $ (8,838) $ (9,005) $ (7,089) $ (5,307)
========== ========= ========= ========= =========
Basic and diluted net loss per share..... $(1.15) $(1.51) $(1.62) $(1.35) $(0.97)
========== ========= ========= ========= =========
Shares used in calculating net loss per
share--basic and diluted................ 22,688,050 7,609,524 6,891,764 6,272,043 6,126,598
========== ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(in thousands)
Balance Sheet Data:
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents, and $39,117 $ 24,171 $ 11,007 $ 9,961 $ 936
marketable securities...................
Working capital (deficit)................ 37,519 21,958 8,882 8,697 (513)
Total assets............................. 65,600 33,183 18,542 15,885 5,236
Deferred revenues........................ 5,691 3,376 2,003 1,334 449
Long-term debt........................... -- 236 393 1,948 1,008
Convertible preferred stock.............. -- 59,860 37,234 25,066 8,798
Total stockholders' (deficit) equity..... 47,201 (34,123) (25,111) (14,033) (7,178)
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF MULTEX SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED
FINANCIAL STATEMENTS AND THE NOTES TO THOSE STATEMENTS INCLUDED ELSEWHERE
HEREIN. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS
AND UNCERTAINTIES. MULTEX.COM'S ACTUAL RESULTS AND TIMING OF CERTAIN EVENTS
COULD 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 HEREIN.
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. We
offer five main services as follows:
24
<PAGE>
. MultexNET, which was launched in June 1996;
. MultexEXPRESS, which was launched in January 1997;
. Multex Research-On-Demand, which was launched in April 1997;
. Multex Investor, which was launched in November 1998; and
. Market Guide database, which was acquired in September 1999.
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 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
corporations, financial institutions and advisors, and institutional 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 gives individual investors who register
as members access to a range of financial reports and services, including
research reports on a pay-per-view basis, over the Internet from a majority of
the contributors to MultexNET. Multex Investor also includes banner advertising
and sponsorship advertising throughout the site. Sponsors to Multex Investor
include full-service brokerage firms and other financial institutions interested
in attracting individual investors to their products, services and brands.
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 are
recognized upon sale. Revenues from sponsorships to Multex Investor are
recognized in equal installments over the term of the sponsorship. Some of the
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 are expensed as and
when incurred. We pay distribution fees to our distributors and, with respect
to Multex Research-On-Demand and pay-per-view transactions on Multex Investor,
royalties to the investment banks, brokerage firms or third-party research
providers that authored the research.
On March 17, 1999, we completed our initial public offering of 3,450,000
shares of common stock, of which 3,283,500 shares were issued and sold by
Multex.com, at a price of $14.00 per share. Net proceeds of approximately $41.6
million from the sale of common stock in our initial public offering were added
to our working capital.
We continue to expand our operations and have grown from 246 employees at
December 31, 1998 to 336 employees at December 31, 1999. We expect to add
additional personnel both
25
<PAGE>
in the United States and abroad as our operations expand. We currently expect to
significantly increase our operating expenses both on an absolute basis and as a
percentage of revenues in order to expand our sales and marketing operations, to
continue to expand internationally and to continuously upgrade and enhance our
services and technologies. As a result of these and other factors, there can be
no assurance that we will not incur significant losses on a quarterly and annual
basis for the foreseeable future.
We have incurred significant losses since our inception, and as of December
31, 1999 had an accumulated deficit of $60.1 million. In addition, we have
recorded cumulative deferred compensation of $2.4 million, which represents the
difference between the exercise price of stock options for shares of common
stock granted to some of our employees and the fair market value of our common
stock at the date of grant. Of the total deferred compensation amount, $465,000
was amortized prior to December 31,1998 and $646,000 was amortized during the
year ended December 31, 1999. The remaining deferred compensation amount will
be amortized over the remaining vesting periods of the related options. We
believe that period-to-period comparisons of our 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 our subscribers and distributors have accounted for
a substantial portion of our revenues. For the year ended December 31, 1999,
Merrill Lynch accounted for 10.2% of our consolidated revenues. For the years
ended December 31, 1998 and 1997, Reuters Group PLC accounted for 11.3% and
18.1%, respectively, of our consolidated revenues. For the year ended December
31, 1997, Bloomberg L.P. accounted for 10.1% of our consolidated revenues. The
loss of Merrill Lynch, or any of our other subscribers or distributors, could
have a material and adverse effect on our business, results of operations and
financial condition.
Recent Developments
Market Guide Acquisition
The acquisition of Market Guide, which was consummated September 23, 1999,
is further discussed in Part I, Item 1.
Merrill Lynch Transaction
On December 21, 1999, Multex.com announced a multi-year partnership with
Merrill Lynch to co-develop global research and information Web sites for
clients of Merrill Lynch's institutional e-commerce portal. The companies will
jointly develop the next-generation platform for real-time delivery of Merrill
Lynch investment strategy and securities research for its institutional clients.
Sage Transaction
On March 20, 2000, Multex.com acquired Sage Online, Inc. Sage Online is a
leading provider of live events and interactive community for personal finance,
including mutual fund and equity content, chat rooms, forums and message boards.
Sage Online was a privately held company and is now a wholly-owned subsidiary of
Multex.com.
26
<PAGE>
General
In September 1999, Multex.com acquired Market Guide Inc. in a transaction
accounted for as a pooling of interests. The consolidated statement of
operations for the year ended December 31, 1999 includes the calendar results
of operations for Multex.com and Market Guide for the year ended December 31,
1999. The consolidated statement of operations for the year ended December 31,
1998 includes the calendar results of operations for Multex.com and the fiscal
year end results of operations for Market Guide for the year ended February 28,
1999. The consolidated statement of operations for the year ended December 31,
1997, includes the calendar results of operations for Multex.com and the fiscal
year end results of operations for Market Guide for the year ended February 28,
1998.
Results of Operations
The following table shows the percentage of total revenues represented by
the items in our consolidated statements of operations.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997
--------------------------------------
<S> <C> <C> <C>
Revenues 100% 100% 100%
Cost of Revenues -25.9% -23.1% -21.6%
------ ------ ------
Gross profit 74.1% 76.9% 78.4%
Operating expenses:
Sales and marketing 64.6% 39.4% 36.2%
Research and development 15.4% 14.4% 22.8%
General and administrative 45.1% 56.9% 82.6%
------ ------ ------
Total operating expenses 125.1% 110.7% 141.6%
Loss from operations -51.0% -33.8% -63.2%
Other income (expense):
Gain on sale of equipment 0.0% 0.5% 0.0%
Offering expenses 0.0% -3.8% 0.0%
Other income 0.1% 0.0% 0.0%
Acquisition expenses -14.0% 0.0% 0.0%
Interest expense -0.2% -2.6% -3.1%
Interest and Investment income 5.8% 1.8% 3.6%
------ ------ ------
Loss from continuing operations before income tax expense -59.4% -37.9% -62.7%
Income Taxes 2.5% 1.3% 0.1%
loss from continuing operations -61.9% -39.2% -62.8%
Income (Loss) from discontinued operations 0.2% -1.9% -8.6%
Gain on sale of discontinued operations 0.6% 1.0% 0.0%
Net loss -61.1% -40.1% -71.4%
Redeemable preferred stock dividends -2.9% -12.2% -17.3%
Net loss attributable to common shareholders -64.0% -52.3% -88.7%
</TABLE>
Year Ended December 31, 1999 Compared to Year Ended December 31, 1998
Revenues
Multex.com's revenues consist of subscription fees for MultexNET,
subscription, development and hosting fees for MultexEXPRESS, sales of
investment research on a pay-per-view basis through Multex Research-On-Demand,
license and redistribution fees for the Market Guide database, and sales of
sponsorships, advertising and investment research through the Multex Investor
and Market Guide Web sites. We also provide professional services to select
MultexEXPRESS clients, including software development, customization and
integration services. On occasion, as a service to our clients, we have
acquired equipment for resale.
Revenues increased 85.5% to $40.8 million for the year ended December 31,
1999 from $22.0 million for the year ended December 31, 1998. The increase in
revenues was attributable to a number of factors: a significant increase in the
number of institutions and individuals using our pay-per-view service, greater
acceptance of Multex Research-On-Demand, an increase in the number of
installations utilizing MultexEXPRESS to distribute their proprietary research
to their employees and customers, an increase in the number of vendors
distributing the Market Guide database, and increased advertising and
sponsorship revenues from the Multex Investor and Market Guide Web sites.
Cost of Revenues
Cost of revenues consists primarily of fees payable to distributors of
MultexNet and Multex Research-On-Demand, royalties payable to the authors of
investment research and content offered through Multex Research-On-Demand,
Multex Investor and marketguide.com, external development costs incurred for
MultexEXPRESS customers, research department costs related to the collection and
processing of financial data and earnings estimates, purchases of equipment for
resale and data communications costs.
Cost of revenues increased 107.9% to $10.6 million in the year ended
December 31, 1999 from $5.1 million for the year ended December 31, 1998. As a
percentage of revenues, cost of revenues increased to 25.9% for the year ended
December 31, 1999 from 23.1% for the year ended December 31, 1998. The increase
in cost of revenues in dollar terms was primarily due to royalty and
distribution fee payments as a result of increased sales of Multex Research-On-
Demand, the increased cost of equipment purchased for resale, increased data
collection costs related to the maintenance and enhancement of the Market Guide
database, growth in web site traffic resulting in increased royalty payments to
content providers, increased Web site development costs resulting from the
increased number of MultexEXPRESS installations, and additional data
communications charges resulting from increased sales of subscriptions for
MultexNET and installations of MultexEXPRESS.
Operating Expenses
27
<PAGE>
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 204.3% to
$26.4 million for the year ended December 31, 1999 from $8.7 million for the
year ended December 31, 1998. As a percentage of revenues, sales and marketing
expenses increased to 64.6% for the year ended December 31, 1999 from 39.4% for
the year ended December 31, 1998. The increase in sales and marketing expenses
was due to an expansion of our sales force both domestically and
internationally, increased marketing activities, additional costs resulting from
expanding our international marketing efforts, and a significant advertising
campaign undertaken in 1999 to increase awareness and visibility of Multex
Investor and prominence of the Multex.com family of brands.
Research and Development. Research and development expenses consist
primarily of salaries and benefits. Research and development expenses increased
99.0% to $6.3 million for the year ended December 31, 1999 from $3.2 million for
the year ended December 31, 1998. As a percentage of revenues, research and
development expenses increased to 15.4% for the year ended December 31, 1999
from 14.4% for the year ended December 31, 1998. The increase in research and
development expenses in dollar terms was primarily due to an increase in the
number of developers employed by us, salary increases and costs related to
creating and developing new products and enhancements to the Market Guide
database. We believe that continued investment in product development is
critical to attaining our strategic objectives and, as a result, expect research
and development expenses to increase in dollar terms 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 46.7% to $18.4 million for the year ended December 31, 1999 from $12.5
million for the year ended December 31, 1998. As a percentage of revenues,
general and administrative expenses decreased to 45.1% for the year ended
December 31, 1999 from 57.0% for the year ended December 31, 1998. 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 our domestic and international growth, including
costs associated with our London and Multex Data Group offices. We expect that
general and administrative expenses will increase in dollar terms in future
periods as we hire additional personnel and incur additional costs related to
the growth of our business and our operations as a public company.
Loss from Operations
We have invested heavily in establishing a brand name for our services,
expanding internationally, continuing to develop enhanced services, maintaining
our technological advantage and increasing the number of our employees and
offices as we seek to increase our market share. For the foregoing reasons, loss
from operations increased 179.5% to $20.8 million for the year ended December
31, 1999 from $7.4 million for the year ended December 31, 1998.
28
<PAGE>
As a percentage of revenues, loss from operations was 50.9% for the year ended
December 31, 1999 compared to 33.8% for the year ended December 31, 1998.
Interest Income (Expense) and Other Income
Net interest income was $2.2 million for the year ended December 31, 1999
as compared to net interest expense of $186,000 for the year ended December 31,
1998. The changes in net interest income/expense are attributable to the
changes in cash available for investing and fluctuations in borrowings. In
particular, 1999 interest income reflects interest earned on proceeds from the
March 1999 initial public offering.
For the year ended December 31, 1998, Multex.com recognized a gain of
$125,000 from the sale of leased equipment. There was no comparable transaction
during the year ended December 31, 1999.
For the year ended December 31, 1999, Multex.com recorded $5.7 million in
expenses related to the September 1999 acquisition of Market Guide Inc. The
majority of these expenses related to fees for investment bankers, outside
counsel, accountants, proxy solicitors, document preparation and other costs
related to consummating the acquisition.
Income Taxes
At December 31, 1999, Multex.com had net operating loss carryforwards of
approximately $50.0 million and research and development credits of
approximately $1.0 million for income tax purposes that expire in 2009 through
2019. The utilization of approximately $15.6 million and $400,000 of these loss
carryforwards and credits, respectively, are subject to annual limitations of
approximately $1.9 million, pursuant to Section 382 of the Internal Revenue Code
of 1986.
The majority of income tax expense recognized for the years ended December
31, 1999 and 1998 relates to Market Guide's operations prior to the September
1999 acquisition. Such operations cannot be included in Multex.com's
consolidated tax returns, and accordingly cannot be offset by Multex.com's net
operating loss.
Loss from continuing operations
Loss from continuing operations increased 193.5% to $25.3 million for the
year ended December 31, 1999 from $8.6 million for the year ended December 31,
1998. The increase in loss from continuing operations was due to Multex.com's
large investment in establishing a brand name for its services,
expanding internationally, continuing to develop new services,
29
<PAGE>
increasing the number of employees, and $5.7 million in expenses related to the
Market Guide acquisition.
Discontinued operations
Income from discontinued operations totaled $106,000 for the year ended
December 31, 1999 compared to a loss from discontinued operations of $440,000
for the year ended December 31, 1998. Multex.com recognized a gain of $226,000,
net of $163,000 in income taxes, related to the receipt of $1.2 million upon
completion of the sale of CreditRisk Monitor to New Generation Foods in January
1999.
Net loss
Net loss increased 127.2% to $26.2 million for the year ended December 31,
1999 from $11.5 million for the year ended December 31, 1998. The net loss
includes redeemable preferred stock dividends of $1.2 million for the year ended
December 31, 1999 and $2.7 million for the year ended December 31, 1998. All
preferred stock was converted into common stock upon the completion of the March
1999 initial public offering.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
Revenues
Multex.com's revenues consist of subscription fees for MultexNET,
subscription, development and hosting fees for MultexEXPRESS, sales of
investment research on a pay-per-view basis through Multex Research-On-Demand,
license and redistribution fees for the Market Guide database, and sales of
sponsorships, advertising and investment research through the Multex Investor
and Market Guide Web sites. We also provide professional services to select
MultexEXPRESS clients, including software development, customization and
integration services. On occasion, as a service to our clients, we have
acquired equipment for resale.
Total revenues increased 74.5% to $22.0 million for the year ended December
31, 1998 from $12.6 million for the year ended December 31, 1997. The increase
in revenues for 1998 was primarily due to several factors: a significant
increase in the number of institutions and individuals using our pay-per-view
service, Multex Research-On-Demand, and the availability of that service for all
of 1998, as compared to 1997, when the availability commenced in April; an
increase in the number of installations utilizing MultexEXPRESS to distribute
their proprietary research to their employees and customers, combined with the
fact that 18 of these installations were revenue-producing for all of 1998, as
compared to only four that were revenue-producing for all of 1997; an increase
in the number of MultexNET users, primarily as a result of the addition of
Reuters as a distribution channel; the launch of Multex Investor in November
1998; the addition of 35 new vendors related to Internet redistribution and co-
branded relationships for the Market Guide database; and a full year of year of
Internet advertising revenue on the marketguide.com Internet site.
30
<PAGE>
Cost of Revenues
Cost of revenues consists primarily of fees payable to distributors of
MultexNet and Multex Research-On-Demand, royalties payable to the authors of
investment research and content offered through Multex Research-On-Demand and
marketguide.com, external development costs incurred for MultexEXPRESS
customers, research department costs related to the collection and processing of
financial data and earnings estimates, purchases of equipment for resale and
data communications costs.
Cost of revenues increased 86.8% to $5.1 million for the year ended
December 31, 1998 from $2.7 million for the year ended December 31, 1997. As a
percentage of revenues, cost of revenues increased to 23.1% for the year ended
December 31, 1998 from 21.6% for the year ended December 31, 1997. The increase
in cost of revenues in dollar terms in each period was primarily due to royalty
and distribution fee payments as a result of increased sales of Multex Research-
On-Demand, the increased cost of equipment purchased for resale, increased data
collection costs related to the maintenance and enhancement of the Market Guide
database, growth in web site traffic resulting in increased royalty payments to
content providers, increased Web site development costs resulting from the
increased number of MultexEXPRESS installations, and additional data
communications charges resulting from increased sales of subscriptions for
MultexNET and installations of MultexEXPRESS.
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 89.7% to
$8.7 million for the year ended December 31, 1998 from $4.6 million for the year
ended December 31, 1997. As a percentage of revenues, sales and marketing
expenses increased to 39.4% for the year ended December 31, 1998 from 36.2% for
the year ended December 31, 1997. The increase in sales and marketing expenses
was due to an expansion of our sales force both domestically and
internationally, increased marketing activities, and additional costs resulting
from expanding our international marketing efforts.
Research and Development. Research and development expenses consist
primarily of salaries and benefits. Research and development expenses increased
10.3% to $3.2 million for the year ended December 31, 1998 from $2.9 million for
the year ended December 31, 1997. As a percentage of revenues, research and
development expenses decreased to 14.4% for the year ended December 31, 1998
from 22.8% for the year ended December 31, 1997. The increase in research and
development expenses in dollar terms was primarily due to an increase in the
number of developers employed by us, salary increases and costs related to
creating and developing new products and enhancements to the Market Guide
database. We believe that continued investment in product development is
critical to attaining our strategic objectives and, as a result, expect research
and development expenses to increase in dollar terms in future periods.
31
<PAGE>
General and Administrative. General and administrative expenses consist
primarily of salaries and benefits, fees for professional services and facility
expenses, including depreciation of assets. General and administrative expenses
increased 20.4% to $12.5 million for the year ended December 31, 1998 from $10.4
million for the year ended December 31, 1997. As a percentage of revenues,
general and administrative expenses decreased to 57.0% for the year ended
December 31, 1998 from 82.6% for the year ended December 31, 1997. 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 our domestic and international growth, including
costs associated with our London and Multex Data Group offices. We expect that
general and administrative expenses will increase in dollar terms in future
periods as we hire additional personnel and incur additional costs related to
the growth of our business and our operations as a public company.
Loss from Operations
We have invested heavily in establishing a brand name for our services,
expanding internationally, continuing to develop enhanced services and
maintaining our technological advantage, and increasing the number of our
employees and offices as we seek to increase our market share, all of which have
contributed to our losses. Loss from operations decreased 6.6% to $7.4 million
for the year ended December 31, 1998 from $8.0 million for the year ended
December 31, 1997. As a percentage of revenues, loss from operations was 33.8%
for the year ended December 31, 1998 and 63.2% for the year ended December 31,
1997.
Interest Income (Expense) and Other Income
Net interest expense was $186,000 for the year ended December 31, 1998
compared to net interest income of $61,000 for the year ended December 31, 1997.
The changes in net interest income/expense are attributable to the changes in
cash available for investing and fluctuations in borrowings.
In the fiscal year ended December 31, 1998, Multex.com recognized a gain of
$125,000 from the sale of leased equipment. There was no comparable transaction
during the year ended December 31, 1997.
Income Taxes
The majority of income tax expense recognized in the years ended December
31, 1998 and 1997 was related to Market Guide's operations prior to the
September 1999 acquisition.
Loss from continuing operations
32
<PAGE>
Loss from continuing operations increased 8.9% to $8.6 million for the year
ended December 31, 1998 from $7.9 million for the year ended December 31, 1997.
The increase in loss from continuing operations was due to Multex.com's large
investment in establishing a brand name for its services, expanding
internationally, continuing to develop new services, increasing the number of
employees and $841,000 of expenses related to its proposed, but not completed,
1998 initial public offering.
Discontinued operations
Loss from discontinued operations decreased 59.5% to $440,000 for the year
ended December 31, 1998 from $1.1 million for the year ended December 31, 1997.
The decline in losses from 1997 to 1998 reflects a growing number of customers
for the CreditRisk Monitor service and a cost containment program instituted in
the middle of fiscal year 1998. Multex.com also recognized a gain of $226,000,
net of $163,000 in income taxes, related to the receipt of $1.2 million upon
completion of the sale of CreditRisk Monitor to New Generation Foods in January
1999.
Net loss
Net loss increased 3.0% to $11.5 million for the year ended December 31,
1998 from $11.2 million for December 31, 1997. The net loss includes redeemable
preferred stock dividends of $2.7 million and $2.2 million for the years ended
December 31, 1998 and 1997, respectively.
Selected Unaudited Quarterly Results of Operations
The following table sets forth unaudited quarterly statement of operations
data for each of the eight quarters ended December 31, 1999. In the opinion of
management, the unaudited financial results include all adjustments, consisting
only of normal recurring adjustments, necessary for the fair presentation of our
consolidated results of operations for those periods. The consolidated
quarterly data should be read in conjunction with the audited Consolidated
Financial Statements and the Notes thereto appearing elsewhere in this report.
The results of operations for any quarter are not necessarily indicative of the
results of operations for any future period.
In the following table, the quarters ended March 31, June 30, September 30
and December 31, 1998 include the calendar quarter results for Multex.com and
the results for Market Guide's fiscal quarters ended May 31, August 31 and
November 30, 1998 and February 28, 1999, respectively. The quarters ended March
31, June 30, September 30 and December 31, 1999 include the calendar quarter
results for Multex.com and the estimated results for Market Guide on a calendar
quarter basis.
33
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------------------------------------------------
Mar. 31, 1998 June 30, 1998 Sept. 30, 1998 Dec. 31, 1998 Mar. 31, 1999
------------- ------------- -------------- ------------- -------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Revenues........................... $ 4,934 $ 5,175 $ 5,569 $ 6,343 $ 7,606
Cost of revenues................... 1,273 1,236 1,221 1,353 2,006
------ ------ ------ ------ ------
Gross profit....................... 3,661 3,939 4,348 4,990 5,600
Operating expenses:
Sales and marketing............... 1,452 1,609 2,083 3,523 4,031
Research and development.......... 702 704 728 1,033 1,065
General and administrative........ 2,793 3,076 3,115 3,566 3,737
------ ------ ------ ------ ------
Total operating expenses......... 4,947 5,389 5,926 8,122 8,833
------ ------ ------ ------ ------
Loss from operations............... (1,286) (1,450) (1,578) (3,132) (3,233)
Net interest income (expense)...... (213) 36 37 (46) 263
Other income (expenses)............ (716) -- -- -- --
Loss from continuing operations
before taxes...... (2,215) (1,414) (1,541) (3,178) (2,970)
Income taxes....................... 8 4 7 257 446
------ ------ ------ ------ ------
Loss from cont. operations......... (2,223) (1,418) (1,548) (3,434) (3,416)
Discontinued operations............ (234) (269) (255) 543 331
------ ------ ------ ------ ------
Net loss........................... $(2,457) $(1,687) $(1,803) $(2,891) $(3,085)
====== ====== ====== ====== ======
<CAPTION>
Three Months Ended
-------------------------------------------
June 30, 1999 Sept. 30, 1999 Dec. 31, 1999
------------- -------------- -------------
<S> <C> <C> <C>
Revenues........................... $ 8,841 $ 10,929 $13,474
Cost of revenues................... 2,293 2,671 3,599
------ ------- ------
Gross profit....................... 6,548 8,258 9,875
Operating expenses:
Sales and marketing............... 4,912 6,619 10,817
Research and development.......... 1,122 2,039 2,075
General and administrative........ 4,087 4,776 5,814
------ ------- ------
Total operating expenses......... 10,121 13,434 18,706
------ ------- ------
Loss from operations............... (3,573) (5,176) (8,831)
Net interest income (expense)...... 711 685 586
Other income (expenses)............ -- (5,606) (106)
Loss from continuing operations
before taxes...... (2,862) (10,097) (8,351)
Income taxes....................... 226 234 124
------ ------- ------
Loss from cont. operations......... (3,088) (10,331) (8,475)
Discontinued operations............ -- -- --
------ ------- ------
Net loss........................... $(3,088) $(10,331) $(8,475)
====== ======= ======
</TABLE>
<TABLE>
<CAPTION>
Percentage of Total Revenues
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues............................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues.................... 25.8 23.9 21.9 21.3 26.4 25.9 24.4 26.7
----- ----- ----- ----- ----- ----- ----- -----
Gross profit........................ 74.2 76.1 78.1 78.7 73.6 74.1 75.6 73.3
Operating expenses:
Sales and marketing................ 29.5 31.1 37.4 55.6 53.0 55.6 60.6 80.2
Research and development........... 14.2 13.6 13.1 16.3 14.0 12.7 18.7 15.4
General and administrative......... 56.6 59.4 55.9 56.2 49.1 46.2 43.7 43.2
----- ----- ----- ----- ----- ----- ----- -----
Total operating expenses.......... 100.3 104.1 106.4 128.1 116.1 114.5 123.0 138.8
----- ----- ----- ----- ----- ----- ----- -----
Loss from operations................ (26.1) (28.0) (28.3) (49.4) (42.5) (40.4) (47.4) (65.5)
Net interest income (expense)....... (4.3) 0.7 0.6 (0.7) 3.5 8.0 6.0 4.1
Other income (expenses)............. (14.5) -- -- -- -- -- (51.1) (0.6)
----- ----- ----- ----- ----- ----- ----- -----
Loss from continuing operations
before taxes...... (44.9) (27.3) (27.7) (50.1) (39.0) (32.4) (92.5) (62.0)
Income taxes........................ (0.1) (0.1) (0.1) (4.0) (5.9) (2.5) (2.0) (0.9)
Loss from cont. operations.......... (45.1) (27.4) (27.8) (54.1) (44.9) (34.9) (94.5) (62.9)
Discontinued operations............. (4.7) (5.2) (4.6) 8.6 4.4 -- -- --
----- ----- ----- ----- ----- ----- ----- -----
Net loss............................ (49.8)% (32.6)% (32.4)% (45.5)% (40.5)% (34.9)% (94.5)% (62.9)%
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
Our 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, Multex Investor, which was
launched in November 1998, increased purchases of the Multex Research-On-Demand
service, which was launched in April 1997, and the continued growth in the
number of companies licensing the Market Guide database. Our 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. In other quarters,
when we have significant amounts of equipment resale transactions, including,
for example, 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 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.
Our 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 these
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fluctuations have included and may include, among other factors, 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 or price levels of securities
transactions and general economic factors. Any one or more of these factors
could have a material and adverse effect on our business, results of operation
and financial condition, and makes the prediction of results of operations on a
quarterly basis unreliable. See "Risk Factors-- Fluctuations in Multex.com's
operating results may negatively impact our stock price".
Liquidity and Capital Resources
We have financed our operations primarily through the sale of equity
securities as we have not generated cash flow from operations since our
inception. Through December 31, 1999, we have received an aggregate of $94.3
million in net proceeds from the sale of common stock and convertible preferred
stock. At December 31, 1999, we had $6.1 million of cash and cash equivalents.
Our principal commitments consist of obligations under operating leases.
Net cash used in operating activities from continuing operations was $22.3
million in the year ended December 31, 1999, and $4.7 million in the equivalent
period in 1998. The principal use of cash for all periods was to fund our
losses from operations.
Net cash used in investing activities was $21.7 million in the year ended
December 31, 1999, and $13.2 million in the equivalent period in 1998. Cash
used in investing activities was primarily related to purchases of marketable
securities and the acquisition of property and equipment.
Net cash provided by financing activities was $45.6 million in the year
ended December, 1999, and $19.0 million for the equivalent period in 1998. Net
cash provided by financing activities primarily consisted of net proceeds from
the sale of equity securities in the March 1999 initial public offering.
Net cash provided by discontinued activities was $331,000 in the year ended
December, 1999, compared to net cash used in discontinued operations of $261,000
for the equivalent period in 1998. Net cash provided by discontinued operating
activities reflects proceeds from the gain on sale of Market Guide's Creditrisk
Monitor division in January 1999.
Although we have no material commitments for capital expenditures, we
anticipate that we will experience a substantial increase in our capital
expenditures and lease commitments consistent with our anticipated growth in
operations, infrastructure and personnel, including the implementation of an
off-site backup computer system and various capital expenditures associated with
expanding our facilities. We currently anticipate that we will continue to
experience significant growth in our operating expenses for the foreseeable
future and that our operating expenses will be a material use of our cash
resources. We believe that our existing cash, cash equivalents and marketable
securities, will be sufficient to meet our anticipated cash needs for working
capital and capital expenditures at least for the next twelve months.
35
<PAGE>
Impact of the Year 2000
The Year 2000 issue is the result of computer systems and software products
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. Year 2000 issues have not had any material impact on Multex.com.
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
CURRENCY RATE FLUCTUATIONS
Our results of operations, financial position, and cash flows are not
materially affected by changes in the relative values of non-U.S. currencies to
the U.S. dollar. We do not use derivative financial instruments to limit our
foreign currency risk exposure.
INTEREST RATE FLUCTUATIONS
Our results of operations, financial position, and cash flows are not
materially affected by changes in market interest rates. We have no long-term
debt obligations. We had $39.1 million in cash, cash equivalents and marketable
securities as of December 31, 1999.
RISK FACTORS THAT MAY AFFECT FUTURE RESULTS
Because we have a limited operating history, there is limited information upon
which you can evaluate Multex.com's business
Although Multex.com commenced operations in April 1993, all of our current
services were launched since June 1996. 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, from development, hosting and subscription fees for
MultexEXPRESS, generate additional sales of investment research on a pay-per-
view basis through Multex Research-On-Demand, attract more users to Multex
Investor and increase license fees from the Market Guide database. However, as
a 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;
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<PAGE>
. 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.
If we are unsuccessful in addressing these risks or in executing our
business strategy, our business, results of operations and financial condition
would be materially and adversely affected.
Multex.com has a history of losses
Since our incorporation, we have not been profitable on an annual or
quarterly basis. We incurred net losses of $25.0 million, $8.8 million and $9.0
million for the years ended December 31, 1999, 1998 and 1997, respectively. We
continue to experience operating losses and negative cash flows and will
continue to incur significant operating expenses and make capital investments in
our business. We may not ever generate sufficient revenues to achieve
profitability. If we do achieve profitability, we may not sustain or increase
profitability on a quarterly or annual basis in the future. At December 31,
1999 we had an accumulated deficit of $60.1 million. We have financed our
operations to date primarily through the sale of equity securities.
Fluctuations in Multex.com's operating results may negatively impact our stock
price
Our 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 new and renewal subscriptions and licensing
agreements;
. the number, timing and significance of new services introduced by both 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;
37
<PAGE>
. 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, external
development costs 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 would be materially and adversely affected because a
relatively small amount of our costs and expenses varies with our revenues in
the short term.
The loss of a major research or information provider would harm Multex.com's
business
We are dependent upon the continued provision of high-quality investment
research reports from investment banks, brokerage firms and third-party research
providers. Some of these arrangements are not embodied in written contracts and
some of these arrangements can be terminated by the provider on short notice.
At present, more than half of our approximately 700 information providers permit
us to offer the research for sale after a specified embargo period, generally
seven to fifteen days. The remaining information providers do not permit these
sales. Many of our providers of research reports and other information compete
with one another and, to some extent, with us for subscribers. None of these
information providers have arrangements to provide research or information
exclusively to us. The loss of one or more significant information providers
would decrease the research and other information which we can offer our users
and would have a material and adverse effect on our business, results of
operations and financial condition.
Royalty payments and distribution fees to research providers and strategic
partners increase Multex.com's costs
Royalties and distribution fees payable to our information providers and
strategic partners 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 or fees payable to these
information providers or strategic partners, these increased payments could have
a material and adverse effect on our business, results of operations and
financial condition.
38
<PAGE>
Because some of Multex.com's competitors are parties to exclusive distribution
agreements, we may not be able to get content from important research providers
A number of 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 these
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 exclusive
distribution arrangements or that we are hindered in our ability to offer our
own services due to the lack of content from these investment banks, brokerage
firms and third-party research providers, our business, results of operations
and financial condition would be materially and adversely affected.
The inadvertent distribution of research reports could result in a claim for
damages against Multex.com or harm our reputation
Our proprietary software technology enables us to restrict distribution of
a particular research report or other financial information to those users who
have been authorized or entitled to access the report by the 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 information provider or which could harm our reputation in the
marketplace, either of which could have a material and adverse effect on our
business, results of operations and financial condition.
Multex.com's business would be materially and adversely affected if the emerging
market for online investment research does not continue to grow
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 market, 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,
39
<PAGE>
to attract and retain high- quality information 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 corporate documents 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 distribution and sale 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 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 Investor,
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, or to attract and retain information providers, our business, results
of operations and financial condition would be materially and adversely
affected.
Multex.com is dependent on strategic distribution relationships and our business
could be materially and adversely affected if we were to lose one of our
strategic distributors
We have distribution arrangements for our services with a number of third-
party distributors, including America Online, Inc., Bloomberg L.P., Dow Jones &
Co. Inc., Bridge Information Systems, Inc., FactSet Research Systems 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 these third-party distributors will continue
to actively market our services. If we are unable to retain and increase the
utilization of our services by these customers, our business, results of
operations and financial condition would be materially and adversely affected.
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 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 various specified circumstances, in some circumstances
on short notice. Furthermore, we cannot assure you that we will be able to
renew these 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 would be materially and adversely affected.
40
<PAGE>
Multex.com's business would be materially and adversely affected if Multex.com
is not successful in establishing brand awareness for Multex Investor
The future success of Multex Investor 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 the Multex Investor Web site. 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 will depend in
part on our ability to increase the number of users of our 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.
Multex.com's business could be materially and adversely affected by increased
competition
The market for the distribution of investment research and other
information over the Internet is intensely competitive. We expect competition
to continue to increase because our market poses no substantial barriers to
entry. Competition also may 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 and adverse effect
on our business, results of operations and financial condition.
Other companies provide and distribute investment research
We face direct and indirect competition for both providers of investment
research and other reports, and for subscribers, with the following types of
companies:
. large and well-established distributors of financial information, including
Thomson Financial Services, through its subsidiaries First Call and
Investext, and Institutional Brokers Estimate System, a subsidiary of
Primark Corp.;
. companies that provide investment research, including investment banks and
brokerage firms, many of whom have their own Web sites;
. other providers of either free or subscription research services on the
Internet;
. services provided by some of our strategic distributors which are
competitive in one or more respects with our service offerings;
. numerous prospective competitors, including Standard & Poor's, Moody's and
Zacks Investment Research, that offer investment research-based services;
. various written publications, including traditional media, investment
newsletters, personal financial magazines and industry research appearing
in financial periodicals; and
. services provided by in-house management information services personnel and
independent systems integrators. Various public sources provide extensive
company information for free
41
<PAGE>
We also face competition due to the fact that extensive company-specific
information, as well as general investment research relating to particular
industries, may be obtained, frequently without charge, from various public
sources, including:
. annual reports and other filings with the Securities and Exchange Commission;
. Standard & Poor's company-specific reports; and
. Value Line investment research reports.
These reports are all available from public libraries and from the
companies about which these reports relate.
We believe that our ability to compete successfully will depend 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.
Our 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 information providers.
Our competitors may develop services that are equal or superior to the services
offered by us or that achieve greater market acceptance than our services do.
In addition, current and potential 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, which could
materially and adversely affect our business, results of operations and
financial condition.
Multex.com has a high level of customer concentration and our business could be
materially and adversely affected if we were to lose a major subscriber or
distributor
Historically, a few of our subscribers and distributors have accounted for
a substantial majority of our revenues. Specifically, 10.2% of our revenues in
the year ended December 31, 1999 were generated from Merrill Lynch & Co. The
loss of any major subscriber or distributor, or any reduction or delay in
subscriptions by any subscriber or distributor, or our failure to successfully
market our services to new subscribers or distributors could have a material and
adverse effect on our business, results of operations and financial condition.
42
<PAGE>
Multex.com's business could be materially and adversely affected by a downturn
in 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 this 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 these 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 some of our services. These factors, as well as other
changes occurring in the financial services industry, could have a material and
adverse effect on our business, results of operations and financial condition.
Rapid growth in Multex.com's future operations could strain our managerial,
operational and financial resources
We have experienced rapid growth in our operations. At December 31, 1999,
we had a total of 336 employees, as compared to 246 employees at December 31,
1998. 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 personnel. If we are unable to accomplish any of these
objectives, our business, results of operations and financial condition could be
materially and adversely affected.
The loss of any of Multex.com's key personnel could have a material and adverse
effect
Our future success will depend, in substantial part, on the continued
service of our senior management, including Mr. Isaak Karaev, our Chairman 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 $2.0 million on the life of Mr. Karaev. The loss of the services of
one or more of our key personnel could have a material and adverse effect on our
business, results of operations and financial condition. Our future success
will also depend 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 this 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 will be
able to 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.
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Multex.com's international operations are new and may not be successful. We
have only limited business experience outside of the United States
We have only 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 some markets, including Hong Kong, we intend to rely on the
sales and marketing efforts of independent representatives. The failure of our
independent representatives to successfully solicit information providers or
market our services in these markets could have a material and adverse effect on
our business, results of operations and financial condition.
Doing business internationally subjects us to additional regulatory
requirements, tax liabilities and other risks
There are risks inherent in doing business in international markets,
including unexpected changes in regulatory requirements, potentially adverse tax
consequences, export restrictions and controls, tariffs and other trade
barriers, difficulties in staffing and managing foreign operations, political
instability, fluctuations in currency exchange rates, and seasonal reductions in
business activity during the summer months in Europe and various other parts of
the world, any of which could have a material and 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 these
countries as an investment advisor or in our having to cease selling our
services in these countries, either of which could have a material and adverse
effect on our business, results of operations and financial condition.
If Multex.com cannot keep pace with the evolving standards of the industry and
demands of customers, we may be unable to enhance our existing services or
introduce new services
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 these changes in a timely manner could have a material and 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
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<PAGE>
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.
Because Multex.com's business is dependent upon network and computer systems
located in one area, we are particularly susceptible to problems caused by
natural disasters, power failures, system failures, security breaches or other
damage to our system
Our electronic distribution of investment research utilizes proprietary
technology which resides principally in New York City. The continued and
uninterrupted performance of our network and computer systems is critical to our
success. Any disaster, power outage or system failure that causes interruptions
in our ability to provide our services to our customers, including failures that
affect our ability to collect research from our information providers or provide
electronic investment research to our users, 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 systems, or in the
rate of requests for this 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 systems that could
disrupt the distribution of research and other reports and information. Our
business, results of operations and financial condition could be materially and
adversely affected if any of these problems occur.
Our operations are dependent on our ability to protect our network and
computer systems against damage from computer viruses, fire, power loss, data
communications failures, vandalism and other malicious acts, and similar
unexpected adverse events. In addition, a failure of our communications
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.
If Multex.com fails to adequately protect its intellectual property rights or
faces a claim of intellectual property infringement by a third-party, it could
lose its intellectual property rights or be liable for significant damages
Our future success will depend, in substantial part, on our intellectual
property rights. We seek to protect our intellectual property 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 intellectual 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.
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<PAGE>
Furthermore, we cannot assure you that third parties will not claim that we
have infringed their patents or other proprietary rights. From time to time we
have been, and we expect to continue to be, subject to claims by third parties
in the ordinary course of our business, including claims of alleged infringement
of the trademarks and other proprietary rights of third parties. Although there
has not been any litigation relating to these claims to date, these claims and
any resultant litigation, should they 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, this 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 these claims or litigation
unless we enter into agreements with the third parties responsible for these
claims or litigation which may be unavailable on commercially reasonable terms.
Generally, we 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 information from unauthorized use or disclosure, parties may attempt
to disclose, obtain or use our proprietary information which, if successful,
could have a material and adverse effect on our business, results of operation
and financial condition. The steps we have taken may not prevent
misappropriation of our proprietary information.
The market price of our shares may experience extreme price and volume
fluctuations
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. 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, or the Internet
industry;
. 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.
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
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and resources and have a material adverse effect on our business, results of
operation and financial condition.
Our executive officers, directors and 5% or greater stockholders significantly
influence all matters requiring a stockholder vote
Our executive officers, directors and existing stockholders who each own
greater than 5% of the outstanding common stock and their affiliates, in the
aggregate, beneficially own approximately 26.2% of our outstanding common stock.
As a result, our executive officers, directors and 5% or greater stockholders
will be able to significantly influence the outcome of 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.
A third party could be prevented from acquiring your shares of stock at a
premium to the market price because of our anti-takeover provisions
Various provisions of our certificate of incorporation, bylaws and Delaware
law could make it more difficult for a third party to acquire us, even if doing
so might be beneficial to you and our other stockholders.
The future sale of shares of our common stock may negatively affect our stock
price
If our stockholders sell substantial amounts of our common stock, including
shares issuable upon the exercise of outstanding options and a warrant in the
public market, the market price of our common stock could fall. These 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. Persons who may be deemed to be
affiliates of Multex.com include individuals or entities that control, are
controlled by, or are under common control of Multex.com and may include some
of the officers, directors, or principal shareholders of Multex.com. Affiliates
may not sell their shares of Multex.com common stock except pursuant to:
. an effective registration statement under the Securities Act covering the
resale of those shares;
. an exemption under Rule 144 under the Securities Act; or
. another applicable exemption under the Securities Act.
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Risks Related to the Internet Industry
If Internet usage does not continue to grow, the our business may not be
successful
The Internet is relatively new and is rapidly evolving. The Multex.com's
business would be materially and adversely affected if Internet usage does not
continue to grow. Internet usage may be inhibited for a number of reasons,
including:
. 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, including credit card numbers, and
attempts by unauthorized computer users to penetrate our network security;
and
. privacy concerns, including those related to the placement by Web sites of
information on a user's hard drive without the user's knowledge or consent
in order to gather user information.
Our markets are 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
markets 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, results of operation and financial condition would be
materially and adversely affected if we incurred significant costs without
generating additional revenues or if we cannot rapidly adapt to these changes.
If the Internet infrastructure is not adequately maintained, we may be unable to
provide investment research and information services in a timely manner
Our future success will depend, in substantial part, upon the maintenance
of the Internet infrastructure, including a reliable network backbone with the
necessary speed, data capacity and security, and the timely development of
enabling products, including 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 result of damage to portions of its infrastructure or
otherwise, and these 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
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unresolved and could materially and adversely affect both the growth of Internet
usage generally and our business, results of operations and financial condition
in particular.
We may be subject to legal claims in connection with the content we publish and
distribute on the Internet
As a publisher and distributor of online content, we face potential direct
and indirect liability for claims of 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 these 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 claims or
resulting litigation could have a material and adverse effect on our business,
results of operations and financial condition.
We may become subject to burdensome 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, including those governing intellectual property,
privacy, libel and taxation, apply to the Internet generally and the electronic
distribution of investment research in particular. Legislation could dampen the
growth in the use of the Internet generally and decrease the acceptance of the
Internet as a communications and commercial medium, which could have a material
and 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,
some local telephone carriers have petitioned governmental agencies to regulate
Internet service providers and online service providers in a manner similar to
long distance telephone carriers and to impose access fees on Internet service
providers and online service providers. 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, the United 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, federal or foreign governments, that
we might not unintentionally violate these laws or that these laws will not be
modified, or new laws enacted, in the future. Any of these developments could
have a material and adverse effect on our business, results of operations and
financial condition.
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ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(a)(1) Consolidated Financial Statements
The response to this item is incorporated by reference to pages F-1 to F-20
herein.
(a)(2) Supplementary Data
Not Applicable.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Executive Officers and Directors. Executive officers and directors of
Multex.com, and their ages as of March 6, 2000, are as follows:
<TABLE>
<CAPTION>
Age Position
Executive Officers:
<S> <C> <C>
Isaak Karaev(1) 53 Chairman and Chief Executive Officer
James M. Tousignant 39 President and Director
John J. McGovern 44 Chief Financial Officer
Gregg B. Amonette 47 Senior Vice President, Global Sales
Ron Waksman 35 Senior Vice President, Business-to-Business Services
Homi M. Byramji 47 Senior Vice President and Director
John J. Mahoney 40 Senior Vice President, Product Management
Mikhail Akselrod 44 Senior Vice President, Technology
Directors:
George F. Rick Adam, Jr.(2) 53 Director
I. Robert Greene(1)(2) 39 Director
Lennert J. Leader(3) 45 Director
John Tugwell(1)(2)(3) 59 Director
Devin N. Wenig(3) 33 Director
</TABLE>
_______________
(1) Member of the Executive Committee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
Isaak Karaev co-founded Multex.com in April 1993 and has served as Chief
Executive Officer and a director of Multex.com since that time. In addition,
Mr. Karaev served as
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Chairman of the board of directors from Multex.com's inception to October 1996
and has served as Chairman of the board of directors since April 1998. Before
founding Multex.com, 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.
James M. Tousignant co-founded Multex.com in April 1993 and has served as
Multex.com's President and a Director since June 1999. Mr. Tousignant served as
Multex.com's Executive Vice President from December 1998 to June 1999 and as
Multex.com's Senior Vice President from April 1993 to December 1998. Before
founding Multex.com, Mr. Tousignant was Senior Director of Sales in the
Brokerage Services Information Group of ADP from 1989 to April 1993.
John J. McGovern has served as Multex.com's Chief Financial Officer since
November 1999. Prior to joining Multex.com, Mr. McGovern has served in senior
financial and executive positions for over twenty years, including most recently
as President and Chief Executive Officer of Northsound Music Group for two
years. Before that he was Managing Director of JJM Group LLC from January 1996
to July 1997 and Chief Executive Officer of Axel Electronics/Sigma Power from
1990 to 1995. He also served more than ten years at Merrill Lynch & Co. and was
a Senior Vice President of Merrill Lynch Interfunding and Director of ML Capital
Markets.
Gregg B. Amonette has served as Multex.com's Senior Vice President, Global
Sales since June 1999, as Senior Vice President Sales and Marketing between
December 1998 and June 1999, and as Multex.com'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.
Ron Waksman has served as Multex.com's Senior Vice President, Business-to-
Business Services since August 1999. Mr. Waksman is responsible for managing
Multex.com's institutional product line. He founded the Multex Research-On-
Demand product. Before joining the Multex.com team in 1995, he worked for ten
years at Goldman, Sachs & Co.
Homi M. Byramji has served as a Senior Vice President and Director of
Multex.com and President of Market Guide since September 1999. Prior to joining
Multex.com, Mr. Byramji had been the President and CEO of Market Guide since
1992.
John J. Mahoney has served as Multex.com's Senior Vice President, Product
Management since December 1998, and also served as Multex.com's Vice President,
Product Development from August 1994 to December 1998. Prior to joining
Multex.com, Mr. Mahoney was Vice President of Workstation Products in the
Brokerage Services Information Group of ADP from 1987 to March 1993.
Mikhail Akselrod has served as Multex.com's Senior Vice President,
Technology since August 1999. He also served as Multex.com's Vice President,
Operations from April 1997 to August 1999. Mr. Akselrod joined Multex.com in
April 1993.
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George F. Rick Adam, Jr. has served as a director of Multex.com since July
1999. Mr. Adam is the founder, Chairman and Chief Executive Officer of New Era
of Networks Inc., a provider of enterprise application integrating software
solutions. From 1987 to 1993, Mr. Adam was a general partner of Goldman Sachs &
Co. where he was responsible for information technology, back office operations
and general services. Prior to joining Goldman Sachs, Mr. Adam served as the
Chief Information Officer and Vice President of Personnel at Baxter Healthcare
Corp. from 1980 to 1987.
I. Robert Greene has served as a director of Multex.com since July 1996.
He is currently a Managing Partner at Flatiron Partners. From January 1999
through June 1999, Mr. Greene was 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 Multex.com.
Lennert J. Leader has served as a director of Multex.com since December
1998. Mr. Leader is President of America Online, Inc. Investments. Mr. Leader
served as Senior Vice President, Chief Financial Officer and Treasurer of
America Online, Inc. from September 1989 until July 1998 and was Chief
Accounting Officer from October 1993 until July 1998. Prior to joining America
Online, 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. America Online, Inc., which is an affiliate of America
Online, Inc. Investments, is a significant stockholder of Multex.com.
John Tugwell has served as a director of Multex.com since July 1999. Since
October 1997, Mr. Tugwell has provided consulting services on strategic and
financial issues to family-owned and middle market companies in the metropolitan
New York region. From April 1996 to April 1997, Mr. Tugwell served as President
and Chief Executive Officer of Fleet Bank N.A. after its acquisition of NatWest
Bancorp Inc. in 1996. Prior to this acquisition, Mr. Tugwell served as
President and Chief Executive Officer of NatWest Bancorp, a 400-branch financial
services company.
Devin N. Wenig replaced Herbert L. Skeete as a director of Multex.com in
February 2000. Mr. Wenig is Managing Director, Global Marketing at Reuters
Information, which is an affiliate of Reuters Limited and Reuters America, Inc.,
which is a significant stockholder of Multex.com. Reuters Limited and
Multex.com are joint venturers in Multex Investor Europe. Mr. Wenig has also
served from 1994 through the present in various management positions at Reuters
America, including most recently as Executive Vice President, Marketing. Prior
to joining Reuters, Mr. Wenig practiced law at the New York firm of Cravath,
Swaine & Moore from 1991 to 1994.
Composition of the Board of Directors
Our board of directors is 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
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that class will be elected for three-year terms at the annual meeting of
stockholders in the year in which their term expires. Our board of directors has
resolved that Messrs. Adam, Greene and Tousignant will be Class I Directors
whose terms expire at the 2000 annual meeting of stockholders. Messrs. Leader
and Wenig will be Class II Directors whose terms expire at the 2001 annual
meeting of stockholders. Messrs. Byramji Karaev and Tugwell will be Class III
Directors whose terms expire at the 2002 annual meeting of stockholders. With
respect to each class, a director's term will be subject to the election and
qualification of their successors, or their earlier death, resignation or
removal.
Mr. Wenig was appointed by the board of directors to fill a vacancy caused
by the resignation of Herbert Skeete in February 2000. Mr. Skeete was appointed
by the board of directors to replace Davis Gaynes in March 1999, when Mr. Gaynes
resigned from the board of directors.
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 our independent auditors, the scope of the
annual audits, fees to be paid to the auditors, the performance of our
independent auditors and our accounting practices. The members of the audit
committee are Messrs. Leader, Tugwell and Wenig.
The compensation committee of the board of directors determines the
salaries and incentive compensation of our officers and provides recommendations
for the salaries and incentive compensation of our other employees. The
compensation committee also administers our various incentive compensation,
stock and benefit plans. The members of the compensation committee are Messrs.
Adam, Greene and Tugwell.
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 Tugwell.
Director Compensation
We do not currently compensate directors for attending meetings of the
board of directors or committee meetings of the board of directors, but we do
reimburse directors for their reasonable travel expenses incurred in connection
with attending these meetings.
Under the Automatic Option Grant Program of the 1999 Stock Option Plan,
which is described below under "Executive Compensation--1999 Stock Option
Plan", and subject to the last sentence of this paragraph, each individual who
served as a non-employee member of the board of directors on the date the
underwriting agreement entered into in connection with our initial public
offering was executed and who was not previously in our employ received at that
time an option to purchase 12,000 shares of common stock with an exercise price
equal to $14.00 per share. Each individual who first joins the board of
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directors after the completion of our initial public offering as a non-employee
member of the board of directors will also receive an option grant for 12,000
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 our prior
employ. In addition, at each annual meeting of stockholders, 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
3,750 shares of common stock, whether or not such individual has been in our
prior employ. 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, will not be eligible to receive
any options under the Automatic Option Grant Program.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth all compensation earned during the fiscal
year ended December 31, 1999 by our Chief Executive Officer and our other four
most highly compensated executive officers of whose salaries and bonuses
exceeded $100,000 in 1999.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Compensation
Annual Compensation (1) Awards
----------------------- ------
Securities
Underlying
Name and Principal Position Salary Bonus Options
--------------------------- ------ ----- -------
Isaak Karaev
<S> <C> <C> <C>
Chief Executive Officer..................................... $200,000 $250,000 0
James M. Tousignant
President................................................... 174,615 300,000 300,000
Homi M. Byramji (2)
Senior Vice President ...................................... 200,360 0 150,000
Gregg B. Amonette
Senior Vice President, Global Sales and Marketing........... 163,462 228,000 100,000
John J. Mahoney
Senior Vice President, Product Management................... 153,077 100,000 100,000
</TABLE>
(1) The column for "Other Annual Compensation" has been omitted because there
is no compensation required to be reported in that column. The aggregate
amount of perquisites and other personal benefits provided to each
executive officer above is less than 10% of the total annual salary and
bonus of that officer.
(2) Mr. Byramji joined Multex.com following the acquisition of Market Guide on
September 23, 1999 and became Senior Vice President and Director.
Option Grants in Last Fiscal Year
The following table sets forth information regarding options granted to our
executive officers during the fiscal year ended December 31, 1999. We have
never granted any stock appreciation rights.
<TABLE>
<CAPTION>
Individual Grants (1)
---------------------
Percent of
Number of Total Potential Realizable
Securities Options Value at Assumed Annual
Underlying Granted to Exercise Rates of Stock Price
Options Employees In Price Per Expiration Appreciation for Option
Name Granted 1999 (2) Share ($) Date Term (3)
- ---- ------- -------- --------- ---- -------------------
<S> <C> <C> <C> <C> <C>
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
5% 10%
----- -----
<S> <C> <C> <C> <C>
Isaak Karaev.................. 0 0.0% N/A N/A $ -- $ --
James M. Tousignant.......... 300,000 10.0 15.06 8/10/09 2,841,343 7,200,528
John J. McGovern (4).......... 50,000 1.7 21.75 11/15/09 683,923 1,733,195
150,000 5.0 21.75 11/15/09 1,367,846 3,466,390
Philip Callaghan (5).......... 0 0.0 N/A N/A -- --
Gregg B. Amonette (6)........ 100,000 3.3 15.06 8/10/09 947,115 2,400,176
John J. Mahoney (6).......... 100,000 3.3 15.06 8/10/09 947,115 2,400,176
Homi M. Byramji (7).......... 50,000 1.7 13.20 3/30/09 415,070 1,051,870
100,000 3.3 14.31 10/13/09 899,948 2,280,643
Ron Waksman.................. 7,500 0.3 8.00 1/15/09 37,734 95,625
30,000 1.0 14.31 10/13/09 269,984 684,194
Mikhail Akselrod............. 30,000 1.0 30.00 12/21/09 566,005 1,434,368
</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 our 1999 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.
(2) In the year ended December 31, 1999, we granted options to employees to
purchase an aggregate of 3,002,450 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
an estimate or projection of our future common stock prices. These amounts
represent certain assumed rates of appreciation in the value of our 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) John J. McGovern joined Multex.com and assumed the position of Chief
Financial Officer on November 16, 1999. Options to acquire 50,000 shares of
common stock vest after two consecutive reporting periods in which
Multex.com exceeds internal financial projections.
(5) Mr. Callaghan resigned on August 16, 1999.
(6) These options vest on the date which is six years following the date of
their grant, but may vest earlier if we achieve certain milestones.
Specifically, the options will vest earlier with respect to 50% of the
shares when total gross revenues in any 12-month period exceed $50.0 million
and, the other 50% of the shares when we achieve positive earnings before
interest, taxes, depreciation and amortization.
(7) Mr. Byramji joined Multex.com following the acquisition of Market Guide on
September 23, 1999 and became Senior Vice President and Director. The
50,000 options granted to Mr. Byramji on 3/30/99 vested upon execution of
the Market Guide merger agreement on June 23, 1999.
Aggregated Option Exercises In The Year Ended December 31, 1999 And Fiscal Year-
End Option Values
The following table sets forth information concerning options to purchase
common stock exercised by our executive officers during the year ended December
31, 1999 and the number and value of unexercised options held by each of the
executive officers at December 31, 1999.
55
<PAGE>
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised
Acquired on Value Underlying Unexercised In-The-Money Options at
Name Exercise Realized Options at December 31, 1999 December 31, 1999 (1)
- ---- -------- -------- ---------------------------- ---------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Isaak Karaev......... 0 0 500,000 125,000 $17,981,250 $4,078,125
James M. Tousignant. 12,500 109,250 48,125 363,125 1,587,266 8,851,642
John J. McGovern (2). 0 0 0 200,000 0 3,175,000
Philip Callaghan (3). 23,125 651,563 -- -- -- --
Greg B. Amonette..... 10,625 141,445 43,750 175,625 1,511,719 4,859,455
John J. Mahoney..... 43,750 340,125 4,375 131,875 131,797 3,347,735
Homi M. Byramji (4).. 0 0 112,500 100,000 3,260,876 2,331,250
Ron Waksman.......... 10,625 282,475 21,875 66,250 795,297 1,938,470
Mikhail Akselrod..... 10,625 95,625 25,000 71,875 892,062 1,666,172
</TABLE>
(1) The last reported sale price of Multex.com's common stock on the NASDAQ on
December 31, 1999 was at $37.625.
(2) Mr. McGovern joined Multex.com and assumed the position of Chief Financial
Officer on November 16, 1999.
(3) Mr. Callaghan resigned on August 16, 1999.
(4) Mr. Byramji joined Multex.com following the acquisition of Market Guide on
September 23, 1999 and became Senior Vice President and Director.
Employment and Non-Competition Agreements
None of our executive officers has an employment agreement, although all of
our executive officers have entered into agreements that contain non-
competition, non-disclosure and non-solicitation restrictions and covenants,
including a provision prohibiting these officers from competing with Multex.com
during their employment with us and for a period of nine months after
termination of their employment with us.
1999 Stock Option Plan
Multex.com's 1999 Stock Option Plan is the successor equity incentive
program to Multex.com's existing 1993 Stock Incentive Plan and became effective
in January 1999. We have reserved for issuance 6,521,000 shares of common stock
under the 1999 Stock Option Plan. The share reserve is comprised of the shares
issuable upon exercise of outstanding stock options granted under the 1993 Stock
Incentive Plan, the remaining share reserve available for option grants under
that plan, an additional 2,500,000 share reserve which was approved by our
stockholders on September 22, 1999 and outstanding stock options granted under
Market Guide stock plans assumed by Multex.com. 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 750,000 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 375,000 shares in the aggregate per calendar year.
Outstanding options under the 1993 Stock Incentive Plan were incorporated
into the 1999 Stock Option Plan at the time of our initial public offering, and
no further option grants will be made under the 1993 Stock Incentive 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 1993 Stock Incentive
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:
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<PAGE>
. the Discretionary Option Grant Program under which eligible
individuals, 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 Administrator;
. the Stock Issuance Program under which eligible individuals may, in
the Plan Administrator's discretion, be issued shares of common stock
directly, through the purchase of shares at a price determined by the
Plan Administrator or as a bonus tied to the performance of services;
. 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
. 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 are
administered by the compensation committee of the board of directors. The
compensation committee, as Plan Administrator, has complete discretion to
determine which eligible individuals are to receive option grants or stock
issuances, the time or times when option grants or stock issuances are to be
made, the number of shares subject to each 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 also has 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 exercises 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
are made in compliance with the express provisions of these programs.
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 individuals to deliver a full-recourse,
interest-bearing promissory note in payment of the option exercise price and/or
direct issue price, and any associated withholding taxes incurred in connection
with that acquisition.
In the event of an acquisition of Multex.com, whether by merger or asset
sale or a sale by the stockholders of more than 50% of the total combined voting
power of Multex.com
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<PAGE>
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 our repurchase rights with
respect to those shares are to be assigned to the successor corporation or
otherwise continued in effect. The Plan Administrator has the authority under
the Discretionary Option Grant Program to provide that the shares subject to
options granted under that program will automatically vest as follows:
. upon an acquisition of Multex.com, whether or not those options are
assumed or continued;
. upon a hostile change in control of Multex.com effected through a
successful tender offer for more than 50% of the outstanding voting
stock or by proxy contest for the election of members of the board of
directors; or
. 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
1993 Stock Incentive Plan will vest in the event of an acquisition of
Multex.com 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 Multex.com.
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 us
equal to the excess of the fair market value of the vested shares of common
stock subject to the surrendered option over the aggregate exercise price
payable for those shares. This 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 1993 Stock Incentive 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 of our
executive officers and other highly compensated employees 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
58
<PAGE>
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 specified changes in the ownership or
control of Multex.com.
Under the Automatic Option Grant Program, and subject to the last sentence
of this paragraph, each individual who served as a non-employee member of the
board of directors on the date the underwriting agreement entered into in
connection with our initial public offering was executed and who was not
previously in our employ received at that time an option grant for 12,000 shares
of common stock with an exercise price equal to $14.00 per share. Each
individual who first joins the board of directors after the completion of our
initial public offering as a non-employee member of the board of directors will
also receive an option grant for 12,000 shares of common stock at the time of
his or her commencement of service on the board of directors, provided that the
individual has not otherwise been in our prior employ. In addition, at each
annual meeting of stockholders, 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 3,750 shares of common stock,
whether or not that individual has been in our prior employ. 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, will 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 12,000-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 3,750-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 specified changes in the ownership or control of Multex.com or, 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 of our officers as part of
their option grants under the Discretionary Option Grant Program. Options with
this limited stock appreciation right may be surrendered to us upon the
successful completion of a hostile tender offer for more than 50% of our
outstanding voting stock. In return for the surrendered option, the optionee
will be entitled to a cash distribution from us in an amount per surrendered
option share equal to the excess of the highest price per share of common stock
paid in connection with the tender offer over the exercise price payable for
that share.
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<PAGE>
Our 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 ten years after the date that the board
of directors adopts the 1999 Stock Option Plan, the date on which all shares
available for issuance under the 1999 Stock Option Plan have been issued as
fully-vested shares, or the termination of all outstanding options in connection
with specified changes in control or ownership of Multex.com.
1999 Employee Stock Purchase Plan
Multex.com has reserved for issuance 750,000 shares of common stock under
Multex.com's 1999 Employee Stock Purchase Plan, which became effective in
January 1999. The Employee Stock Purchase Plan is designed to allow eligible
employees of Multex.com 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 began on the date of our initial public
offering and will end on or about 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, which is 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 the fair market value of the
common stock on the participant's entry date into the offering period or, the
fair market value on the semi-annual purchase date. In no event, however, may
any participant purchase more than 1,500 shares, nor may all participants in the
aggregate purchase more than 187,500 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.
Our 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.
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Compensation Committee Interlocks and Insider Participation
The compensation committee of the board of directors consists of Messrs.
Adam, Greene and Tugwell, none of whom has been an officer or employee of
Multex.com at any time since our inception. No executive officer of Multex.com
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 our 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 the compensation of our executive officers.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of the common stock as of December 31, 1999 by each stockholder whom
we know to beneficially own 5% or more of the outstanding shares of common
stock, each of our directors and executive officers and all of our directors and
executive officers as a group. Unless otherwise indicated, the address of each
beneficial owner listed below is c/o Multex.com, Inc., 100 William St., 7th
Floor, New York, New York 10038.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Except as indicated by the footnotes below,
we believe, based on information furnished to us, that the persons and entities
named in the table below 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 27,179,717 shares of common stock outstanding
as of December 31, 1999. 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, 1999, these shares are deemed outstanding for the purpose of
determining the percentage ownership of the optionee. These shares, however,
are not deemed outstanding for the purpose of computing the percentage ownership
of any other stockholder.
<TABLE>
<CAPTION>
Percent Beneficially
Name of Beneficial Owner Number of Shares Owned
- ------------------------ ---------------- -----
Executive Officers and Directors:
<S> <C> <C>
Isaak Karaev (1)................................................................... 1,394,668 5.0%
James M. Tousignant (2)............................................................ 202,875 *
Philip Callaghan (3)............................................................... 0 *
John J. McGovern................................................................... 0 *
Gregg B. Amonette (4).............................................................. 91,313 *
Ron Waksman (5).................................................................... 26,100 *
Homi M. Byramji (6)................................................................ 551,864 2.0%
John J. Mahoney (7)................................................................ 200,000 *
Michael Akselrod (8)............................................................... 28,881 *
George F. Rick Adam, Jr. (9)....................................................... 12,000 *
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
I. Robert Greene (10).............................................................. 8,662 *
Lennert J. Leader (11)............................................................. 400,000 1.5%
Devin N. Wenig (12)................................................................ 1,944,445 7.2%
John Tugwell (13).................................................................. 12,000 *
All directors and executive officers as a group (14 persons) (14).................. 4,872,808 17.5%
Other 5% Stockholders:
Chase Venture Capital Associates, L.P. (15)........................................ 2,464,116 9.1%
Reuters America Inc. (16).......................................................... 1,944,445 7.2%
</TABLE>
- ------------
* Less than one percent.
(1) Includes 500,000 shares of common stock issuable upon the exercise of stock
options which are exercisable within 60 days of December 31, 1999.
(2) Includes 48,125 shares of common stock issuable upon the exercise of stock
options which are exercisable within 60 days of December 31, 1999.
(3) Mr. Callaghan resigned on August 16, 1999.
(4) Includes 50,000 shares of common stock issuable upon exercise of stock
options which are exercisable within 60 days of December 31, 1999.
(5) Includes 23,750 shares of common stock issuable upon the exercise of stock
options which are exercisable within 60 days of December 31, 1999.
(6) Includes 112,500 shares of common stock issuable upon the exercise of stock
options which are exercisable within 60 days of December 31, 1999.
(7) Includes 13,750 shares of common stock issuable upon the exercise of stock
options which are exercisable within 60 days of December 31, 1999.
(8) Includes 25,000 shares of common stock issuable upon the exercise of stock
options which are exercisable within 60 days of December 31, 1999.
(9) Includes 12,000 shares of common stock issuable upon the exercise of stock
options which are exercisable within 60 days of December 31, 1999.
(10) Consists of 8,662 shares of common stock owned by Mr. Greene. Mr. Greene
was previously a limited partner of Chase Capital Partners, the general
partner of Chase Venture Capital Associates L.P. During his tenure in this
capacity, Mr. Greene could have been deemed to be the beneficial owner of
Chase Venture Capital Associates' shares, although he disclaimed beneficial
ownership of those shares except to the extent of his pecuniary interest,
if any. Does not include 72,000 shares of common stock held by Flatiron
Fund 1998-1999 LLC, of which Mr. Greene is a limited partner.
(11) Consists of 400,000 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.
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<PAGE>
Investments. In this capacity, Mr. Leader may be deemed to be a beneficial
owner of these shares, although he disclaims beneficial ownership of these
shares except to the extent of his pecuniary interest, if any.
(12) Consists of 1,944,445 shares of common stock held by Reuters America Inc.
Mr. Wenig serves as Managing Director, Global Marketing of Reuters
Information, an affiliate of Reuters America Inc. In this capacity, Mr.
Wenig may be deemed to be the beneficial owner of these shares, although he
disclaims beneficial ownership of these shares except to the extent of his
pecuniary interest, if any.
(13) Includes 12,000 shares of common stock issuable upon the exercise of stock
options which are exercisable within 60 days of December 31, 1999.
(14) Includes 797,125 shares of common stock issuable upon exercise of stock
options which are exercisable within 60 days of December 31, 1999. See
Notes 1 through 13.
(15) Consists of 2,464,116 shares of common stock held by Chase Venture Capital
Associates, L.P., of which Chase Capital Partners is the General Partner.
Mr. Greene was previously a limited partner of Chase Capital Partners, the
general partner of Chase Venture Capital Associates L.P. During his tenure
in this capacity, Mr. Greene could have been deemed to be the beneficial
owner of Chase Venture Capital Associates' shares, although he disclaims
beneficial ownership of those shares 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.
(16) Consists of 1,944,445 shares of common stock held by Reuters America Inc.
Mr. Wenig serves as Managing Director, Global Marketing of Reuters
Information, an affiliate of Reuters America Inc. In this capacity, Mr.
Wenig may be deemed to be the beneficial owner of these shares, although he
disclaims beneficial ownership of these shares except 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.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Reuters Agreements
Reuters Limited entered into a strategic distribution relationship with
Multex.com in June 1995. An affiliate of Reuters, Reuters America Inc., is one
of our significant stockholders. 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, we granted to Reuters a limited, non-
exclusive license to use and distribute some of our technology for production
and delivery of research reports to Reuters' customers, to market and distribute
MultexNET research reports to up to 15,000 Reuters' customers, and to market
Multex Research-on-Demand service to Reuters' customers. In 1998, Reuters made
aggregate payments to us of approximately $1.2 million, which consisted of a
$500,000 license fee and payments for consulting and maintenance services.
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<PAGE>
On July 15, 1998, we and Reuters entered into a revised agreement, pursuant
to which we renegotiated the terms of our relationship described above. The new
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 this agreement, Multex.com 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. MultexNET and Multex
Research-On-Demand are available to Reuters 3000 subscribers on both a
subscription and pay-per-view basis. Revenues generated from the use of
Multex.com products via the Reuters Web are shared in accordance with the terms
of this agreement. Specifically, Reuters is required to pay us 50% of all
revenues generated from the first 20,000 Reuters' customers who subscribe to
MultexNET, and 40% of all revenues generated from subscribers in excess of
20,000. In addition, Reuters is required to pay us a royalty payment of 75% of
all purchases by Reuters' customers of research reports and information from
Multex Research-on-Demand. Over the five year term, Reuters may terminate the
agreement if certain subscriber minimums are not met. Beginning on January 1,
2000, Reuters may terminate the agreement if the number of subscribers does not
exceed 1,000. Over the remaining four-year period, this minimum number of
subscribers increases from 2,500 to 5,000 by December 31, 2003.
We believe that the terms of the initial agreement with Reuters were no
less favorable than the terms we would have otherwise negotiated with an
unaffiliated third party as we entered into this agreement before Reuters
America Inc. became a stockholder of Multex.com in June 1996. In addition, we
believe that the terms of the revised agreement with Reuters, which became
effective on January 1, 1999, are no less favorable than the terms we would have
otherwise negotiated with an unaffiliated third party.
In February 2000, we and Reuters entered into a joint venture agreement to
operate Multex Investor Europe.
Mr. Skeete, who became a director of Multex.com in March 1999 and resigned
in February 2000, and Mr. Wenig, who became a director of Multex.com in February
2000, are both officers of Reuters.
America Online Agreements
In March 1998, Multex.com entered into an agreement, which was amended in
February 1999, with America Online, Inc., one of our significant stockholders.
Pursuant to the terms of the initial agreement, we secured a position as an
anchor tenant for brokerage research on the America Online Personal Finance
channel as well as a programming presence on other screens within the America
Online service, with links from those locations back to Multex Investor. Under
the revised agreement, our anchor tenancy for brokerage research on the America
Online Personal Finance channel became "exclusive" so that we receive continuous
and permanent placement on the channel. America Online has the right to cancel
this "exclusive" tenancy if we do not remain one of the top three providers of
commingled investment and brokerage research, or if it determines that our
content is not commensurate with that of a top three provider. The revised
agreement also provides for additional tenancies, including placements on
international and other screens within the America Online service and on
CompuServe's personal finance
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<PAGE>
channel. The initial and revised agreements expire in February 2001 and are
automatically renewable unless either party gives advance notice of its
intention not to renew. In consideration of the anchor tenant position, we paid
America Online a carriage fee of $100,000 in 1998 and under the revised
agreement, we are obliged to pay an aggregate carriage fee of $1.8 million in
eight equal installments, which began in February 1999 and end in November 2000.
In addition, America Online receives 10% to 25% of both advertising and
merchandising revenues from advertisements and sales generated from Multex
Investor, with links back to the America Online network. This revenue share is
based on an advertising minimum of $30.00 for each thousand times an
advertisement is delivered to a user.
We believe that the terms of the agreement with America Online are no less
favorable than the terms we would have otherwise negotiated with an unaffiliated
third party as the parties entered into the agreement before America Online
became one of our stockholders in December 1998. In addition, we believe that
the terms of the revised agreement with America Online, which became effective
on February 25, 1999, are no less favorable than the terms we would have
otherwise negotiated with an unaffiliated third party.
Mr. Leader, who is one of our directors, is the President of America
Online, Inc. Investments, an affiliate of America Online.
Merrill Lynch Agreement
On December 21, 1999, Multex.com announced a multi-year partnership with
Merrill Lynch to co-develop global research and information Web sites for
clients of Merrill Lynch's institutional e-commerce portal. The companies will
jointly develop the next-generation platform for real-time delivery of Merrill
Lynch investment strategy and securities research for its institutional clients.
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."
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements.
Reference is made to the consolidated financial statements included in
Item 8 to this Report on Form 10-K.
2. Financial Statement Schedules.
Reference is made to the consolidated financial statements included in
Item 8 to this Report on Form 10-K.
(b) Reports on Form 8-K
We filed a Report on Form 8-K, Items 2 and 7, on October 6, 1999,
announcing the consummation of the Market Guide merger.
We filed a Report on Form 8-K, Items 5 and 7, on October 29, 1999,
declaring that the Market Guide acquisition was accounted for as a pooling of
interests.
(c) Exhibits
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ -----------
<C> <S>
3.1 Form of Second Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.2 of our Registrtion
Statement on Form S-1, as amended (Registration No. 333-70693)).
3.2 Form of Amended and Restated Bylaws (incorporated by reference to Exhibit 3.4 of our
Registration Statement on Form S-1, as amended (Registration No. 333-70693)).
4.1 Specimen common stock certificate (incorporated by reference to Exhibit 4.1 of our Registration
Statement on Form S-1, as amended (Registration No. 333-70693)).
4.2 See Exhibits 3.1 and 3.2 for provisions of the Certificate of Incorporation and
Bylaws of the Registrant defining the rights of holders of Common Stock of the Registrant.
</TABLE>
66
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.1 Multex.com, Inc. 1999 Stock Option Plan (incorporated by
reference to Exhibit 99.1 of our Registration Statement on
Form S-8 filed on October 20,1999).
10.2 Multex.com, Inc. Employee Stock Purchase Plan (incorporated
by reference to Exhibit 99.11 of our Registration Statement
on Form S-8 filed on March 26, 1999).
10.3 Fourth Amended and Restated Registration Rights Agreement,
dated as of December 15, 1998 (incorporated by reference
to Exhibit 10.7 of our Registration Statement on Form S-1, as
amended (Registration No. 333-70693)).
10.4 Market Guide Inc. 1995 Key Employee Incentive Plan
(incorporated by reference to Exhibit 99.11 of our
Registration Statement on Form S-8 filed on October 20,
1999).
10.5 Market Guide Inc. 1995 Independent Director's Stock Incentive
Plan (incorporated by reference to Exhibit 99.13 of our
Registration Statement on Form S-8 filed on October 20,
1999).
10.6 Agreement and Plan of Merger and Reorganization dated as of
June 23, 1999 by and among the Registrant, Merengue
Acquisition Corp. and Market Guide, Inc. (incorporated by
reference to Exhibit 2.1 of our Current Report on Form 8-K
filed on June 29, 1999).
10.7 Agreement and Plan of Reorganization dated as of March 13,
2000 by and among the Registrant, Multex A Acquisition Corp.,
Sage Online, Inc., and the shareholders of Sage Online, Inc.
(incorporated by reference to Exhibit 2.1 of our Current
Report on Form 8-K filed on April 5, 2000).
10.8(a) Master Agreement for Electronic Distribution Services, dated
as of November 13, 1998, between the Registrant and Merrill
Lynch, Pierce, Fenner & Smith Incorporated.
10.8(b)+ Addendum No. 3 to Master Agreement for Electronic
Distribution Services, dated as of December 21, 1999 between
the Registrant and Merrill Lynch.
21.1 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21.1 of our Registration Statement on Form S-1, as
amended (Registration No. 333-70693)).
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Zerbo, McKiernan & Zambito, LLC.
27.1 Financial Data Schedule for the years ended December 31, 1997, 1998 and 1999.
</TABLE>
________________
+ Confidential treatment to be requested for certain portions of this Exhibit
pursuant to Rule 24b-2 promulgated under the Securities Exchange Act.
Confidential portions of this Exhibit have been filed separately with the
Securities and Exchange Commission.
(d) Financial Statement Schedules.
See Item 14(a)2 above.
67
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Multex.com, Inc. has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on this 11th day of April, 2000.
MULTEX.COM, INC.
By: /s/ Isaak Karaev
------------------------
Isaak Karaev
Chief Executive Officer
<PAGE>
MULTEX.COM, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Auditors.................................................................................. F-2
Consolidated Balance Sheets as of December 31, 1999 and 1998.................................................... F-4
Consolidated Statements of Operations for the years ended December 31, 1999, 1998 and 1997...................... F-5
Consolidated Statements of Stockholders' Equity (Deficit) for the years ended December 31, 1999, 1998 and
1997......................................................................................................... F-6
Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997...................... F-7
Notes to Consolidated Financial Statements...................................................................... F-8
Schedule II - Valuation and Qualifying Accounts................................................................. F-20
</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, 1999 and 1998, and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for each of the three years in the period ended December 31, 1999. Our
audits also included the financial statement schedule listed in the Index at
Item 14 (a). These financial statements and schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits. We did not audit the
statement of operations, stockholders' equity (deficit) or cash flows of Market
Guide Inc. which was acquired in a pooling of interests, which statement
reflects total revenues of $6,602,733 for the year ended December 31, 1997.
That statement was audited by other auditors whose report has been furnished to
us, and in our opinion, in so far as it relates to data included for Market
Guide Inc. is based solely on the report of the other auditors.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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, 1999 and 1998, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1999 in conformity with accounting principles generally
accepted in the United States. Also, in our opinion, the related financial
statement schedule when considered in relation to the basic financial statements
taken as a whole, present fairly in all material respects the information set
forth therein.
ERNST & YOUNG LLP
New York, New York
February 4, 2000, except for the seventh paragraph of
Note 17, as to which the date is March 21, 2000.
F-2
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of
Market Guide Inc.
We have audited the balance sheet of Market Guide Inc. (the "Company") as of
February 28, 1998, and the related statements of operations, accumulated
deficit, cash flows, and stockholders' equity for the year ended February 28,
1998. Our audits also included the financial statement schedule for the year
ended February 28, 1998 listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audit 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 our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Market Guide Inc. at February
28, 1998, and the results of its operations and its cash flows for the year
ended February 28, 1998 in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein for
the year ended February 28, 1998.
As discussed in Notes C and J, respectively, a change in accounting for
operating leases resulted in an understatement of previously reported expenses
and disposal of a division has been reclassified as a discontinued operation.
Accordingly, the financial statement for the year ended February 28, 1998 has
been restated to reflect these changes.
Zerbo, McKiernan & Zambito, LLC
Fairfield, New Jersey
May 18, 1998 except for Notes C and J as to which the date is April 27, 1999
F-3
<PAGE>
MULTEX.COM, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
----------------------------
1999 1998
------------- -------------
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents ................................................................... $6,089,552 $4,156,083
Marketable securities ....................................................................... 33,027,789 20,014,680
Accounts receivable, less allowance of $423,000 and $172,000
in 1999 and 1998, respectively ............................................................. 10,954,109 3,668,168
Deferred income tax ......................................................................... -- 191,008
Prepaid expenses ............................................................................ 1,404,147 290,511
Other current assets ........................................................................ 1,788,502 202,711
------------ ------------
Total current assets ........................................................................ 53,264,099 28,523,161
Property and equipment, net ................................................................... 10,862,634 4,469,691
Notes receivable, net of deferred gain of $840,000 in 1999 (Note 16) .......................... -- --
Other ......................................................................................... 1,473,721 190,135
------------ ------------
Total assets ................................................................................ $65,600,454 $33,182,987
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable ............................................................................ $5,051,382 $1,128,032
Accrued expenses ............................................................................ 4,778,052 1,702,102
Deferred revenues ........................................................................... 5,690,638 3,376,012
Current portion of long-term debt ........................................................... -- 157,250
Current portion of capital lease obligations .............................................. 224,720 201,625
------------ ------------
Total current liabilities ................................................................... 15,744,792 6,565,021
Long term liabilities:
Long term debt .............................................................................. -- 235,875
Capital lease obligations ................................................................... 192,656 167,232
Deferred rent ............................................................................... 2,431,311 419,306
Other liabilities ........................................................................... 30,822 58,619
------------ ------------
Total long term liabilities ................................................................. 2,654,789 881,032
Commitments (Note 13)
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--none and 25,000 shares at December 31, 1999 and 1998, respectively -- 3,459,696
Series B redeemable preferred stock; $.01 par value,
$5,500,000 aggregate liquidation preference:
Issued and outstanding--none and 36,666 shares at December 31, 1999 and 1998, respectively -- 7,294,411
Series C redeemable preferred stock; $.01 par value,
$15,000,000 aggregate liquidation preference:
Issued and outstanding--none and 100,000 shares at December 31, 1999 and 1998, respectively -- 18,064,794
Series D redeemable preferred stock; $.01 par value,
$10,000,000 aggregate liquidation preference:
Issued and outstanding--none and 55,556 shares at December 31, 1999 and 1998, respectively -- 11,101,685
Series E redeemable preferred stock; $.01 par value,
$20,000,000 aggregate liquidation reference:
Issued and outstanding--none and 80,000 shares at December 31, 1999 and 1998, respectively -- 19,939,452
Stockholders' equity (deficit):
Preferred stock--$.01 par value:
Authorized--5,000,000 shares; none issued and outstanding
at December 31, 1999 and 1998 ............................................................. -- --
Common stock--$.01 par value:
Authorized--50,000,000 shares; issued and outstanding--
27,179,717 shares and 8,043,338 shares at December 31, 1999 and 1998,
respectively .............................................................................. 271,797 80,433
Additional paid-in capital .................................................................. 109,564,235 2,038,678
Accumulated deficit ......................................................................... (60,141,003) (34,766,267)
Deferred compensation ....................................................................... (2,430,597) (1,460,000)
Accumulated other comprehensive loss ........................................................ (63,559) (15,948)
------------ ------------
Total stockholders' equity (deficit) ...................................................... 47,200,873 (34,123,104)
------------ ------------
Total liabilities and stockholders' equity (deficit) ...................................... $65,600,454 $33,182,987
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
MULTEX.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Revenues..................................................................... $ 40,849,515 $ 22,021,110 $ 12,616,499
Cost of revenues............................................................. 10,568,681 5,082,658 2,720,487
------------ ------------ ------------
Gross profit................................................................. 30,280,834 16,938,452 9,896,012
Operating expenses:
Sales and marketing........................................................ 26,378,775 8,667,316 4,568,385
Research and development................................................... 6,300,809 3,167,005 2,872,404
General and administrative................................................. 18,414,056 12,549,821 10,426,311
------------ ------------ ------------
Total operating expenses..................................................... 51,093,640 24,384,142 17,867,100
------------ ------------ ------------
Loss from operations......................................................... (20,812,806) (7,445,690) (7,971,088)
Other income (expense):
Gain on sale of equipment.................................................. -- 124,796 --
Offering expenses (Note 1)................................................. -- (840,781) --
Acquisition expenses (Note 5).............................................. (5,712,658) -- --
Interest expense........................................................... (113,773) (575,038) (395,646)
Interest and investment income............................................. 2,358,975 388,593 456,159
------------ ------------ ------------
Loss from continuing operations before income tax expense.................... (24,280,262) (8,348,120) (7,910,575)
Income taxes................................................................. 1,030,042 275,846 7,274
------------ ------------ ------------
Loss from continuing operations.............................................. (25,310,304) (8,623,966) (7,917,849)
Discontinued operations:
Income (loss) from discontinued operations, net of taxes................... 105,866 (439,849) (1,087,021)
Gain on sale of discontinued operations, net of taxes...................... 225,572 225,572 --
------------ ------------ ------------
331,438 (214,277) (1,087,021)
Net loss..................................................................... (24,978,866) (8,838,243) (9,004,870)
Redeemable preferred stock dividends......................................... 1,188,165 2,679,445 2,181,472
------------ ------------ ------------
Net loss attributable to common stockholders'................................ $(26,167,031) $(11,517,688) $(11,186,342)
============ ============ ============
Earnings (loss) per common share - basic and diluted:
Continuing operations, net of redeemable preferred stock dividends......... $(1.17) $(1.49) $(1.46)
============ ============ ============
Discontinued operations.................................................... 0.01 (0.03) (0.16)
============ ============ ============
Net loss................................................................... $(1.15) $(1.51) $(1.62)
============ ============ ============
Number of shares used in computing
basic and diluted loss per share............................................ 22,688,050 7,609,524 6,891,764
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
MULTEX.COM, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Common Stock
------------
Additional
Paid-in Accumulated Deferred
Shares Amount Capital Deficit Compensation
------ ------ ------- ------- ------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 ........ 6,777,561 $67,776 $2,822,146 $(16,923,154) $ --
Net loss ......................... -- -- -- (9,004,870) --
Translation adjustment ........... -- -- -- -- --
Comprehensive loss ............... -- -- -- -- --
Redeemable preferred stock ....... -- -- (2,181,472) -- --
dividend
Issuance of common stock ......... 3,750 37 10,275 -- --
Stock issued for services ........ 35,000 350 10,150 -- --
Issuance of common stock from the
employee stock purchase plan 11,658 117 27,688 -- --
Exercise of options .............. 340,625 3,406 45,593 -- --
Amortization of deferred
compensation .................... -- -- -- -- 25,107
relating to stock options
Deferred compensation related to stock
options ........................ -- -- 1,077,219 -- (1,077,219)
--------- ------- ---------- ------------ -----------
Balance at December 31, 1997 ........ 7,168,594 71,686 1,811,599 (25,928,024) (1,052,112)
Net loss ......................... -- -- -- (8,838,243) --
Translation adjustment ........... -- -- -- -- --
Comprehensive loss ............... -- -- -- -- --
Redeemable preferred stock
dividend........................ -- -- (2,679,445) -- --
Stock issued for services ........ 10,000 100 45,004 -- --
Issuance of common stock from
the employee stock purchase plan 33,244 332 184,893 -- --
Exercise of options .............. 631,500 6,315 218,933 -- --
Tax benefit from option exercises -- -- 242,134 -- --
Amortization of deferred
compensation .................... -- -- -- -- 439,672
relating to stock options
Cancellation of stock options .... -- -- (24,898) -- 24,898
Deferred compensation related to
stock options.................... -- -- 872,458 -- (872,458)
Sale of stock and issuance of
options in connection with the acquisition
of ............................. 75,000 750 644,250 -- --
certain assets of Multex Data
Group
Issuance of stock in connection
with ............................ 125,000 1,250 623,750 -- --
the acquisition of Multex
Data Group
Issuance of warrant in connection
with long-term debt ............. -- -- 100,000 -- --
--------- ------- ---------- ------------ -----------
Balance at December 31, 1998 ........ 8,043,338 80,433 2,038,678 (34,766,267) (1,460,000)
80,433
Net loss ......................... -- -- -- (24,978,866) --
Translation adjustment ........... -- -- -- -- --
Unrealized loss on marketable
securities .................. -- -- -- -- --
Comprehensive loss ............... -- -- -- -- --
Redeemable preferred stock
dividend......................... -- -- (1,188,165) -- --
Conversion of redeemable
preferred stock to common stock.. 14,861,112 148,611 60,912,224 -- --
Issuance of common stock, net
of offering costs............. 3,283,500 32,835 41,604,633 -- --
Exercise of options .............. 944,752 9,448 3,508,282 -- --
Amortization of deferred
compensation relating to stock
options......................... -- -- -- -- 479,923
Compensation related to
acceleration of option vesting... -- -- 160,938 -- --
Issuance of common stock from
the employee stock purchase
plan ......................... 47,015 470 571,645 -- --
Issuance of warrants ........... -- -- 1,956,000 -- (1,456,000)
Amortization of warrants ....... -- -- -- -- 5,480
Accumulated deficit adjustment
(Note 1) ............................ -- -- -- (395,870) --
--------- ------- ---------- ------------ -----------
Balance at December 31, 1999 ........ 27,179,717 $271,797 $109,564,235 $(60,141,003) $(2,430,597)
========== ======== ============ ============ ===========
<CAPTION>
Accumulated
Other
Comprehensive
Loss Total
---- -----
<S> <C> <C>
Balance at December 31, 1996 ........ $ -- $(14,033,232)
------------
Net loss ......................... -- (9,004,870)
Translation adjustment ........... (14,124) (14,124)
------------
Comprehensive loss ............... -- (9,018,994)
------------
Redeemable preferred stock
dividend........................ -- (2,181,472)
Issuance of common stock ......... -- 10,312
Stock issued for services ........ -- 10,500
Issuance of common stock from the
employee stock purchase plan... -- 27,805
Exercise of options .............. -- 48,999
Amortization of deferred
compensation ................... -- 25,107
relating to stock options
Deferred compensation related to stock
options ........................ -- --
----------- ------------
Balance at December 31, 1997 ........ (14,124) (25,110,975)
Net loss ......................... -- (8,838,243)
Translation adjustment ........... (1,824) (1,824)
------------
Comprehensive loss ............... -- (8,840,067)
------------
Redeemable preferred stock
dividend......................... -- (2,679,445)
Stock issued for services ........ -- 45,104
Issuance of common stock from
the employee stock purchase
plan ......................... -- 185,225
Exercise of options .............. -- 225,248
Tax benefit from option exercises -- 242,134
Amortization of deferred
compensation relating to stock
options......................... -- 439,672
Cancellation of stock options .... -- --
Deferred compensation related to
stock options.................... -- --
Sale of stock and issuance of
options in connection with the
acquisition of ................. -- 645,000
certain assets of Multex Data
Group
Issuance of stock in connection
with the acquisition of Multex... -- 625,000
Data Group
Issuance of warrant in connection
with long-term debt ............. -- 100,000
----------- ------------
Balance at December 31, 1998 ........ (15,948) (34,123,104)
----------- ------------
Net loss ......................... -- (24,978,866)
Translation adjustment ........... 1,264 1,264
Unrealized loss on marketable
securities .................. (48,875) (48,875)
------------
Comprehensive loss ............... -- (25,026,477)
------------
Redeemable preferred stock
dividend...................... -- (1,188,165)
Conversion of redeemable
preferred stock to common stock.. -- 61,060,835
Issuance of common stock, net
of offering costs............. -- 41,637,468
Exercise of options .............. -- 3,517,730
Amortization of deferred
compensation relating to stock
options......................... -- 479,923
Compensation related to
acceleration of option vesting.. -- 160,938
Issuance of common stock from
the employee stock purchase
plan ......................... -- 572,115
Issuance of warrants ........... -- 500,000
Amortization of warrants ....... -- 5,480
Accumulated deficit adjustment
(Note 1) ............................ -- (395,870)
----------- ------------
Balance at December 31, 1999 ........ $(63,559) $47,200,873
======== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
MULTEX.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------
1999 1998 1997
-------------- ------------- -------------
<S> <C> <C> <C>
Operating activities
Net loss from continuing operations ............................................ $(25,310,304) $(8,623,966) $(7,917,849)
Adjustments to reconcile net loss from continuing operations to net
cash used in operating activities:
Amortization of deferred compensation ........................................ 646,341 439,672 25,107
Gain on sale of equipment .................................................... -- (124,796) --
Depreciation and amortization ................................................ 3,364,917 1,869,514 1,659,102
Amortization of issuance and financing costs ................................. 12,632 146,569 40,988
Deferred income tax .......................................................... 191,008 (179,892) --
Bad debt expense ............................................................. 900,599 148,000 168,130
Stock issued for services .................................................... -- 45,330 20,825
Accumulated deficit adjustment ............................................... (395,870) -- --
Changes in operating assets and liabilities:
Accounts receivable ....................................................... (8,186,540) (1,175,189) (1,328,297)
Prepaid expenses .......................................................... (1,113,636) 24,402 (102,173)
Other current assets ...................................................... (1,585,791) 82,347 156,736
Other assets .............................................................. (1,283,586) 178,263 54,063
Accounts payable .......................................................... 2,977,129 539,306 (97,672)
Accrued expenses .......................................................... 3,178,443 508,285 194,297
Deferred revenue .......................................................... 2,314,626 1,373,643 668,628
Deferred rent ............................................................. 2,012,005 (11,186) 60,680
Other liabilities ......................................................... (27,797) 58,619 --
------------ ------------ -----------
Net cash used in operating activities from continuing operations ............... (22,305,824) (4,701,079) (6,397,435)
Investing activities
Purchase of marketable securities .............................................. (41,956,984) (21,283,209) (7,663,585)
Deposits and other assets ...................................................... -- 12,027 --
Proceeds from sale of marketable securities .................................... 28,895,000 8,932,114 7,829,635
Proceeds from sale of division, net of related expenses ........................ -- 819,324 --
Proceeds from sale of equipment ................................................ -- 200,953 --
Purchase of property and equipment ............................................. (8,634,238) (1,873,747) (1,335,038)
------------ ------------ -----------
Net cash used in investing activities .......................................... (21,696,222) (13,192,538) (1,168,988)
Financing activities
Proceeds from issuances of stock ............................................... 45,727,313 20,710,247 10,076,791
Preferred stock issuance costs ................................................. -- (100,000) (54,095)
Proceeds from long-term debt ................................................... -- 1,850,000 474,667
Proceeds from issuance of warrants ............................................. 500,000 -- --
Repayment of long-term debt and capital leases ................................. (624,500) (3,177,218) (981,833)
Other liabilities .............................................................. -- (312,783) 31,224
------------ ------------ -----------
Net cash provided by financing activities ...................................... 45,602,813 18,970,246 9,546,754
Discontinued activities
Income (loss) from discontinued operations including gain on sale, net of taxes 105,866 (214,277) (1,087,021)
Adjustments to reconcile loss from discontinued operations to net cash used
in discontinued operations:
Gain on sale of discontinued operations, net of taxes ..................... 225,572 (225,572) --
Depreciation .............................................................. -- 101,292 107,686
Decrease in net assets of discontinued operations ......................... -- 77,234 224,238
------------ ------------ -----------
Net cash provided by (used in) discontinued operations ......................... 331,438 (261,323) (755,097)
Effect of exchange rate changes on cash ........................................ 1,264 (1,824) (14,124)
------------ ------------ -----------
Increase in cash and cash equivalents .......................................... 1,933,469 813,482 1,211,110
Cash and cash equivalents, beginning of year ................................... 4,156,083 3,342,601 2,131,491
------------ ------------ -----------
Cash and cash equivalents, end of year ......................................... $6,089,552 $4,156,083 $3,342,601
============ ============ ===========
Supplemental disclosures of cash flow information
Noncash investing and financing activity:
Acquisition of fixed assets through capital leases ........................... $279,894 $ -- $471,750
============ ============ ===========
Accrued purchases of fixed assets ............................................ $843,728 $127,700 $46,336
============ ============ ===========
Fair market value of stock issued in connection with the acquisition
of Multex Data Group ....................................................... $ -- $970,000 $ --
============ ============ ===========
Fair market value of warrants issued ......................................... $1,956,000 $ -- $ --
============ ============ ===========
Stock issued for services .................................................... $ -- $45,330 $20,825
============ ============ ===========
Taxes paid ..................................................................... $418,708 $12,833 $6,000
============ ============ ===========
Interest paid .................................................................. $87,887 $415,182 $245,582
============ ============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Organization
Multex.com, Inc. (the "Company" or "Multex.com") is the leading financial e-
marketplace connecting buyers and sellers of financial services and information.
The Company provides information and commerce enabling technology and
infrastructure, application services, Web hosting and online community services
to brokerage firms, investment banks, corporations and institutional and
individual investors.
Basis of Presentation
On September 23, 1999, the Company acquired Market Guide Inc. ("Market Guide")
which was accounted for as a pooling of interests (See Note 5). The pooling of
interests method of accounting requires the restatement of all periods as if the
Company and Market Guide had always been combined. All prior year consolidated
financial statements have been restated to reflect the acquisition of Market
Guide.
In October, 1999, Market Guide changed its fiscal year end from February 28
to December 31. The consolidated balance sheet at December 31, 1999, combines
the balance sheets of Multex.com and Market Guide as of December 31, 1999. The
consolidated balance sheet at December 31, 1998, combines the balance sheets of
Multex.com and Market Guide as of December 31, 1998 and February 28, 1999,
respectively.
The consolidated statements of operations for the year ended December 31,
1999, combines the statements of operations of Multex.com and Market Guide for
the year ended December 31, 1999. The consolidated statements of operations for
the year ended December 31, 1998, combines the statements of operations of
Multex.com for the year ended December 31, 1998, and the statements of
operations of Market Guide for the year ended February 28, 1999, respectively.
The consolidated statements of operations for the fiscal year ended December 31,
1997, combines the statements of operations of Multex.com for the year ended
December 31, 1997, and the statements of operations of Market Guide for the year
ended February 28, 1998, respectively.
The consolidated statements of operations for both of the years ended
December 31, 1999 and 1998 include the results of operations of Market Guide for
the two months ended February 28, 1999. As a result, accumulated deficit as of
December 31, 1999, has been adjusted by $395,870 to reflect the effect of
including results of operations of Market Guide for the two months ended
February 28, 1999 in both periods.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Multex.com, Inc. and its wholly owned and majority-owned subsidiaries.
Significant intercompany account balances and transactions have been eliminated
in consolidation.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of 90 days
or less when purchased other than commercial paper included in available for
sale securities to be cash equivalents.
F-8
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Concentration of Credit Risk
At December 31, 1999, substantially all cash and cash equivalents were held in
five financial institutions.
The Company's customers are concentrated among institutional investors and
financial professionals, including mutual fund managers, portfolio managers,
brokers and their clients, as well as through third party redistributors. The
Company derives most of its revenues from customers located within the United
States.
One customer accounted for approximately 10% of revenues for the year
ended December 31, 1999. The same customer accounted for approximately 21% of
accounts receivable at December 31, 1999. Another customer accounted for
approximately 11% and 18% of revenues for the years ended December 31, 1998 and
1997, respectively. A third customer accounted for approximately 10% of
revenues for the year ended December 31, 1997. The Company performs ongoing
credit evaluations, generally does not require collateral and establishes an
allowance for doubtful accounts based upon factors surrounding the credit risk
of customers, historical trends and other information. To date, such losses have
been within management's expectations.
Marketable Securities
Marketable securities are classified as available-for-sale. Marketable
securities consist of government securities, corporate notes and bonds,
certificates of deposit and commercial paper. 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, 1999, 1998 and 1997 was approximately
$15.3 million, $2.5 million and $892,000, 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 and
advertising are recognized in equal installments over the term of the contract.
Revenues from database licensing fees are recognized 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 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 prior to that date were expensed.
F-9
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Earnings (Loss) Per Share
The Company calculates earning per share in accordance with SFAS No. 128,
Computation of Earnings Per Share, and SEC Staff Accounting Bulletin No. 98.
Accordingly, basic earnings per share is computed using the weighted average
number of common and dilutive common equivalent shares outstanding during the
period. Common equivalent shares consist of shares issuable upon the exercise
of stock options (using the treasury stock method); common equivalent shares are
excluded from the calculation if their effect is anti-dilutive.
Stock-Based Compensation
The Company measures compensation expense related to the grant of stock
options and stock-based awards to employees in accordance with the provisions of
Accounting Principles Board ("APB") Opinion No. 25, under which compensation
expense, if any, is generally based on the difference between the exercise price
of an option, or the amount paid for the award and the market price or fair
value of the underlying common stock at the date of the award. Stock-based
compensation arrangements involving nonemployees are accounted for under SFAS
No. 123, Accounting for Stock-Based Compensation, under which such arrangements
are accounted for based on the fair value of the option or award. As required
by SFAS No. 123, the Company discloses pro forma net loss per share information
reflecting the effect of applying SFAS No. 123 fair value measurement to
employee arrangements.
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 loss or stockholders' deficit.
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' deficit, to be
included in other comprehensive loss.
Segment Information
The Company discloses information regarding segments in accordance with SFAS
No. 131, Disclosures about Segments of an Enterprise and Related Information.
SFAS No. 131 establishes standards for reporting of financial information about
operating segments in annual financial statements and requires reporting
selected information about operating segments in interim financial reports. The
disclosure of segment information was not required as the Company operates in
only one business segment.
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.
Fair Value of Financial Instruments
The carrying amounts reported in the balance sheets for cash and cash
equivalents, accounts receivable, accounts payable and accrued expenses
approximate their fair values.
F-10
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
2. INVESTMENTS
The amortized cost, gross unrealized gains and losses and fair value of the
investment securities available-for-sale are as follows:
<TABLE>
<CAPTION>
Gross Gross
----- -----
Amortized Unrealized Unrealized
--------- ---------- ----------
December 31, 1999 Cost Gains losses Fair Value
- ----------------- ---- ----- ------ ----------
<S> <C> <C> <C> <C>
U.S. government notes and bonds.............. $ 2,534,450 -- -- $ 2,534,450
Corporate bonds and notes.................... 7,778,983 -- $(30,505) 7,748,478
Commercial paper............................. 19,341,338 $3,244 (4,315) 19,340,267
Euro dollar bonds............................ 2,517,584 -- (17,299) 2,500,285
Repurchase agreements........................ 904,309 -- -- 904,309
----------- ------ -------- -----------
$33,076,664 $3,244 $(52,119) $33,027,789
=========== ====== ======== ===========
</TABLE>
3. STOCKHOLDERS' EQUITY
Common Stock
In March 1999, the Company effected a 1-for-2 reverse stock split. All common
share information included in the accompanying financial statements has been
adjusted to reflect the one-for-two reverse stock split. In December 1998, the
Company increased the number of authorized shares of its common stock to
50,000,000 shares.
On March 17, 1999, the Company's intial public offering was declared
effective by the SEC. The Company realized proceeds of approximately
$41,637,000, net of underwriting discounts and commission and related expenses
from the initial public offering of 3,450,000 shares of its common stock, of
which 3,283,500 shares were issued and sold by the Company.
During 1999, the Company issued 944,752 shares of its common stock for
approximately $3,518,000 in connection with the exercise of stock options and
issued 47,015 shares of its common stock for approximately $572,000 in
connection with the Company's employee stock purchase plan.
Common Stock Reserved for Issuance
At December 31, 1999, the Company has reserved approximately 6,521,000 shares
of its common stock for issuance in connection with shares issuable under the
Company's stock option plan and employee stock purchase plan.
Preferred Stock
In March 1999, the Company authorized the issuance of 5,000,000 shares of
preferred stock, par value $0.01 per share.
4. REDEEMABLE PREFERRED STOCK
During 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 $20,000,000. In connection with the issuance of the Series E
Stock, the Company incurred issuance costs of approximately $100,000.
The holders of Series C, Series D and Series E Stock were entitled to a
liquidation preference over the Series A and Series B Stock. The Series C,
Series D and Series E Stock share ratably on a pari passu basis in the event of
a liquidation and the Series A and Series B Stock share ratably on a pari passu
basis in the event of a liquidation.
The holders of redeemable preferred stock were entitled to vote upon any
matter as to which the holders of common stock are entitled to vote.
F-11
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
4. REDEEMABLE PREFERRED STOCK (continued)
The holders of shares of redeemable preferred stock had 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 $250 for Series E) and dividing the result
by $1.00 for Series A, $1.50 for Series B and C, $1.80 for Series D, $250 for
Series E or by the conversion price, as defined, as last adjusted and in effect.
In March 1999, the series A, B, C, D and E redeemable preferred stock were
converted into 14,861,112 shares of the Company's common stock upon the
consummation of the initial public offering. At December 31, 1998, and at the
date of conversion, the total cumulative dividends in arrears that would have
been payable upon liquidation, was approximately $7,146,000 and $8,335,000,
respectively.
5. ACQUISITIONS
Multex Data Group
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
(earnings estimate database and related 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., 75,000 shares of the Company's common stock at a
purchase price of $4.00 per share ($300,000) and a one year option ("One Year
Option") to acquire 125,000 shares of the Company's common stock at an exercise
price of $5.00 per share. This option was exercised in March 1999. The Company
has estimated the fair market value of the 75,000 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 75,000 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 (49 shares of Multex Data
Group) for assets acquired .................................................... $345,000
=========
</TABLE>
On December 15, 1998, the Company acquired the remaining 49% of Multex Data
Group in exchange for 125,000 shares of the Company's common stock, which was
valued at approximately $625,000. Such value was based on the estimated fair
market value of the Company's common stock of $5.00 per share. The purchase
price was fully allocated to the earnings estimate database.
The acquisition has been accounted for by the purchase method of accounting
and accordingly, the Company has consolidated the results of operations of
Multex Data Group effective March 27, 1998.
Market Guide Inc.
On September 23, 1999, pursuant to an Agreement and Plan of Merger and
Reorganization, the Company acquired Market Guide Inc., an online provider of
financial information and data. The merger was accounted for as a pooling of
interests with each Market Guide shareholder receiving one share of the
Company's common stock for each outstanding share of Market Guide stock. The
Company issued 4,900,000 shares of its common stock and assumed stock options to
purchase 680,000 shares of the Company's common stock. In connection with the
merger, the Company incurred approximately $5.7 million in costs related to the
transaction.
F-12
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
5. ACQUISITIONS (continued)
Unaudited combined and separate results of the Company and Market Guide for
the period from January 1, 1999 to September 23, 1999 were:
<TABLE>
<CAPTION>
Market Inter-
------ ------
Multex.com Guide company Combined
---------- ----- ------- --------
<S> <C> <C> <C> <C>
Revenues ........................... $19,235,000 $8,319,000 $(178,000) $27,376,000
Net income (loss) .................. (14,883,000) (2,809,000) -- (17,692,000)
</TABLE>
Adjustments to conform Market Guide's method of accounting for computer
software and database expansion costs with that of the Company increased
combined net loss for the years ended December 31, 1998 and 1997 by
approximately $605,000 and $914,000, respectively.
6. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings
per share:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------
1999 1998 1997
-------------- ------------- -------------
<S> <C> <C> <C>
Numerator:
Net loss ..................................................................... $(24,978,866) $(8,838,243) $(9,004,870)
Redeemable preferred stock dividends ......................................... 1,188,165 2,679,445 2,181,472
------------ ------------ ------------
Numerator for basic and diluted loss per share--net loss attributable
=============
to common stockholders ....................................................... $(26,167,031) $(11,517,688) $(11,186,342)
============ ============ ============
Denominator:
Denominator for basic and dilutive loss per share--weighted
average shares ............................................................... 22,688,050 7,609,524 6,891,764
============ ============ ============
Basic and diluted loss per share ............................................. $(1.15) $(1.51) $(1.62)
============ ============ ============
</TABLE>
The following securities have been excluded from the dilutive per share
computation as they are antidilutive:
<TABLE>
<CAPTION>
At December 31,
--------------------------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C>
Redeemable preferred stock--Series A .......................... -- 25,000 25,000
Redeemable preferred stock--Series B .......................... -- 36,666 36,666
Redeemable preferred stock--Series C .......................... -- 100,000 100,000
Redeemable preferred stock--Series D .......................... -- 55,556 55,556
Redeemable preferred stock--Series E .......................... -- 80,000 --
Stock options ................................................. 4,784,848 2,839,150 2,283,600
Warrants ...................................................... 418,050 318,050 --
</TABLE>
7. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
December 31,
-------------------------------
1999 1998
---------------- -------------
<S> <C> <C>
Computer and telecommunications equipment and related software ....................... $13,726,699 $9,243,845
Furniture and fixtures ............................................................... 1,461,700 361,093
Leasehold improvements ............................................................... 4,504,722 330,323
----------- ----------
19,693,121 9,935,261
Less accumulated depreciation and amortization ....................................... 8,830,487 5,465,570
----------- ----------
$10,862,634 $4,469,691
=========== ==========
</TABLE>
F-13
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
8. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
December 31,
-------------------------------
1999 1998
---- ----
<S> <C> <C>
Payroll and related costs ............................................ $597,930 $305,955
Accrued vacation ..................................................... 200,000 125,000
Accrued bonuses ...................................................... 1,244,250 142,000
Royalties ............................................................ 1,004,083 636,932
Other ................................................................ 1,731,789 492,215
---------- ----------
$4,778,052 $1,702,102
========== ==========
</TABLE>
9. 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,
approximately $1,053,000, was fully repaid in 1998. 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, 1997, the Company recorded
approximately $313,000 in other liabilities related to such obligation, which
was fully repaid in 1998.
In October 1998, the Company entered into agreements with respect to a
$2,000,000 equipment line and a $4,000,000 revolving credit facility with a
bank. The Company could have borrowed up to 80% of eligible accounts receivable,
as defined, in the revolving credit facility, and advances under the equipment
line could not exceed 75% of the net book value of equipment purchased within
the last twelve months. Substantially all of the assets of the Company were
pledged as collateral for the above obligations. The equipment line and
revolving credit facility bore interest at the prime rate plus 1%, as defined.
Borrowing under this agreement were repaid in December 1998. In July 1999, the
Company increased its equipment line of credit to $3,000,000. This line expires
in January 2000. As of December 31, 1999, there were no borrowings under the
equipment and revolving credit facility.
In connection with the above obligations, the Company granted, to the bank, a
warrant to purchase 318,050 shares of the Company's common stock at $4.80 per
share, which was valued at $100,000 based upon the Company's incremental
borrowing rate. The warrant expires on December 28, 2003.
10. 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.
Significant components of the Company's deferred tax assets are as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1999 1998
------------------ ----------------
<S> <C> <C>
Net operating loss carryforward ........................................ $21,566,000 $10,483,000
Research and development credits ....................................... 1,020,000 711,000
Depreciation and amortization .......................................... 789,000 686,000
Deferred revenue ....................................................... 2,352,000 1,073,000
Other .................................................................. 646,000 256,000
------------ ------------
26,373,000 13,209,000
Valuation allowance .................................................... (26,373,000) (13,018,000)
------------ ------------
$ -- $191,000
============ ============
</TABLE>
F-14
<PAGE>
Due to the uncertainty of the realization of the tax assets, a valuation
allowance has been provided.
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
10. INCOME TAXES (continued)
At December 31, 1999, the Company had net operating loss carryforwards of
approximately $50.0 million and research and development credits of
approximately $1.0 million for income tax purposes that expire in 2009 through
2019. The utilization of approximately $15.6 million and $400,000 of such net
operating loss carryforwards and research and development credits, respectively,
are subject to an annual limitations of approximately $1.9 million, pursuant to
Section 382 of the Internal Revenue Code.
The provision for income taxes from continuing operations consists of the
following:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------
1999 1998 1997
-------------------- ------------------ ----------------
<S> <C> <C> <C>
Current ....................................... $839,000 $456,000 $7,000
Deferred ...................................... 191,000 (180,000) --
---------- --------- ------
$1,030,000 $276,000 $7,000
========== ========= ======
</TABLE>
The reconciliation of income taxes computed at the U.S. Federal statutory rate
to income tax expense is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------
1999 1998 1997
--------------------- ------------------ ------------------
<S> <C> <C> <C>
Tax at U.S. statutory rate of 34% .......................... $(8,255,000) $(2,838,000) $(2,690,000)
U.S. losses without benefit ................................ 8,724,000 3,211,000 2,692,000
State taxes ................................................ 370,000 83,000 5,000
Other ...................................................... 191,000 (180,000) --
----------- ----------- -----------
$1,030,000 $276,000 $7,000
=========== =========== ===========
</TABLE>
11. STOCK OPTIONS
In March 1999, the Company established the 1999 Stock Option Plan (the "Plan")
which is the successor equity incentive program to the Company's 1993 Stock
Incentive Plan which terminated upon the Company's initial public offering of
its common stock. All outstanding options under the 1993 Stock Incentive Plan
have been transferred into the Plan. A total of 7,000,000 options to purchase
shares of the Company's common stock were authorized for issuance under the
Plan.
During the years ended December 31, 1998 and 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 $872,000
and $1,077,000, respectively. 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 years ended December 31, 1999, 1998 and
1997 amounted to approximately $480,000, $440,000 and $25,000, respectively.
For the year ended December 31, 1999, all options were issued at the fair market
value of the Company's common stock on the date of grant.
F-15
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
11. STOCK OPTIONS (continued)
The following transactions occurred with respect to stock options issued for
the years ended December 31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
Weighted-
Average
Number of Exercise
Options Price
--------------- ------------
<S> <C> <C>
Outstanding December 31, 1996 ............................................. 1,301,875 $0.27
Granted during the year ................................................... 1,600,600 0.81
Cancelled during the year ................................................. (278,250) 0.50
Exercised during the year ................................................. (340,625) 0.14
---------
Outstanding December 31, 1997 ............................................. 2,283,600 0.64
Granted during the year ................................................... 1,264,000 4.99
Cancelled during the year ................................................. (76,950) 2.35
Exercised during the year ................................................. (631,500) 0.36
---------
Outstanding December 31, 1998 ............................................. 2,839,150 2.59
Granted during the year ................................................... 3,002,450 16.64
Cancelled during the year ................................................. (237,000) 6.68
Exercised during the year ................................................. (819,752) 3.51
---------
Outstanding December 31, 1999 ............................................. 4,784,848 11.04
=========
</TABLE>
The following table summarizes information concerning outstanding options at
December 31, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------- -------------------
Weighted Average
Number of Options Weighted Average Remaining Number of Options Weighted Average
Exercise Price Range Outstanding Exercise Price Contractual Life Exercisable Exercise Price
- -------------------- ----------- -------------- ---------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$ 0.02 - 0.02 68,125 $ 0.02 5.5 68,125 $ 0.02
0.50 - 0.55 1,019,198 0.52 7.4 578,073 0.53
2.68 - 3.00 50,100 2.92 6.1 50,100 2.92
4.80 - 6.00 652,715 5.13 8.4 306,964 5.20
7.50 - 9.50 510,313 8.18 8.7 50,625 7.63
12.00 - 17.88 1,803,047 14.56 9.6 180,850 12.39
18.94 - 27.56 366,750 23.36 9.8 24,000 27.00
28.56 - 34.56 314,600 29.70 10.0 ---- ----
--------- ---------
4,784,848 11.04 8.8 1,258,737 4.23
</TABLE>
Options outstanding under the Plan primarily 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.
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
weighted average fair value of options granted during the years ended December
31, 1999, 1998 and 1997 was $13.27, $3.94 and $0.90, respectively. 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 1999 1998 1997
----------- ---- ---- ----
Volatility factor of the expected market price of the Company's
<S> <C> <C> <C>
common stock .............................................................. 1.172 0.823 0.558
Average risk-free interest rate ........................................... 5.75% 5.19% 6.1%
Dividend yield ............................................................ 0.0% 0.0% 0.0%
Average life .............................................................. 4 years 4 years 3 years
</TABLE>
F-16
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
11. STOCK OPTIONS (continued)
The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's stock options have characteristics significantly different
from those of traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its stock options.
The Company's pro forma information is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
Pro forma net loss available to common
<S> <C> <C> <C>
Stockholders ............................................... $(30,543,903) $(11,805,808) $(11,223,779)
Pro forma basic and diluted loss per share ................. $(1.35) $(1.55) $(1.63)
</TABLE>
12. EMPLOYEE STOCK PURCHASE PLAN
The Company maintains an Employee Stock Purchase Plan (the "Plan") which
allows eligible employees to purchase shares of common stock of the Company
through payroll deductions at 85% of the fair market value during specific
purchase periods, as defined. A total of 750,000 shares of common stock has
been authorized for issuance under this plan. As of December 31, 1999, 707,972
shares are reserved for issuance under the Plan. For the years ended December
31, 1999, 1998 and 1997, 47,015, 33,244 and 11,658 shares of common stock,
respectively had been issued for total proceeds of $572,000, $185,000 and
$28,000, respectively.
13. COMMITMENTS
Operating Leases
The Company has various lease agreements for offices. Lease terms generally
range from five to ten years with options to renew at varying terms. The
approximate future minimum annual rental payments under these operating leases
are as follows:
2000 $ 2,486,000
2001 2,819,000
2002 2,983,000
2003 3,011,000
2004 2,977,000
Thereafter 14,243,000
-----------
$28,519,000
===========
Total rental expense for the years ended December 31, 1999, 1998 and 1997 was
approximately $1,808,000, $887,000 and
$857,000, respectively.
Capital Leases
The Company has various capital lease agreements for furniture, fixtures and
equipment. Lease terms generally range from three to five years. The future
minimum payments for all capital leases and principal repayment are summarized
as follows:
2000 $252,000
2001 120,000
2002 81,000
2003 7,000
--------
Total payments 460,000
Less amount representing interest 43,000
--------
417,000
F-17
<PAGE>
Less current portion of obligations under capital leases 224,000
--------
Thereafter $193,000
========
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
13. COMMITMENTS (continued)
Letters of Credit
As of December 31, 1999, the Company had outstanding letters of credit issued in
the amount of $1,051,000.
14. RELATED PARTY TRANSACTIONS
In March 1998, the Company entered into an agreement with an independent third
party (the "Third Party") to secure a position as an anchor tenant on the Third
Party's Internet site. The agreement is for two years and is automatically
renewable unless either party elects not to renew. In 1999 and 1998, the
Company made aggregate royalty payments of approximately $800,000 and $100,000,
respectively. In December 1998, the Third Party became a Series E stockholder.
A holder of preferred stock entered into a strategic distribution relationship
with the Company. As a result the Company granted the preferred stockholder a
limited non-exclusive license to use and distribute the Company's technology and
products. The preferred stockholder made license payments and payments for
consulting and maintenance services which amounted to approximately 10% of
revenues for the year ended December 31, 1997.
15. PENSION PLAN
The Company established a defined contribution plan (the "Plan") under Section
401(k) of the Internal Revenue Code. All employees of the Company are eligible
to participate in the Plan upon hire. Participants may contribute up to 20% of
their eligible earnings, as defined. The Company may decide to make an
additional contribution to the Plan on behalf of the Plan participants. No
additional contributions have been made by the Company for the years ended
December 31, 1999, 1998 and 1997.
16. DISCONTINUED OPERATIONS
On January 15, 1999, Market Guide completed the sale of its CreditRisk Monitor
("CRM") division for approximately $2,300,000, which consisted of approximately
$1,200,000 paid in cash and notes receivable of approximately $1,100,000. The
Company recorded a gain on the sale of approximately $226,000, net of taxes of
$163,000, relating to the cash portion of the proceeds received in excess of the
net assets of the division. The Company has deferred the gain relating to the
notes receivable portion of the sales price until such time as its payment is
more fully assured. The notes receivable are summarized as follows:
. $1,000,000 secured promissory note, bearing interest at 6.0% beginning on
July 1, 2001, payable in 24 equal monthly installments of principal and
interest in the amount of $44,320 commencing July 31, 2001 through June 30,
2003. The present value of such promissory note was approximately $792,000
at its origination.
. $98,162 secured expense promissory note, accruing interest beginning on
February 1, 1999, payable in 24 equal monthly installments of principal and
interest in the amount of $5,286 commencing February 28, 2001 through
January 31, 2003.
Results of operations for the CRM division have been classified as discontinued
operations for all periods presented.
Revenues and income from discontinued operations are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Revenues $ -- $ 667,440 $ 297,244
========= =========== ============
Operating loss................................................................ -- (757,447) (1,087,021)
Income tax benefit............................................................ 105,866 317,598 --
------- ------- ----------
Loss from discontinued operations............................................. $ 105,866 $ (439,849) $(1,087,021)
========= =========== ============
Gain on sale.................................................................. $ 388,448 $ 388,448
Income tax expense (162,876) (162,876)
-------- --------
Gain on sale, net............................................................. $ 225,572 $ 225,572
============= ==============
</TABLE>
F-18
<PAGE>
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
17. SUBSEQUENT EVENTS
Merrill Lynch
On December 21, 1999, the Company announced a multi-year partnership with
Merrill Lynch to co-develop global research and information web sites for
clients of Merrill Lynch's institutional e-commerce portal. The companies will
jointly develop the next-generation platform for real-time delivery of Merrill
Lynch investment strategy and securities research for its institutional clients.
As part of this strategic partnership, the Company amended its Electronic
Distribution Services Agreement ("EDS Agreement") with Merrill Lynch to
incorporate the terms of this new development plan.
Also on December 21, 1999, the Company entered into an agreement with Merrill
Lynch, which closed on January 21, 2000, as part of its strategic partnership
with them and agreed, subject to regulatory approval, to (i) issue 1 million
shares of the Company's common stock at $21.60 per share, (ii) issue warrants to
purchase 100,000 shares of the Company's common stock, that vest immediately,
with an exercise price of $20 per share for $400,000, (iii) issue warrants to
purchase 1.5 million shares of the Company's common stock, that vest based on
certain performance and renewal criteria, as defined in the agreement, with an
exercise price of $20 per share, for $100,000 and (iv) issue warrants to
purchase 750,000 shares of the Company's common stock with an exercise price of
$50 per share. In addition the Company agreed to purchase software from Merrill
Lynch for $500,000 and 200,000 shares of the Company's common stock, which
represents the fair value of the software purchased. The software was purchased
on February 1, 2000.
The Company received the $400,000 for the warrants to purchase 100,000 shares
of the Company's common stock with an exercise price of $20 per share on
December 22, 1999. These warrants vested immediately and were issued in
connection with the EDS Agreement. The Company has valued these warrants, using
the Black Scholes valuation model, at $1,856,000. The fair value of the warrants
less the $400,000 paid is being amortized over the term of the EDS agreement.
The Company received the $100,000 for the warrants to purchase 1.5 million
shares of the Company's common stock at an exercise price of $20 per share on
December 22, 1999. These warrants vest based on certain performance and renewal
criteria, as defined in the agreement, and will be accounted for at their fair
market value on the date when the performance is complete. Performance criteria
have not been met as of December 31, 1999.
On February 1, 2000, the Company received $21.6 million of proceeds from
Merrill Lynch for the issuance of 1 million shares of common stock. The sale of
the common stock will be accounted for at the fair market value on the date of
issuance. Deferred expense will be recorded for the difference between the
proceeds and the fair market value of the common stock and will be amortized
over the term of the EDS Agreement.
In connection with the issuance of the warrants to purchase 750,000 shares
of the Company's common stock at $50 per share, the Company will record a
deferred charge equal to the fair value of the warrants on the closing date,
February 1, 2000, which will be amortized over the term of the EDS agreement.
Sage
On March 20, 2000, the Company acquired all of the assets of Sage Online,
Inc. for approximately $6 million in cash and 354,000 shares of common stock at
a fair value of approximately $31 per share.
F-19
<PAGE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Multex.com, Inc.
<TABLE>
<CAPTION>
Additions
---------------------------
(1) (2)
---------------------------
Balance at Charged to Balance
Beginning Costs and Charged to at End
Description of Period Expenses Other Accounts Deduction of Period
- ----------- --------- -------- -------------- --------- ---------
<S> <C> <C> <C> <C> <C>
For the Year Ended December 31, 1999
Allowance for doubtful accounts .............. $172,000 $900,599 $(644,599)(a) $423,000
For the Year Ended December 31, 1998
Allowance for doubtful accounts .............. 264,000 148,000 (240,000)(a) 172,000
For the Year Ended December 31, 1997
Allowance for doubtful accounts .............. 154,000 168,130 (58,130)(a) 264,000
(a) Uncollectible accounts written off, net of recoveries.
</TABLE>
F-20
<PAGE>
Exhibit 10.8(a)
MASTER AGREEMENT
FOR
ELECTRONIC DISTRIBUTION SERVICES
Dated as of: November 13, 1998
Between
MULTEX SYSTEMS, INC.
And
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SCHEDULES
A. Merrill Lynch Online/Multex Service Request (1997)
B. Contribution and Distribution of Research
C. Multex Publisher for Internal Electronic Distribution Services
D. Merrill Lynch OnLine Trial Program Addendum
ATTACHMENTS
A. Form of Service Request
B. Multex or Merrill Lynch Provided Equipment
C. Third Party Software/License Requirements for End Users
D. Multex Subscriber Agreement
1
<PAGE>
MASTER AGREEMENT FOR
ELECTRONIC RESEARCH DISTRIBUTION SERVICES
THIS MASTER AGREEMENT FOR ELECTRONIC RESEARCH DISTRIBUTION SERVICES
("Agreement") is made and entered into as of the 13th day of November, 1998. by
and between MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, a Delaware
corporation with offices at Merrill Lynch World Headquarters, North Tower, World
Financial Center, 250 Vesey Street. New York, N.Y. 10281 (herein referred to as
"Merrill Lynch" or "Licensee"), and MULTEX SYSTEMS, INC. a Delaware corporation
with offices at 33 Maiden Lane, 5th Floor, New York, N.Y. 10038 (herein referred
to as "Multex"). Multex and Merrill Lynch shall be referred to herein as the
"Parties".
RECITALS
WHEREAS, Merrill Lynch and/or its subsidiaries and affiliates, create, produce
and develop various global research data and other financial information about
companies, industries and markets as further described in the Schedules and
Service Requests hereto.
WHEREAS, Multex has developed certain proprietary software, which electronically
receives and distributes various research data, including but not limited to
global equity, fixed income and economic market data, morning meeting notes,
earnings estimates, recommendations, full-text research reports and other
financial information and electronic documents.
WHEREAS. Multex and Merrill Lynch entered into an Agreement for Electronic
Distribution Services dated as of July 1, 1994, pursuant to which Multex agreed
to distribute certain Merrill Lynch proprietary research documents to approved
Merrill Lynch clients (the "1994 Agreement").
WHEREAS, Multex and Merrill Lynch entered into a Master Agreement for Internal
Electronic Distribution Services dated as of April 1, 1996 pursuant to which
Multex agreed to distribute Merrill Lynch research within Merrill Lynch in
accordance with the terms of that Master Agreement and additional Service
Requests to be entered into by the parties (the "1996 Master Agreement").
WHEREAS, Multex and Merrill Lynch executed a Merrill Lynch Online/Multex Service
Request dated as of February 28. 1997 for electronic distribution of Merrill
Lynch research via the Merrill Lynch system known as Merrill Lynch Online (the
"1997 Service Request") The 1994 Agreement, the 1996 Master Agreement and the
1997 Service Request are sometimes hereinafter referred to as the "Existing
Agreements".
WHEREAS, the parties desire to consolidate the terms and conditions relating to
the services provided pursuant to the Existing Agreements and for Multex to
provide to Merrill Lynch certain additional services, all as more fully
described in this Master
2
<PAGE>
Services Agreement and the Schedules and Attachments hereto.
NOW THEREFORE, in consideration of the foregoing, and other good and valuable
consideration, the parties agree as follows:
1. Definitions. As used in this Agreement and the Schedules and Attachments
-----------
hereto, the following terms shall have the meanings set forth below:
(a) Approved Data Provider shall mean Data Providers as defined below
-- ----------------------
authorized by Merrill Lynch
(b) Data Providers shall mean third party research providers who are in the
--------------
business of producin9 or procuring research reports, market data and other
financial documents for sale or resale to the financial and corporate
markets, excluding clients of Merrill Lynch.
(c) Equipment shall mean the hardware and software (e.g., workstations,
---------
servers, operating software) required in order for Merrill Lynch to access
the Services, as more fully described in this Agreement and the Exhibits.
(d) External Users shall mean persons or entities other than employees of
--------------
Merrill Lynch to whom the Research is provided by means of the Services
provided under this Agreement and are approved by Merrill Lynch.
(e) Internal Users shall mean the investment professionals and other
--------------
employees of Merrill Lynch to whom the Research is provided by means of the
Services provided under this Agreement.
(f) Multex Software shall mean any of Multex's proprietary software which
---------------
is provided to Merrill Lynch hereunder and which is used to receive and
distribute Research and otherwise to provide the Services hereunder. The
Multex Software includes, but is not limited to (i) Multex Publisher,
MultexNet, MuItexEXPRESS, Multex Research on Demand and Multex Investor
Network and (ii) certain software licensed from third parties (the "Third
Party Software"), as described on Attachment C. The Multex Software and the
Third Party Software are sometimes hereinafter referred to as the
"Software".
(g) Research shall mean the digitized or electronically transmitted data
--------
which is contributed to Multex by Merrill Lynch and/or distributed by
Multex to Merrill Lynch and Users as part of the Services to be provided
under this Agreement and the Schedules and Service Requests. The particular
formats, types and contents of the Research covered by this Agreement shall
be as set forth in the Schedules and Service Requests.
(h) Schedule or Schedules shall mean one or more Schedules attached to this
---------------------
Agreement or to a Service Request and made a part hereof which set forth
the Services to be provided by Multex to Merrill Lynch, and any terms and
conditions related to such Services.
3
<PAGE>
(I) Services shall have the meaning ascribed thereto in Section 2(a) below.
--------
(j) Service Request shall have the meaning ascribed thereto in Section 2(b)
---------------
below.
(k) Subscribers shall mean an entity which has subscribed to and is
-----------
receiving one or more research distribution services from Multex.
(k) Users shall mean either the Internal Users or External Users.
-----
2. Scope of Services.
-----------------
(a) Multex Services. Multex agrees to provide Merrill Lynch and its
---------------
affiliates, and Merrill Lynch agrees to receive from Multex, the
Services described in Section 2(d) below and the applicable Schedules
referred to therein, and any additional services as may from time to
time be requested by Merrill Lynch or its affiliates and agreed to by
the parties (collectively, the "Services"). Services for any individual
user or group of users shall be ordered by Merrill Lynch and its
affiliates pursuant to a service request ("Service Request") in
substantially the form attached hereto as Attachment A. The Service
Request shall include a description of the Services being ordered, the
Merrill Lynch department, division, affiliate or location ordering the
Services, the location(s) where invoices are to be sent, the fee for
the Services, the date or dates for the commencement and termination of
the Services, the equipment, if any, which is to be provided either by
Multex or Merrill Lynch, the permitted number of users, and any other
terms and conditions agreed to by the parties. Other than the Services
set forth in the Schedules hereto, Merrill Lynch shall have no
obligation to execute any Service Request or purchase any Services of
any kind by virtue of having executed this Agreement, nor shall Multex
be obligated to provide Services until a Service Request has been
executed.
(b) Merrill Lynch Contribution of Research. Merrill Lynch agrees to provide
--------------------------------------
Multex, and Multex agrees to receive from Merrill Lynch, the Research
for distribution solely in accordance with the terms and conditions of
this Agreement and the Schedules, Service Requests and Attachments to
this Agreement.
(c) Service Requests. Each Service Request executed by both parties
----------------
pursuant to this Agreement shall be deemed to include and incorporate
the provisions of this Agreement. In the event of a conflict or
ambiguity between the terms of this Agreement and any Service Request,
the provisions of the Service Request shall prevail with respect to the
Services that are the subject of such Service Request. Merrill Lynch's
affiliates may execute Service Requests pursuant to this Agreement; in
such event, the affiliate executing the Service Request shall be deemed
to be the customer under such Service Request and shall agree in such
Service Request to be bound by the restrictions of this Agreement and
shall be afforded the benefits, rights, and protections of this
Agreement. If
4
<PAGE>
an affiliate receives Services hereunder pursuant to a Service Request
which does not contain a written agreement to be bound by the terms and
conditions of this Agreement, then Merrill Lynch shall indemnify and
hold harmless Multex from and against any loss, liability, claim,
damage or expense arising from or in connection with (ii any action,
proceeding or claim made or brought against Multex by any such
affiliate to the extent that this Agreement bars or otherwise limits
Multex's liability with respect to the subject matter of such claim, or
(ii) the breach by any affiliate of any of the obligations of (and
prohibitions on) Merrill Lynch under this Agreement.
(d) Current Services. A description of the Services currently being
----------------
provided to Merrill Lynch, and any additional terms and conditions
relating to such Services are set forth in Schedules A through 0 of
this Agreement, as described below:
(i) MuItexEXPRESS. Pursuant to the Merrill Lynch OnLine/Multex Service
-------------
Request dated February 28,1 997, a copy of which is attached hereto as
Schedule A (the "Online Service Request"). Multex is providing to
Merrill Lynch internal distribution of the Research described in the
Online Service Request, all as more particularly set forth in the
Online Service Request. The parties agree that, effective as of the
date hereof, the Online Service Request shall be amended as set forth
below:
(A) Upon expiration of the current term of the Online Service
Request, which expires on February 28. 1999, the term of the Online
Service Request shall continue on a month-to-month basis until either
the parties enter into a renewal term or either party terminates such
Service Request on 30 days prior written notice to the other party.
(B) All references to the term "MultexNet" contained in the
Online Service Request shall be changed to the "MuItexEXPRESS", which
is the current name of the Multex service which is provided to Merrill
Lynch under the Online Service Request.
Except as specifically provided herein, all terms of the Online
Service Request shall remain in full force and effect.
(ii) Contribution and Distribution of Research. Merrill Lynch agrees
-----------------------------------------
to provide to Multex the Research described in the Merrill Lynch
Contribution and Distribution Services Schedule attached as Schedule B
for distribution of such Research only in accordance with the terms of
this Agreement and such Schedule B.
(iii) Multex Publisher for Internal Electronic Distribution Services.
--------------------------------------------------------------
Pursuant to the Multex Publisher Internal Distribution Electronic
Distribution Services Schedule attached hereto as Schedule C, Multex
5
<PAGE>
will continue to distribute Research within Merrill Lynch by means of
Multex Publisher.
(iv) Merrill Lynch OnLine Trial Program. Attached hereto as Schedule
----------------------------------
D is copy of executed Merrill Lynch OnLine/Multex Trial Program
Addendum effective as of October 29, 1998 which amends the Merrill
Lynch Online/ Multex Service Request effective as of February 28. 1997
and continues in effect in accordance with its terms.
3. Equipment.
---------
Any equipment such as computers, servers, routers ("Equipment") to be
provided by Multex to Merrill Lynch shall be set forth in Attachment B or
in the applicable Service Request. Any Equipment provided to Merrill Lynch
under this Agreement shall remain the sole and exclusive property of Multex
and no right, title or interest in such Equipment is granted to Merrill
Lynch. (Except for that Equipment which is purchased by Merrill Lynch from
or through Multex in which case Multex shall transfer good and valid title
to such Equipment to Merrill Lynch). Merrill Lynch agrees to provide
physical facilities, access, and security as reasonably required for the
proper installation, operation and maintenance of the Equipment and to
surrender Multex's Equipment to Multex upon the termination or cancellation
of this Agreement in the sane condition as delivered, reasonable wear and
tear excepted. Physical risk of loss or damage to the Equipment while in
Merrill Lynch's possession shall be borne by Multex, excluding any damage
or loss caused by the gross negligence or willful misconduct of Merrill
Lynch. In no event shall Merrill Lynch's liability for loss or damage to
any Equipment exceed the depreciated value of the Equipment at the time of
loss or damage. Multex is responsible for recovering its Equipment within
thirty (30) days' after the cancellation or termination of this Agreement,
or any Order Schedule. Merrill Lynch shall not be responsible for any
Equipment in its possession more than thirty (30) days' after the date of
cancellation or termination of Services.
4. (a) Grant of Software License by Multex.
-----------------------------------
As part of the Services provided by Multex under this Agreement and in
consideration of the mutual covenants contained herein, Multex hereby
grants to Merrill Lynch and it affiliates a non-exclusive, non-
transferable, worldwide license ("License") to use Multex Software for
the term of this Agreement, including the Third Party Software identified
in Attachment C. The Third Party Software is licensed to Merrill Lynch
and its affiliates in accordance with the provisions of Attachment C
(Third Party License Requirements for End Users) which is incorporated
herein and made a part of this Agreement. In the event of any conflict
between this Agreement and Attachment C, this Agreement shall control.
Merrill Lynch shall have the option of independently licensing Third
Party Software for use in connection with the Services pursuant to
separate licensing arrangements entered into between Merrill Lynch and
third party licensors. The number of users licensed to use Multex
Software shall be agreed to and set forth in
6
<PAGE>
the applicable Schedule or Service Request.
(b) Grant of License by Merrill Lynch.
---------------------------------
i. During the time Schedule B remains in effect, Merrill Lynch hereby
grants to Multex limited, non-exclusive, non-transferable
worldwide license to receive, store and distribute the Research
solely to (1) Internal Users; (2) External Users that have
executed a Multex Subscriber Agreement in the form Attached hereto
as Attachment D; (3) Subscribers who have executed a Multex
Subscriber Agreement; and (4) Approved Data Providers for the
purpose of redistributing the Research to the clients of such Data
Providers("Data Provider Clients"), provided that distribution to
External Users, Subscribers and Approved Data Providers is subject
to the entitlement provisions set forth in Section 4 of Schedule
B. The initial list of Approved Data Providers is attached as
Exhibit A to Schedule B, and Multex may not add any Data Providers
to this list without the prior written approval of Merrill Lynch
in each instance,.
ii. Merrill Lynch shall, in its sole discretion, retain editorial
control at all times over the selection and dispatch of its
Research to Multex for distribution. Merrill Lynch may elect in
its sole discretion to withhold certain Research or modify the
Research prior to submission to Multex. Merrill Lynch shall have
no obligation to provide any particular volume or quantity of
Research under this Agreement. Multex shall have the capacity to,
and Multex shall delete, block, remove or delay specified Research
reports in accordance instructions received from Merrill Lynch and
shall, to the extent feasible, immediately comply with all such
reasonable instructions. Merrill Lynch retains the unrestricted
right to distribute the Research or have the Research
simultaneously distributed by any other third party, over any
medium of Merrill Lynch's choice. In the event that any Schedule
or Service Request s terminated this license shall be deemed
terminated with respect to the Research, or portion thereof,
covered by said Schedule or Service Request. Notwithstanding
anything to the contrary contained herein, Merrill Lynch agrees
that the volume, quantity and content of the Research which
Merrill Lynch provides to Multex hereunder will be the same as
that provided to any other Data Provider to which Merrill Lynch
contributes Research, except for a Data Provider whose systems are
capable of entitling research by securities product (e.g., by
equity or fixed income), and Merrill Lynch will not modify,
withhold, delete, block, remove or delay the contribution of
Research to Multex unless it does so for all other Data Providers
(except those noted above).
5. Correction of Errors.
--------------------
Multex shall use reasonable efforts to promptly correct all material
errors, defects or bugs (collectively "Error 1 in the Multex Software
reported to Multex by Merrill Lynch or its affiliates or that Multex
7
<PAGE>
becomes aware of through any other means. With regard to the Third
Party Software, Multex will inform the appropriate Third Party of the
Error in its Third Party Software and seek prompt corrections of such
error in accordance with the Multex contract with such Third Party.
6. Independent Contractor.
----------------------
Multex (and its employees), in performance of this Agreement, is
acting as an independent contractor. Personnel supplied by Multex
hereunder are not Merrill Lynch'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 Merrill Lynch rules and regulations while visiting
Merrill Lynch's premises.
7. Cost/Fees.
---------
(a) Merrill Lynch is responsible for the costs relating to (i) the
development of the Research; (ii) the contribution and delivery of the
Research to Multex's central computer facilities, and (iii) the
distribution of the Merrill Research within the Merrill Lynch
organization (except as otherwise provided in a Service Request). Such
costs include the costs of Merrill Lynch's telecommunication lines,
telephones, modems, computers, magnetic tape, magnetic tape delivery
and messenger services.
(b) Except for the fees set forth in the Schedules. Multex shall be
responsible for all costs associated with the distribution of the
Services to its Subscribers and Data Providers, Such costs include,
without limitation, the costs of its own telecommunication lines,
telephones, modems, computers, magnetic tape, magnetic tape delivery
and messenger services.
(c) The fees for the Services are set forth in the applicable Schedules
and/or Service Requests.
8. Term; Termination.
-----------------
(a) The term of this Agreement shall commence as of the date of this
Agreement (the "Effective Date") and shall remain in effect so long as
the Schedules and Service Requests issued pursuant to this Agreement
remain in effect. Each Schedule and Service Request executed hereunder
shall include such term and termination provisions as are mutually
agreed upon between the parties.
(b) Notwithstanding the term set forth above or in a Service Request, 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 and/or the applicable
Schedule or Service Request if such failure is not corrected within 30
days after
8
<PAGE>
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 a cure of its 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) Multex shall be responsible for the payment of any and all taxes
(including but not limited to sales, use, withholding, gross receipts
or excise taxes) imposed on any Services or Research provided to third
parties. Merrill Lynch shall not be responsible, and Multex shall pay
or reimburse Merrill Lynch for payment of any tax related to Research
provided to any third party. Multex agrees to notify Merrill Lynch of
any tax liability or potential tax liability, and of any pending or
threatened tax audit or other proceeding that could lead to the
imposition of tax liability against Merrill Lynch and shall afford
Merrill lynch all reasonable opportunity to participate in any such
audit or proceeding affecting its interests. Merrill Lynch shall be
responsible for the payment of any and all taxes (including but not
limited to sales, use, withholding, gross receipts or excise taxes)
imposed on its receipt of any Services or Research provided hereunder.
(e) Should Merrill Lynch fail to pay when due any sum of money due under
this Agreement, the Schedules or a Service Request and such failure
shall continue for a period of thirty (30) days after notice thereof,
Multex, at its option, may, upon written notice thereof, (i) terminate
the applicable Schedule or Service Request. (ii) whether or not the
applicable Schedule or Service Request 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. and (iii) sell, dispose of,
hold, use or lease any items of Equipment not fully paid for, as
Multex, in its sole discretion, may decide.
(f) Should Merrill Lynch fail to contribute the Research to Multex in
accordance with the terms of Section 4(b) of this Agreement and
Schedule B, and such failure continues for more than 10 days after
written notice thereof, then Multex shall have the right to terminate
this Agreement and all of the Services provided hereunder.
(g) The remedies contained in this Paragraph 8 are cumulative and are in
addition to all other rights and remedies available to either party
under this Agreement and the Schedules and Service Request hereto, by
9
<PAGE>
operation of law or otherwise.
9. Disposition of Software and other Materials.
-------------------------------------------
Upon the expiration or termination of this Agreement and all Service
Requests hereunder, for whatever reason, and upon the written request
of Multex. Merrill Lynch shall return to Multex the Multex Software
(including the magnetic or other physical media on which it was
originally or subsequently recorded or fixed) and all related
documentation, as well as all hardware and Equipment owned by Multex
in good condition, reasonable wear and tear and damage by the elements
excepted. At the written direction of Multex, the Multex Software may
be completely deleted, erased or otherwise destroyed by Merrill Lynch.
10. Unlawful Use.
------------
Merrill Lynch shall not use or permit any person or entity under its
control to use the Services for any unlawful purpose.
11. Distribution of Service.
-----------------------
Except as set forth in the Schedules and Service Requests, Merrill
Lynch is not authorized or permitted to furnish the Services to any
person or firm other than its employees, affiliates and their
employees, for re-use, redistribution or retransmission without the
prior approval of Multex.
12. Limitation of Liability.
-----------------------
(a) Multex will use its best efforts to provide the Services to Merrill
Lynch and its affiliates as described herein. However. Merrill Lynch
understands 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. MERRILL
LYNCH AGREES THAT UNLESS THE FOLLOWING ARE CAUSED BY THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF MULTEX. MULTEX SHALL NOT HAVE ANY
LIABILITY OR OBLIGATION TO MERRILL LYNCH OR ITS AFFILIATES (WHETHER
CAUSED DIRECTLY OR INDIRECTLY) RELATING TO (I) INTERRUPTION, DELAY OR
FAILURE IN THE TRANSMISSION, PROCESSING, DELIVERY OR DISTRIBUTION OF
THE SERVICES OR THE RESEARCH; (II) THE UNAVAILABILITY OF MULTEX
SOFTWARE OR THE SERVICES; (III) THE ACCURACY OF THE MERRILL LYNCH
RESEARCH; OR (IV) THE ACTS OR OMISSION OF MERRILL LYNCH.
(b) Except for Multex's liability under Paragraph 13(a) and 14(a) and
damages arising from the gross negligence or willful misconduct of
Multex, Multex's maximum liability hereunder for any other cause, not
exculpated hereunder, whether in tort or contract, shall not exceed
the
10
<PAGE>
lesser of actual damages or $100,000; provided, however, if the
fees paid to Multex pursuant to this Agreement in any one (1) calendar
year period exceed sioo,000; Multex's maximum liability shall be
raised from $100,000 to the amount of such fees paid over said-one (1)
year period.
(c) Third Parties who provide portions of the Services to Multex shall not
have any direct or indirect liability under this Agreement to Merrill
Lynch for monetary damage on account of the Services provided or to be
provided by Multex hereunder.
(d) Multex conducts no review whatsoever and exercises no editorial
control over the Research. and accordingly, Multex shall have no
liability to Merrill Lynch whatsoever (whether in contract or tort)
for the content, completeness or accuracy of the Research.
(e) Multex understands that Merrill Lynch cannot and does not guarantee
the content or accuracy of the Research or any related data,
information or documentation provided by Merrill Lynch hereunder.
ACCORDINGLY, MULTEX AGREES THAT MERRILL LYNCH SHALL NOT BE LIABLE FOR
ANY LOSS, DAMAGE, INJURY OR EXPENSE, CAUSED BY ITS NEGLIGENCE OR
OTHERWISE, ARISING DIRECTLY OR INDIRECTLY, IN CONNECTION WITH THE
RESEARCH UNLESS CAUSED BY ITS OWN WILLFUL OR INTENTIONAL MISCONDUCT OR
GROSS NEGLIGENCE AND MERRILL LYNCH SHALL NOT BE LIABLE FOR ANY LOSS,
DAMAGE. INJURY OR EXPENSE CAUSED BY OR ARISING FROM ANY ACTION OR
INACTION OF MULTEX or ANY USER. Except for Merrill Lynch's liability
under Paragraph 13(b) and 14(b) and damages arising from the gross
negligence or willful misconduct of Merrill Lynch, Merrill Lynch's
maximum liability hereunder for any other cause, not exculpated
hereunder, whether in tort or contract, shall not exceed the lesser of
actual damages or $100,000; provided, however, if the fees paid to
Multex pursuant to this Agreement in any one (1) calendar year period
exceed $100,000, Merrill Lynch's maximum liability shall be raised
from $100,000 to the amount of such fees paid over said one (1) year
period.
(f) NEITHER PARTY SHALL BE LIABLE FOR ANY, INDIRECT CONSEQUENTIAL,
INCIDENTAL OR SPECIAL DAMAGES EVEN IF IT HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES, OR FOR ANYTHING BEYOND ITS REASONABLE
CONTROL. FOR THE PURPOSES OF THIS SECTION, DAMAGES PAYABLE TO A THIRD
PARTY IN AN ACTION FOR WHICH A PARTY IS INDEMNIFIED UNDER SECTION 13
OF THIS AGREEMENT SHALL NOT BE DEEMED CONSEQUENTIAL, INDIRECT OR
SPECIAL DAMAGES.
11
<PAGE>
(g) The parties acknowledge and agree that the limitations of liability
set forth in this Section 12 are a condition of this Agreement, and
that the Fees reflect the allocations of risk set forth in this
Section 12.
13. Indemnity.
---------
(a) Multex shall defend and/or handle at its own cost and expense any
claim or action brought by a third party against Merrill Lynch, its
parent company, and its or their subsidiaries and/or affiliated
companies (also referred to collectively as Merrill Lynch
"affiliates"), for actual or alleged infringement of any patent,
copyright, trademark or other proprietary right, including, but not
limited to, misappropriation of trade secrets (collectively,
Proprietary Rights} based on any software, programs. Equipment.
Services, and/or other materials furnished to Merrill Lynch by Multex
pursuant to the terms of this Agreement (including, without
limitation, Multex Software and the Third Party Software included
therein) or the use thereof by Merrill Lynch or its affiliates in
accordance with the terms of this Agreement;, provided, however, that
Multex shall have the sole right to control the defense and settlement
of such action and all rights of appeal, and shall not be liable to
Merrill Lynch or its affiliates for any costs, settlements,
compromises or legal fees of any kind incurred or entered into by
Merrill Lynch or its affiliates without Multex's prior written
approval. Multex shall indemnify and hold harmless Merrill lynch and
its affiliates, from and against all liabilities, losses, damages,
costs and expenses (including but not limited to, attorneys' fees,
costs and disbursements) associated with any such claim or action In
the event any Services, Software or materials provided hereunder are
deemed to & suspected to infringe the Proprietary Rights of any third
party, Multex may immediately terminate this Agreement, or, subject to
Merrill Lynch's approval, substitute non-infringing, equally
functional software, materials or services. Any such termination of
this Agreement shall not relieve Multex of its obligations pursuant to
this Section 13(a). In the event of such termination, Multex shall
refund to Merrill Lynch all prepaid fees for Services not rendered or
received. Multex's obligations hereunder shall be contingent upon
Merrill Lynch promptly notifying Merrill Lynch of any such claim and
cooperating, at Multex's expense, in the litigation.
(b) Merrill Lynch shall defend and/or handle at its own cost and expense
any claim or action brought by a third party against Merrill Lynch for
actual or alleged infringement of Proprietary Rights based on the
Research as provided by Merrill Lynch provided, however, that Merrill
Lynch shall have the sole right to control the defense and settlement
of such action and all rights of appeal, and shall not be liable to
Multex for any costs, settlements, compromises or legal fees of any
kind incurred or entered into by Multex without Merrill Lynch's prior
written approval. Merrill Lynch shall indemnify and hold harmless
Multex and its affiliates
12
<PAGE>
from and against all liabilities, losses, damages, costs and expenses
(including but not limited to, attorneys' fees, costs and
disbursements) associated with any such claim or action. Merrill
Lynch's obligations hereunder shall be contingent upon Multex promptly
notifying Merrill Lynch of any such claim and cooperating, at Merrill
Lynch's expense, in the litigation.
14. Confidential Information.
------------------------
(a) "Confidential Information" shall mean (i) with respect to Merrill
Lynch, any information obtained by Multex (or its employees or agents)
from, or disclosed to Multex (or its employees or agents) by, Merrill
Lynch, or its affiliates or clients, which is marked as confidential
or which ought reasonably to be understood to be confidential
concerning the past or present business activities of said entities,
and/or their clients, including, but not limited to, any information
relating to the Merrill Research, pricing, methods, strategies,
processes, financial data, investments, accounts, assets, lists,
technical data, software programs, apparatus, statistics, research,
multimedia programs and strategies, programs, specifications,
documentation, development plans, or related information, and the
results from the provision of the Services performed by Multex under
this Agreement and (ii) with respect to Multex, the Multex Software
and any related documentation or specifications, and any other
information obtained by Merrill Lynch or its affiliates (or its or
their employees or agents) which is marked as confidential, or which
ought reasonably to be understood to be confidential, concerning
Multex's business and operations and financial condition; the
software, systems, data bases, hardware and information services used
by Multex to conduct its business, including the configurations
hereof; and Multex's customer lists and prospects.. Notwithstanding
the foregoing, the internal distribution of Research to Merrill Lynch
employees pursuant to a Service Request by Multex in accordance with
the terms of this Agreement shall not be deemed a breach of this
paragraph 14 (a).
(b) Multex shall protect the confidentiality of the Research and shall not
disclose such Research to any entity or person except as expressly
permitted herein. Multex 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 as described herein in their entirety (including all
accompanying disclaimers and proprietary notices) and without revision
by Multex. Multex shall use reasonable efforts to prevent
interception, inappropriate disclosure, or use of the Research by
unauthorized persons. Towards that end, Multex will ensure that its
employees abide by the provisions of this Agreement and do not
illegally trade on or wrongfully disclose or use any information given
to Multex by Merrill
13
<PAGE>
Lynch.
(c) 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, or firm or enterprise, or use for its own
benefit, any such Confidential Information (except as specifically
permitted or contemplated by this Agreement). Notwithstanding the
foregoing, it is agreed that neither party shall not have any
liability for breach of any confidentiality obligation by its clients
or other third parties not under such party's control.
(d) 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.
15.Ownership Rights.
----------------
(a) The Research shall remain the sole and exclusive property of Merrill
Lynch and/or its affiliates and Multex shall not acquire any rights in
the Research.
(b) The Multex Software shall remain the property of Multex. Merrill Lynch
and its affiliates may use the Multex Software only in conjunction
with the Services. Merrill Lynch shall not permit the Multex Software
to be used by more than the number of users as may be agreed to
between Merrill Lynch and Multex. Merrill Lynch shall not copy, in
whole or in part, the Multex Software or related documentation,
whether in the form of computer media, printed or in any other form;
provided, however, that for each Service Request, Merrill Lynch and
its affiliates may make one(1) copy of the Software for back-up
purposes only.
(c) The License granted herein is for the limited purposes of enabling
Merrill Lynch and its affiliates to contribute the Research to Multex,
and to receive the Services and distribute the Merrill Research and
other research materials provided by Multex within Merrill Lynch and
its affiliates.
(d) MERRILL LYNCH SHALL NOT MAKE ANY ALTERATION, CHANGE OR MODIFICATION TO
THE MULTEX SOFTWARE. MERRILL LYNCH MAY NOT RECOMPILE, DECOMPILE.
DISASSEMBLE. OR REVERSE ENGINEER THE MULTEX SOFTWARE OR MAKE OR
DISTRIBUTE ANY OTHER FORM OF THE MULTEX SOFTWARE.
14
<PAGE>
(e) Merrill Lynch may use the trademarks of Multex or its licensors only
to identify printed output produced by the Multex 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 Merrill Lynch 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 Licensee and Merrill Lynch & Co., Inc
only as necessary to identify the source of the Research 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 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.
16.Warranties.
----------
(a) Multex hereby represents, warrants, and covenants to Merrill Lynch and
its affiliates 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
and shall comply with applicable laws;
(ii) Multex Software and the Services provided to Merrill Lynch
and its affiliates shall not infringe 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 Merrill Lynch and its
affiliates as described herein; and
(iv) The medium on which Multex Software is furnished is
warranted to be free of detects in materials and
workmanship under normal use for a period of thirty (30)
days from the date of delivery of Multex Software pursuant
to each Service Request.
(b) Merrill Lynch represents, warrants and covenants to Multex that:
(i) Merrill Lynch is the owner of and has the right to provide
the Research to Multex for distribution as provided herein;
(ii) Merrill Lynch has the right to internally distribute the
Research;
(iii) To the best of its knowledge, the Research does not
infringe the Proprietary Rights of any third Party;
(iv) Merrill Lynch will comply with all laws and regulations
applicable to the use and internal distribution of the
Merrill Research, and will comply with the laws relating to
the preparation of the Research of the jurisdiction in
which such Research is prepared.
(c) THE EXPRESS WARRANTIES AND LIMITATIONS SET FORTH
15
<PAGE>
HEREIN CONSTITUTE THE ONLY WARRANTIES OF MULTEX AND MERRILL LYNCH (AND
ITS AFFILIATES) AND 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. MULTEX AND
ITS LICENSORS DO NOT AND CANNOT WARRANT THE PERFORMANCE OR RESULTS
MERRILL LYNCH OR ITS AFFILIATES OR CLIENTS MAY OBTAIN BY USE OF MULTEX
SOFTWARE OR THE SERVICES. THE MERRILL RESEARCH IS PROVIDED TO MULTEX
ON AN "AS IS" BASIS, WITH ALL FAULTS AND DEFECTS CONTAINED THEREIN,
MERRILL LYNCH DOES NOT MAKE ANY WARRANTIES, EXPRESS OR IMPLIED, AS TO
MERCHANTABILITY. FITNESS FOR A PARTICULAR USE OR ANY OTHER MATTER WITH
RESPECT TO THE RESEARCH AND EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, NO REPRESENTATION OR STATEMENT SHALL BE BINDING UPON
MERRILL LYNCH AS A WARRANTY OR OTHERWISE.
17. 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 and (iii) automobile
liability coverage of at least $500,000. Upon request, Multex shall
provide evidence of such policies (including certificates of
insurance) to Merrill Lynch. Such policies shall contain an express
waiver of any right of subrogation.
18. Advertising.
-----------
Neither party shall use the name or marks of the other or its parent
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 may be withheld in said party's sole discretion.
Notwithstanding the foregoing, Multex may disclose the fact of and
terms of this Agreement (but not Merrill Lynch Confidential
Information) to its directors, officers, employees, and representative
and potential investors of Multex. Merrill Lynch may reference
Multex's name in reports, analyses, and other materials in the
ordinary course of its business. Multex may include Merrill Lynch's
name as a contributor to Multex's distribution services.
19. Successors and Assigns.
----------------------
This Agreement shall be binding upon the parties respective
16
<PAGE>
successors and permitted assigns. Neither party may assign this
Agreement and/or any of its rights and/or obligations hereunder
without the prior written consent of the other party, and any such
attempted assignment shall be void.
20. 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 New York.
21. Modifications.
-------------
No modification, amendment, supplement to or waiver of this Agreement
or any Service Request or Attachment hereunder, or any of their
provisions shall be binding upon the parties hereto unless made in
writing and duly signed by both parties.
22. 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.
23. Exhibits.
--------
The terms and conditions of any and all Exhibits and Attachments to
this Agreement are incorporated herein by this reference and shall
constitute part of this Agreement as if fully set forth herein.
24. Compliance with Law.
-------------------
Multex shall comply with all applicable U.S., state and local laws and
regulations in its performances of its obligations hereunder and the
Services will comply with applicable law.
25. Heading.
-------
The headings herein are for convenience of reference only and shall
not impact the meaning of this Agreement.
26. Entire Agreement.
----------------
This Agreement constitutes the entire Agreement between the parties
concerning the subject matter hereof and shall supersede all prior
agreements or understandings concerning such subject matter.
27. Survival.
--------
Notwithstanding any termination of this Agreement, the provisions of
Section 3,6, 8 (e), 9, 12. 13, 14, 15, 16, 18, 19, 27, and 31 shall
survive termination.
28. Access.
------
17
<PAGE>
Merrill Lynch 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.
29. Force Majeure.
-------------
In no event shall either party be liable to the other for any delay or
failure to perform hereunder (other than a failure to pay any amounts
due hereunder), which delay or failure to perform is due to causes
beyond the reasonable control of said party including, but not limited
to, acts of God; acts of a public enemy; acts of the United States of
America; fires, floods; epidemics; quarantine restrictions; strikes;
and freight embargoes. In every case, the delay or failure to perform
must be beyond the control and without the fault or negligence of the
party claiming excusable delay, and the party claiming excusable delay
must promptly notify the other party of such delay. Without limiting
the foregoing, strikes or other labor discord by a party's employees
or the employees of its agents or subcontractors will not excuse such
party's delay or failure to perform.
30. Computer Security Guidelines; Merrill Lynch Firewalls.
-----------------------------------------------------
(a) Multex represents and, warrants that under the terms of this
Agreement: (i) all Multex interconnectivity to Merrill Lynch and its
affiliates' computing systems and/or networks and all attempts at.
same shall be only through Merrill Lynch's security gateways
and/firewalls; (ii) it will not access, and will not permit
unauthorized persons or entities to access. Merrill Lynch computing
systems and/or networks without Merrill Lynch's express written
authorization and any such actual or attempted access shall be
consistent with any such authorization; and (iii) it will use a virus
detection/scanning program or connect to Merrill Lynch or its
affiliates via a virus clean environment prior to any attempts to
access any of Merrill Lynch's computing systems and/or networks and
upon detecting a virus, all attempts to access Merrill Lynch's
computing and/or networks shall immediately cease and shall not resume
until any such virus has been eliminated.
(b) Merrill Lynch uses front end computers known as firewalls (the
"Firewalls") to insure network security. The Firewalls have the
ability to alter and cancel data transmissions based on internal
Merrill Lynch specifications. Multex will deliver Research
electronically to the Firewalls and shall be responsible for document
integrity to the Firewalls and to any Merrill Lynch test sites
provided for in the Schedules. Merrill Lynch shall be solely
responsible for document integrity from the Firewalls throughout
Merrill Lynch.
31. Notices.
-------
Except as otherwise expressly provided herein or in any Service
18
<PAGE>
Request, any notice or other communication required or permitted shall
be in writing and shall be delivered via overnight delivery service,
personal delivery, or certified mail, return receipt requested
addressed as follows:
If to Multex: Multex Systems, Inc.
33 Maiden Lane
5th Floor
New York, New York 10038
Attention: President
If to Merrill Lynch: Merrill Lynch, Pierce, Fenner & Smith,
Incorporated
250 Vesey Street, 17th Floor
New York, New York 10028
Attention; Jack Roehrig
Merrill Lynch, Pierce, Fenner & Smith.
Incorporated
222 Broadway222 Broadway, 17th Floor
New York, New York 10038
Attention: Corporate Law Department
Or so such other address as shall be given by either party to the
other in writing.
32. Import/Export Restrictions.
--------------------------
(a) This Agreement is made subject to any laws, regulations. orders or
restrictions on the export of the Services, Multex Software, and
Equipment that may be imposed at any time or from time to time by the
U.S. Government or other governmental authorities with jurisdiction
over the parties. Both parties (i) shall comply with all such laws,
regulations, permits, orders and other restrictions to the extent that
they are applicable to the Services, Equipment, and/Multex Software
and (ii) shall not directly or indirectly, export or re-export (as
defined in the United States Export Administration Regulations) the
Services, Multex Software, or Equipment to any country for which the
U.S. Government, or any agency thereof, requires an export license or
other governmental approval without first obtaining the same. With
respect to all Multex Software. Equipment and related Services
exported outside of the United States pursuant to the is Agreement,
except as otherwise provided on a Service Request. Multex shall act as
the exporter of record for purposes of the Export Administration Act
of 1979. as amended, and all other relevant laws or regulations.
33. Foreign Corrupt Practices Act.
-----------------------------
Multex represents, warrants and covenants to Merrill Lynch and its
19
<PAGE>
affiliates that it is aware of and familiar with the provisions of the
Foreign Corrupt Practices Act of 1977. as amended (the FCPA"), and its
purposes will take no action and make no payment in violation of, or
which might cause Multex or Merrill Lynch or any its affiliates or its
and their respective directors, officers, employees or agents to be in
violation of, the FCPA. Multex will act in full compliance with the
FCPA. Multex further represents and warrants that no person employed
by it in connection with the performance of its obligation under this
Agreement is an official of the government of any foreign country, or
any agency thereof, and that no part of any monies or consideration
paid hereunder shall accrue for the benefit of any such official.
Notwithstanding anything to the contrary, if Multex takes any action
that could constitute a violation of the FCPA, Merrill Lynch may, at
its sole option, immediately terminate this Agreement. Furthermore,
for the purposes of reasonably ensuring compliance with the FCPA,
Multex agrees that, upon request by Merrill Lynch at any time during
the term of this Agreement. Multex will make available for audit by an
accounting firm designated by Merrill Lynch which is reasonably
acceptable to Multex, Multex's books, records and other documentation
relevant to its business activities conducted pursuant to this
Agreement. The accounting firm shall provide to Merrill Lynch only
such information obtained from such review that relates to a possible
violation of the FCPA. Merrill Lynch shall pay any and all costs of
any such requested audit.
34. Former Agreements.
-----------------
This Agreement replaces and supersedes the 1994 Agreement and the 1996
Master Agreement, which agreements are deemed cancelled as of the date
hereof.
IN WITNESS WHEREOF, the parties hereto, each acting under due and proper
authority, have executed this Agreement as of the date first above written.
MERRILL LYNCH, PIERCE, FENNER MULTEX SYSTEMS, INC
& SMITH INCORPORATED
/s/ /s/
By:________________________ By:________________________
Name:______________________ Name:______________________
Title:_____________________ Title:_____________________
Date:______________________ Date:______________________
20
<PAGE>
Exhibit 10.8(b)
EXECUTION COPY
Addendum No. 3 to
Master Agreement for Electronic Distribution Services
Dated as of December 21, 1999
Reference is made to the Master Agreement for Electronic Distribution
Services dated as of November 13, 1998 between Multex Systems, Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") (the "M.A.") and
------------- ----
all Schedules and Attachments thereto and all prior amendments to, and service
requests under, any of the foregoing. All of the Schedules and Attachments,
prior amendments and service requests (together with the M.A., the "Master
------
Agreement") constituting part of the Master Agreement are set out on Exhibit A
- --------- ---------
hereto.
This is Addendum No. 3 ("Addn-3"), dated and to be effective as of December
------
21, 1999 (the "Addn-3 Effective Date"), to the Master Agreement, and is made by
---------------------
and between Merrill Lynch and Multex.com, Inc. (formerly, Multex Systems, Inc.)
("Multex"; together with Merrill Lynch, the "Parties"). Any capitalized term
------ -------
not defined in this Addn-3 shall have the meaning ascribed to it in the Master
Agreement.
Except as specifically amended by this Addn-3, the terms and conditions of
the Master Agreement shall remain in full force and effect.
In the event of any conflict or inconsistency between the provisions of the
Master Agreement and the provisions of this Addn-3, the provisions set forth in
this Addn-3 shall prevail with respect to the specific matter referenced herein.
The Master Agreement as revised by this Addn-3 is hereinafter referred to as the
"1999 Master Agreement."
---------------------
In consideration of the mutual promises contained herein, the Parties
hereby agree that the Master Agreement is amended as follows:
1. Definitions
Terms with initial capitalization shall have the meanings set forth below.
1.1. "Acceptance" means accepted pursuant to the terms of a Project Plan.
----------
1.2. "Actual Salary" means the cash salary actually paid by Multex to an
-------------
Employee (including reasonable overtime), pro-rated to the extent that the
Employee worked on Projects for less than one (1) Man Year; provided, that for
purposes of the calculations herein, such salary amount shall not exceed the
amount equal to the non-overtime salary cost of one (1) Man Year for such
Employee.
1.3. "Additional Projects" has the meaning set forth in Section 3.5.
------------------- -----------
1.4. "Addn-3 Effective Date" means December 21, 1999, the effective date
---------------------
of this Addn-3 as set forth above.
1
Confidential treatment has been requested for portions of this document, which
have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
<PAGE>
EXECUTION COPY
1.5. "Addn-3 Initial Term" has the meaning set forth in Section 20.1.
------------------- ------------
1.6. "Addn-3 Renewal Term" has the meaning set forth in Section 20.1.
------------------- ------------
1.7. "Bonus" means the bonus paid in cash by Multex to an Employee pro-
-----
rated to the extent that the Employee worked on Projects for less than one (1)
Man Year, and excluding securities, stock options, warrants and other non-cash
compensation or payment.
1.8. "Change of Control" has the meaning set forth in Section 16.1.
----------------- ------------
1.9. "Confidential Information" has the meaning set forth in Section
------------------------ -------
14(a) of the M.A.
- -----
1.10. "Customer Data" has the meaning set forth in Section 15.1.
------------- ------------
1.11. "Customized Software" has the meaning set forth in Section 7.3.
------------------- -----------
1.12. "Data and Equipment Fees" has the meaning set forth in Section
----------------------- -------
11.5.
- ----
1.13. "Data and Equipment Services" has the meaning set forth in Section
--------------------------- -------
11.5.
- ----
1.14. "Data Fees" has the meaning set forth in Section 11.1.
--------- ------------
1.15. "Data Feeds" has the meaning set forth in Section 11.1
---------- ------------
1.16. [*****]
1.17. "Delivery Date" has the meaning set forth in Section 3.9.
------------- -----------
1.18. "Disseminate" and "Dissemination" refer to disseminating,
----------- -------------
delivering, publishing, transmitting, broadcasting, providing access to, making
available (including without limitation on servers) and otherwise distributing
research, content and New Content Forms, and software in connection therewith,
over Interactive Services.
1.19. "Domain Agreement" has the meaning set forth in Section 18.
---------------- ----------
1.20. "Employee" and "Employees" mean one or more full-time employees of
-------- ---------
Multex, provided that no person shall be deemed to be an Employee hereunder
unless he or she has signed a confidential and nondisclosure agreement
substantially in the form of Schedule 1.20.
-------------
1.21. "Employee Benefit Costs" means insurance costs, FICA expenses and
----------------------
other benefits provided to an Employee by Multex, as such costs are agreed to in
writing in advance by ML, adjusted on a quarterly basis, but in any event not to
exceed twenty-five percent (25%) of the Actual Salary of such Employee, unless
such percentage amount is modified pursuant to a written agreement of the
Parties such as an overhead sharing agreement.
1.22. "Employee Overhead" means (i) with respect to an Employee, forty
-----------------
percent (40%) of the sum of such Employee's Actual Salary, Bonus and Employee
Benefit Costs, and (ii) with
2
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respect to an Outside Consultant, twenty percent (20%) of the sum of such
Outside Consultant Cost, in each case unless such percentage amount is modified
pursuant to a written agreement of the Parties such as an overhead sharing
agreement except as otherwise set forth in Section 7.5.
------- ---
1.23. "Equipment" has the meaning set forth in Section 3 of the M.A.
--------- ---------
1.24. "Equipment Fees" has the meaning set forth in Section 11.3.
-------------- ------------
1.25. "First Cure Period" has the meaning set forth in Section 3.9.
----------------- -----------
1.26. "First Implementation Right" has the meaning set forth in Section
-------------------------- -------
9.3.
- ----
1.27. [*****]
1.28. [*****]
1.29. "In-Context Hyperlink" and "In-Context Hyperlinks" mean one or more
-------------------- ---------------------
hyperlinks to a hypertext document related to a specific HTML page or section
having a direct association to said hyperlink.
1.30. "Initial Team Size" has the meaning set forth in Section 3.1.
----------------- -----------
1.31. "Intellectual Property Rights" means: (i) patents, patent
----------------------------
applications, patent disclosures and inventions (whether or not patentable and
whether or not reduced to practice), including but not limited to any reissues,
continuations, continuations-in-part, divisions, revisions, extensions or
reexaminations thereof; (ii) domain names, trademarks, service marks, trade
dress, trade names, corporate names, logos and slogans (and all translations,
adaptations, derivations and combinations of the foregoing) and Internet domain
names, together with all goodwill associated with each of the foregoing; (iii)
copyrights and copyrightable works; (iv) registrations, applications and
renewals for any of the foregoing; (v) trade secrets, confidential information
and know-how (including but not limited to ideas, formulae, compositions,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, financial and accounting data, business and marketing plans, and customer
and supplier lists and related information); and (vi) all other intellectual
property rights (including but not limited to mask works).
1.32. "Interactive Service" and "Interactive Services" refer to the
------------------- --------------------
Internet, intranets and extranets and sites, portals, services and platforms
thereon; cable, cellular, wireless and two-way networks, interactive platforms
and services; and other technologies, means and modes for Disseminating and
receiving interactive content now known or hereafter developed.
1.33. "International ML Interactive Service" has the meaning set forth in
------------------------------------
Section 6.3.
- -----------
1.34. "Internet" means the Internet and any successor or ancillary
--------
network, including, without limitation, what is currently referred to as
Internet 2.
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1.35. "Joint Development Project" and "Joint Development Projects" have
------------------------- --------------------------
the meanings set forth in Section 7.1.
-----------
1.36. "Joint Development Work Project" shall have the meaning set forth
------------------------------
in Section 19.2.
------------
1.37. "Licensed Software" has the meaning set forth in Section 8.1.
----------------- -----------
1.38. "Licensee" has the meaning set forth in Section 17.2.
-------- ------------
1.39. "Licensor" has the meaning set forth in Section 17.2.
-------- ------------
1.40. "Look and Feel Project Plan" and "Look and Feel Project Plans" have
-------------------------- ---------------------------
the meaning set forth in Section 6.1.
-----------
1.41. "Man Year" means the equivalent of working ten (10) hours a day and
--------
five (5) days a week for fifty-two (52) weeks a year; provided that when an
Employee is a Team Member, Man Year means the equivalent of working ninety-five
percent (95%) of the foregoing amount of time.
1.42. "Marks" has the meaning set forth in Section 17.1.
----- ------------
1.43. "Master Agreement" has the meaning set forth in the recitals
----------------
hereof.
1.44. "Master Templates" has the meaning set forth in Section 6.1.
---------------- -----------
1.45. "Material Project" has the meaning set forth in Section 3.9.
---------------- -----------
1.46. "Minimum License Fees" has the meaning set forth in Section 8.4.
-------------------- -----------
1.47. "ML" means Merrill Lynch, Pierce, Fenner & Smith Incorporated and
--
its affiliates worldwide.
1.48. "ML Custom Code" has the meaning set forth in Section 8.2.
-------------- -----------
1.49. "ML Customer" and "ML Customers" mean one or more persons and
----------- ------------
entities who conduct transactions with ML directly or indirectly including,
without limitation, through an intermediary or affiliate, or persons or entities
who are Site Visitors (as such term is defined in Section 8.4). -----------
1.50. "ML Employees" means the employees and other agents of ML.
------------
1.51. [*****]
1.52. [*****]
1.53. "ML Global Retail Agreement" has the meaning set forth in Section
-------------------------- -------
2.2.
- ---
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1.54. "ML Institutional" means ML excluding ML Retail. ML Institutional
----------------
includes, without limitation, the research, investment banking, asset management
and capital markets business of ML and any and all successors thereto and any
other businesses now or hereafter provided by the businesses units excluding ML
Retail.
1.55. "ML Institutional Customer" or "ML Institutional Customers" mean
------------------------- --------------------------
one or more ML Customers of ML Institutional.
1.56. "ML Institutional Service" and "ML Institutional Services" mean ML
------------------------ -------------------------
Interactive Services of ML Institutional.
1.57. "ML Institutional Users" means ML Institutional Customers and ML
----------------------
Employees of ML Institutional.
1.58. "ML Interactive Service" and "ML Interactive Services" mean one or
---------------------- -----------------------
more Interactive Services owned or used by ML.
1.59. [*****]
1.60. "ML International Retail Clients" means clients of one or more non-
-------------------------------
U.S. businesses of ML providing financial services but excluding ML
Institutional Customers.
1.61. "ML Relationship Manager" shall be the person designated by ML (and
-----------------------
his or her successors) to coordinate and approve Project Plans on ML's behalf
and to work with Multex's Relationship Manager.
1.62. "ML Retail" means ML U.S. Retail Clients and ML International
---------
Retail Clients.
1.63. "ML Retail Customer" and "ML Retail Customers" refer to one or more
------------------ -------------------
ML Customers of ML Retail.
1.64. "ML Retail Users" means ML Retail Customers and ML Employees of ML
---------------
Retail.
1.65. "ML U.S. Retail Clients" means clients of one or more U.S.
----------------------
businesses of ML providing financial services but excluding ML Institutional
Customers.
1.66. "ML User" and "ML Users" mean ML Customers, ML Institutional
------- --------
Customers and Employees of ML.
1.67. "Multex" means Multex and its affiliates and subsidiaries.
------
1.68. "Multex Interactive Services" means Interactive Services owned or
---------------------------
used by Multex but excluding ML Interactive Services.
1.69. "MultexNet.com Sites" has the meaning set forth in Section 14.1.
------------------- ------------
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1.70. "Multex Proprietary Software" means Multex Proprietary Software as
---------------------------
defined in the M.A. and all other Multex software (including, without
limitation, Internet-related programming code) used to Disseminate research,
market data and financial information over Interactive Services and to operate
or to support the operation of Interactive Services and, subject to Section 9,
---------
New Products made during the Term hereof and all documentation therefor.
1.71. "Multex Relationship Manager" has the meaning set forth in Section
--------------------------- -------
3.1.
- ---
1.72. "New Content Forms" has the meaning set forth in Section 5.1.
----------------- -----------
1.73. "New Product" has the meaning set forth in Section 9.1.
----------- -----------
1.74. "New Product Development Project" has the meaning set forth in
-------------------------------
Section 9.1.
- -----------
1.75. "Non-Team Members" has the meaning set forth in Section 3.5.
---------------- -----------
1.76. "Notice Period" has the meaning set forth in Section 16.1.
------------- ------------
1.77. "Other Multex Customer" and "Other Multex Customers" mean one or
--------------------- ----------------------
more customers or licensees of Multex other than ML.
1.78. "Output License" has the meaning set forth in Section 9.5.
-------------- -----------
1.79. "Output Right" has the meaning set forth in Section 9.5.
------------ -----------
1.80. "Outside Consultant" and "Outside Consultants" mean one or more
------------------ -------------------
non- employee consultants, independent contractors and subcontractors (both
individuals and companies) or temporary employees engaged by Multex to work on
Projects or assist in the provision of Services hereunder, provided, however, no
person or entity shall be deemed to be an Outside Consultant unless such person
or entity executes confidentiality and nondisclosure agreements substantially in
the form set forth in Schedule 1.77.
-------------
1.81. "Outside Consultant Cost" and "Outside Consultant Costs" mean
----------------------- ------------------------
actual compensation Multex paid to one or more Consultants for their work on one
or more Projects.
1.82. "Person" means an individual, a partnership, a corporation, an
------
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
1.83. "Pre-Existing Agreement" and "Pre-Existing Agreements" mean one or
---------------------- -----------------------
more of the following Service Requests, agreements and addenda to the M.A.
Agreements prior to the Addn-3 Effective Date:
1.83.1. The "ML Direct Agreement/TGA" means the ML Online/Multex
-----------------------
Service Request dated as of February 28, 1997.
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1.83.2. The "AskMerrill Agreement/MLOL" means the ML Online Trial Program
-------------------------
Addendum dated as of October 29, 1999, as amended by Addendum No. 1 to Master
Agreement for Electronic Distribution Services dated as of July 1, 1999.
1.83.3. The "AskMerrill International Agreement" means the Second
----------------------------------
Addendum ML International AskMerrill.com International Trial Program dated as of
April 1, 1999.
1.83.4. The "SPDR Agreement" means the SPDR Service Request dated as of
--------------
August 5, 1999.
1.84. "Pre-Existing Agreement Project" or "Pre-Existing Agreement
------------------------------ ----------------------
Projects" mean one or more projects undertaken pursuant to a Pre-Existing
- --------
Agreement.
1.85. "Project" and "Projects" mean one or more software development, web
------- --------
site development, integration, implementation projects and any other projects or
services which ML engages Multex to provide pursuant to the 1999 Master
Agreement.
1.86. "Project Plan" and "Project Plans" have the meaning set forth in
------------ -------------
Section 4.1.
- -----------
1.87. "Project Plan Amendment" has the meaning set forth in Section 4.1.
---------------------- -----------
1.88. "Project Plan Form" means the project plan form attached hereto as
-----------------
Exhibit B.
- ---------
1.89. "R&D Committee" has the meaning set forth in Section 9.4.
------------- -----------
1.90. "R&D Completion Date" has the meaning set forth in Section 9.2.
------------------- -----------
1.91. "Recruiting Cost" has the meaning set forth in Section 3.7.
--------------- -----------
1.92. "Release" has the meaning set forth in Section 9.2.
------- -----------
1.93. "Relevant R&D" has the meaning set forth in Section 9.1.
------------ -----------
1.94. "Research" has the meaning set forth in Section 1(g) of the M.A.,
--------
as amended pursuant to Section 5.1 of the 1999 Master Agreement.
-----------
1.95. "Revenues" has the meaning set forth in Section 13.1.
-------- ------------
1.96. "Revised Delivery Date" has the meaning set forth in Section 3.9.
--------------------- -----------
1.97. "Second Cure Period" has the meaning set forth in Section 3.9.
------------------ -----------
1.98. "Services" means the work product, services and assistance to be
--------
provided by Multex to ML hereunder including, without limitation, aggregation
and Dissemination of Research and related content (including, without
limitation, financial information, news and data) ("Dissemination Services");
----------------------
software and Internet-related development services, database management and
administration services; hosting, testing, maintaining and repairing Web Sites;
Data and Equipment
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Services, and in addition to the foregoing, procuring hardware and software
rights, including maintenance and support therefor, for ML as set forth in the
1999 Master Agreement.
1.99. "Site Customers" has the meaning set forth in Section 8.4.
-------------- -----------
1.100. "Site Prospects"has the meaning set forth in Section 8.4.
-------------- -----------
1.101. "Site Visitors" has the meaning set forth in Section 8.4.
------------- -----------
1.102. "SLA" has the meaning set forth in Section 6.6.
--- -----------
1.103. "Software License" has the meaning set forth in Section 8.l.
---------------- -----------
1.104. "Software Project" and "Software Projects" have the meaning set
---------------- -----------------
forth in Section 7.1.
-----------
1.105. "Standard Institutional License Fee Rate" has the meaning set
---------------------------------------
forth in Section 8.4.
-----------
1.106. "Standard Project Rate" has the meaning set forth in Section 3.9.
--------------------- -----------
1.107. "Team Member" and "Team Members" have the meaning set forth in
----------- ------------
Section 3.1.
- ------- ---
1.108. "Term" has the meaning set forth in Section 20.1.
---- ------------
1.109. "Third Party" means a person or entity other than Multex or ML.
-----------
1.110. "Third Party R&D" has the meaning set forth in Section 9.1.
--------------- -----------
1.111. "Third Party Software" means software owned by a Third Party or
--------------------
licensed to a Third Party from another Third Party.
1.112. "Third Party Software Fees" has the meaning set forth in Section
------------------------- -------
11.2.
- ----
1.113. "Transition Services" has the meaning set forth in Section 20.4.
------------------- ------------
1.114. "Transition Services Period" has the meaning set forth in Section
-------------------------- -------
20.5.
- ----
1.115. "Upgrades" means one or more error corrections, bug fixes and
--------
minor enhances to software and documentation.
1.116. "Use" means use, install, operate, run, copy, integrate, deploy,
---
distribute, transmit, display, perform, correct, modify, make available, prepare
derivative works within the meaning of Title 17 of the United States Code, and
integrate software or Web features into ML's software or ML Interactive Services
and use, install, copy, correct and modify as necessary for temporary use at a
backup or disaster recovery location during the pendency of a disaster,
emergency or persistent equipment failure.
1.117. [*****]
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1.118. "Web Site" and "Web Sites" mean one or more web sites, World Wide
-------- ---------
Web sites, intranet and extranet sites or pages (including, without limitation,
co- branded sites, affiliated sites and jump pages).
1.119. "Year 1" means the period commencing upon the Addn-3 Effective
------
Date and ending on December 31, 2000. Each subsequent "Year" begins on January 1
----
and ends on December 31 of the next successive calendar years during the Term.
By way of example, "Year 2" means January 1, 2001 to and including December 31,
------
2001; "Year 3" means January 1, 2002 to and including December 31, 2002; "Year
------ ----
4" means January 1, 2003 to and including December 31, 2003; and "Year 5" means
- - ------
January 1, 2004 to and including December 31, 2004.
2. Pre-Existing Agreements and Continuation of Rights
2.1. Each Pre-Existing Agreement, as its provisions may be amended or
superseded by the 1999 Master Agreement, shall continue in full force and effect
to the end of its current term (as such term is set forth in each such
agreement). ML shall have the right, but not the obligation, to enter into an
extension or renewal of any of the AskMerrill Agreement/MLOL, the AskMerrill
International Agreement and/or the SPDR Agreement that will have a one-year or
multi-year period and will grant prospective customers of ML Retail the rights
set forth in the Software License, provided that, the term and the fees payable
-------- ----
to Multex under the AskMerrill Agreement/MLOL, the AskMerrill International
Agreement and/or the SPDR Agreement and any other amended terms shall be
mutually agreed upon.
2.2. ML shall have the right, prior to September 1, 2001, to enter into
an agreement (the "ML Global Retail Agreement") that will have a term ending on
--------------------------
the last day of the Addn-3 Initial Term except that it shall include the right
to Transitional Services the same as those set forth in Section 20 so long as ML
----------
pays the fees for such Transitional Services under the ML Global Retail
Agreement. In addition, the ML Global Retail Agreement will grant ML Retail and
ML Retail Users (but not prospective customers) the right to receive the
Services governed by the AskMerrill Agreement/MLOL and the ML Direct
Agreement/TGA and other Services and Projects as the Parties may agree on the
following terms: Multex will grant ML Retail and ML Retail Users (but not
prospective customers) the same rights set forth in the Software License in
exchange for a minimum annual payment of [*****] for up to [*****] ML Retail
Users (but not prospective customers) and an annual fee of [*****] for each such
additional ML Retail User in excess of [*****], if any. Multex shall provide
Projects and Services to ML Retail as provided in Addn-3 in exchange for payment
by ML at the Standard Project Rate. If entered into, ML shall have the right,
during the last six (6) months of the term of the ML Global Retail Agreement to
renew or extend the ML Global Retail Agreement for a period up to the end of the
Term of Addn-3.
3. [*****]
3.1 [*****]
3.2 [*****]
3.3. The Parties acknowledge and agree that the full consideration to be
received by Multex from ML for Services and Projects governed by any Pre-
Existing Agreement is as set forth
9
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have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
<PAGE>
in such Pre-Existing Agreement. Without limiting the foregoing, and for the
avoidance of doubt, the Parties acknowledge and agree that Multex has and shall
have no right to receive payment at the Standard Project Rate or any payment
other than the consideration provided in any governing Pre-Existing Agreement
for work under such Pre-Existing Agreement.
3.4. If ML desires to receive Services and Projects that are outside the
scope of the Pre-Existing Agreements, such Services and Projects will be
governed by this Addn-3, and ML shall pay Multex for them at the Standard
Project Rate.
3.5. If ML reasonably requires Multex to perform one or more Projects
that are beyond the capacity of the then-current [*****] Team ("Additional
----------
Projects"), Multex shall perform such Additional Projects using Employees and
- --------
Outside Contractors who are not then Team Members ("Non-Team Members") [*****].
----------------
3.6. Multex agrees to acquire and maintain sufficient equipment and
dedicate the Team Members and Non-Team Members and the other resources necessary
to insure timely completion of each Project in accordance with the governing
Project Plan[*****].
3.7. During the Addn-3 Initial Term, ML shall reimburse one hundred
percent (100%) of the actual recruiting costs (without mark-up of any kind) that
Multex paid to hire a new Employee to serve as Team Member ("Recruiting Cost")
---------------
who begins work as a Team Member within forty-five (45) days of his or her first
day of employment by Multex. If such new Employee did not serve as a Team Member
for at least a consecutive twelve (12) month period for any reason [*****],
Multex shall promptly reimburse the Recruiting Cost paid by ML in connection
with that Employee on a pro rata basis for the time not spent serving as a full-
time Team Member during that period. The total amount of Recruiting Costs that
ML shall be obligated to pay pursuant to this Section shall not exceed $500,000.
Each new Employee shall receive sufficient training from Multex (at Multex's
expense) to serve as a Team Member before beginning work as a Team Member,
provided that Multex shall have no obligation to provide more than thirty (30)
days of training. Multex will use reasonable efforts to staff the [*****] Team
with Team Members who have the qualifications and experience to meet the
requirements of the Projects and ML's development requirements and to maintain a
[*****] Team whose Team Members are at least equal in skill level of Multex's
software developers and operational staff [*****] in general.
3.8. ML shall pay Multex for work by its Employees and Outside
Consultants in performing each Project and Services as follows: (a) the Actual
Salary, Bonus, Employee Benefit Costs and the Employee Overhead Costs for each
Employee working on the Projects; and (b) the Outside Consultant Costs for each
Consultant working on the Projects.
3.9. When a Project to be conducted under a Project Plan is estimated to
take more than ninety (90) days to complete and cost more than $200,000, that
Project shall be deemed a "Material Project." The Parties shall mutually agree
-----------------
upon a reasonable delivery date for such Material Project, to be set forth in
the Project Plan governing such Material Project (the "Delivery Date"). Such
-------------
Delivery Date may be changed by mutual agreement of the Parties pursuant to an
Project Plan Amendment (the "Revised Delivery Date," if any). A Material Project
---------------------
shall be deemed to be
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have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
<PAGE>
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completed when it is delivered to ML and satisfies the requirements of the
governing Project Plan. In the event that a Material Project is not completed by
the Delivery Date, or as applicable, Revised Delivery Date, Multex shall have an
initial cure period equal to fifteen (15%) of the Project Length (the "First
-----
Cure Period"). During said First Cure Period, ML shall pay Multex for work to
- ------------
complete such Material Project at the Standard Project Rate. In the event Multex
does not complete the Material Project within the First Cure Period, Multex
shall have thirty (30) calendar days to complete the Material Project (the
"Second Cure Period"). During the Second Cure Period, Multex shall make best
------------------
efforts to complete the Material Project and ML shall pay Multex the Actual
Salary and/or Outside Consultant Cost for Employees and Outside Contractors
performing work on such Material Project without any mark-up or overhead costs.
In the event Multex does not complete the Material Project within the Second
Cure Period, ML may elect one of the following and shall so notify Multex within
ten (10) business days after the Second Cure Period: (a) require Multex complete
the Material Project at Multex's sole expense (ML shall incur no further costs
in having the projected completed) or (b) terminate the Material Project and the
governing Project Plan. In the event ML elects to terminate fifteen (15%) or
more of the Material Projects entered into within any twelve (12) month period
for failure to complete the Material Projects within said Second Cure Period, ML
shall have the right to terminate the 1999 Master Agreement. The method of
calculating payments in Sections 3.8 and 3.9 shall be referred to as the
------------ ---
"Standard Project Rate."
---------------------
3.10. Each Party agrees that it will not directly through another person
or entity, (i) induce or attempt to induce any employee of the other Party to
leave the employ of the other Party, or in any way interfere with the
relationship between the other Party and any employee thereof, and/or (ii) hire
---
any person who was an employee of the other Party at any time during the Term,
and if there is one, during the Transition Services Period, and for the twelve
(12) month period following the later of the last date of the Term or the
Transition Services Period. If, at the time of enforcement of this Section 3.10,
------------
a court shall hold that the duration, scope or other restrictions stated herein
are unreasonable under circumstances then existing, the Parties agree that the
maximum duration, scope or other restrictions deemed reasonable under such
circumstances by such court shall be substituted for the stated restrictions
contained herein.
4. Project Plans
4.1. Except for work or Services provided pursuant to a Pre-Existing
Agreement, Multex shall be obligated to perform Projects and Services pursuant
to Project Plans incorporating the terms agreed to herein and as otherwise
agreed to and signed by the Parties (and signed or co-signed by the ML
Relationship Manager on behalf of ML). Upon execution by both Parties, each
Project Plan shall be deemed part of and governed by the 1999 Master Agreement.
- ------------
All material modifications or supplements to a Project Plan require the mutual
agreement of the Parties and shall be effective only after embodied in a writing
executed by the Parties (a "Project Plan Amendment"). The term "Project Plan"
----------------------
includes the Project Plan and each Project Plan Amendment thereto, and the term
"Project Plans" means more than one Project Plan. In the event of conflict
-------------
between the 1999 Master Agreement and a Project Plan, the 1999 Master Agreement
shall govern. For the avoidance of doubt all references under the 1999 Master
Agreement to "Project Plan(s)" shall refer to Project Plans entered into
pursuant to this Section and mutually agreed to and signed by the Parties and
the ML Relationship Manager on behalf of ML.
11
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4.2. Each Project Plan shall be substantially in the Project Plan Form
attached as Exhibit B hereto and shall include with respect to the Project it
---------
governs: (a) the scope of Services to be provided; (b) the Delivery Date; (c) an
estimated budget; (d) the governing specifications and requirements; (e) the
acceptance criteria, and if the Parties so provide, the acceptance or testing
procedures; (f) the documentation to be provided and the requirements therefor,
if any; (g) the training to be provided by Multex to ML, if any; (h) a detailed
description of the work to be performed by ML, if any; and (i) such other terms
agreed upon by the Parties.
5. Research
5.1. From time to time during the Term hereof, ML will develop new
Research and content and new types and forms of content, interactive content and
features and content vehicles (such as, by way of example only, models,
conference calls, and audio and/or video technology) (the "New Content Forms").
-----------------
At the request of ML, Multex will use commercially reasonable efforts to
promptly integrate (pursuant to a Project Plan) and Disseminate the same through
ML Interactive Services. Subject to Multex's pre-existing contractual
obligations and applicable law, Multex will provide ML with prompt notice of New
Content Forms disclosed or contributed to Multex by Other Multex Customers
(provided that Multex shall not be required to identify the name of such Other
Multex Customers) and the opportunity to develop similar New Content Forms for
Dissemination by Multex. Prior to Dissemination, New Content Forms identified or
disclosed by ML to Multex shall be deemed Confidential Information of ML. Upon
Dissemination, such New Content Forms shall be subject to the provisions of this
Section, and shall be deemed part of "Research" under the M.A. The Parties
- -------- agree that New Content Forms shall not be deemed New Products
hereunder. Multex shall not, either before Dissemination or after, disclose or
identify to Third Parties that particular New Content Forms were disclosed or
identified to Multex by ML, provided, however, that the provisions of this
sentence shall not prohibit Multex from disclosing the same or substantially New
Content Forms to others if they were also disclosed to Multex by a Third Party.
Notwithstanding anything to the contrary contained herein, nothing shall limit
or prevent Multex from Disseminating New Content Forms to Third Parties.
6. Web Site Development; International Projects and Web Hosting
6.1. With ML's assistance, Multex shall develop one or more master
templates for the implementation ("Master Templates") of the certain look and
----------------
feel features for ML Interactive Services. Each such template shall be developed
pursuant to a Project Plan (a "Look and Feel Project Plan" and together, the
--------------------------
"Look and Feel Project Plans").
---------------------------
6.2. At ML's request, and pursuant to applicable Project Plans, Multex
will enhance, develop or create ML Interactive Services.
6.3. Multex will develop ML Interactive Services for use by ML Customers
and others in Japan, Germany, Spain, France, Italy and other foreign countries
to be determined by the Parties from time to time in accordance with the
schedule agreed upon by them and pursuant to Project Plans (each an
"International ML Interactive Service" and collectively the "International ML
------------------------------------ ----------------
Interactive Services"). Each of the International ML Interactive Services shall
- --------------------
be accessible by
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persons or entities from different countries in the world as may be specified in
the governing Project Plan. In accordance with the terms hereof, Multex will
retain a sufficient number of Employees or Outside Consultants who have the
requisite skills to build and localize such Interactive Services for the
applicable country or countries, and may place such Employees or Outside
Contractors in its offices in foreign countries as necessary to provide such
services. Such Employees may be Team Members or Non-Team Members as the Parties
shall determine from time to time. The Parties shall consult and discuss with
each other in good faith from time to time regarding expanding their
international Interactive Services containing global content whenever their
strategic and practical objectives coincide, and enter into Project Plans as may
be mutually agreed upon with respect thereto including without limitation
sharing costs and infrastructures. The Parties may consult with each other with
respect to possible joint ventures or cooperative projects internationally.
6.4. At ML's request, and pursuant to applicable Project Plans, Multex
shall develop Interactive Services (or pages or sections of Web Sites) at the
Standard Project Rate for ML Institutional Customers designated by ML, provided
that such ML Institutional Customers enter into agreements with Multex regarding
the same or enter into an agreement approved by Multex with ML regarding the
same.
6.5. ML shall pay Multex for Projects and Services at the Standard
Project Rate unless, the Parties mutually agree in writing to share costs such
as, without limitation, overhead, content, development and outside services
pursuant to Section 6.3.
-----------
6.6. Multex shall provide Web hosting and necessary related services for
ML Interactive Services in exchange for the fees set forth in applicable Project
Plans and in accordance with the terms and conditions set forth in such Project
Plans and a Service Level Agreement (the "SLA") and other agreements, as
---
applicable. The Parties agree to enter into good faith negotiations regarding
the first such Service Level Agreement promptly after the execution of this
Addn-3. Upon execution by both Parties, the SLA shall be deemed part of and
governed by the 1999 Master Agreement. In the event of a conflict between the
1999 Master Agreement and the SLA, the 1999 Master Agreement shall govern. In
the event of a conflict between the SLA and a Project Plan, the SLA shall
govern.
7. Software Development Projects
7.1. At ML's request and pursuant to a Project Plan, Multex shall
undertake one or more Projects to: (a) develop new software in whole or in part;
(b) enhance or develop new versions or new releases to Multex Proprietary
Software or other software; (c) engage in software development projects to
correct, enhance, upgrade or develop new versions or new releases of ML
Interactive Services or add new features to ML Interactive Services (one of the
foregoing, a "Software Project" and more than one, "Software Projects"). The
---------------- -----------------
Parties may agree to enter into a joint development project to develop a
Software Project (one, a "Joint Development Project" and more than one, "Joint
------------------------- -----
Development Projects").
- --------------------
7.2. [*****]
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7.3. [*****]
7.4. ML shall pay for Customized Software development at the Standard
Project Rate.
7.5. [*****]
8. Software License
8.1. Subject to the terms hereof, Multex agrees to and hereby does grant
to ML Institutional a non-exclusive license throughout the universe under
Multex's Intellectual Property Rights to Use the Multex Proprietary Software,
Customized Software, [*****], New Products other software developed hereunder
and Third Party Software incorporated in or required to be used in conjunction
with any of the foregoing software (provided that ML pays licensee fees and/or
complies with the terms of an conditions of use associated therewith or enters
into agreements with Third Party Software vendor as may be required by such
vendor) and all Upgrades made thereto during the Term hereof in object code (the
"Licensed Software"), with the right to sublicense the right to use the same to
-----------------
ML Institutional Customers as necessary for them to use one or more ML
Interactive Services and in accordance with provisions in an agreement entered
into by ML Institutional Customers with ML with respect to such use satisfactory
to Multex (the "Software License").
----------------
8.2. Multex shall have no right to license the use of Customized Software
to Third Parties until after the expiration of the six (6) month period that
begins upon the Acceptance by ML of such Customized Software. During such six
(6) month period, Multex shall have the right to create a separate software
package that includes features and functionality of the Customized Software,
provided that (a) Multex does not use the same or substantially similar
- --------
programming code that it used to implement such features and functionality in
the Customized Software ("ML Custom Code"), and (b) that the Employees or
--------------
Outside Consultants of Multex who develop any such separate software package do
not have access to the ML Custom Code and do not receive information from or
discuss the ML Custom Code with any of the Team Members or Non-Team Members who
were involved in the creation or development of the ML Custom Code in whole or
part and thereafter Multex shall have no limitations or restrictions with
respect to such Customized Software, subject to the other terms and conditions
of the 1999 Master Agreement.
8.3. [*****]
8.4. Persons and entities who use an ML Institutional Interactive
Services who have not been qualified to access any portion of the Multex
Propriety Software under ML's entitlement process shall be referred to as "Site
Visitors." Site Visitors who have been qualified to access any portion of the
-------------
Multex Propriety Software under ML's entitlement process to have access to
Research on ML Institutional Interactive Services on a trial basis and for a
period of time not to exceed sixty (60) days shall be referred to as "Site
----
Prospects." The Parties agree that the number of Site
- ---------
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Prospects shall not exceed five thousand (5,000) at any one time. Site Prospects
who are ML Institutional Customers and who have been granted the right by ML to
have access to Research through ML's Interactive Services for longer than sixty
(60) days shall be referred to as "Site Customers." [*****] The method of
---------------
calculating the license fee in this section shall be referred to as the
"Standard Institutional License Fee Rate."
---------------------------------------
8.5. Multex shall provide Help Desk services, correct software errors,
bugs and deficiencies and support and maintain the Licensed Software and Web
Sites and provide Dissemination Services, all in accordance with and as provided
in the SLA.
9. Output License
9.1. The Parties acknowledge and agree that Multex is, and during the
Term will be engaged in product planning, product development and research on
development (the "Relevant R&D") to develop new versions, new releases and
------------
substantial improvements of or to the Multex Proprietary Software, Multex's
Interactive Services and Multex's existing platform technology related to the
foregoing and to develop new and improved software and software and Internet
products, features and functionality to be used in the creation, organization,
Dissemination and other display of investment research and related information,
analysis and data ("New Product" and "New Products," as appropriate). The
----------- ------------
project or projects in which Multex engages to create a New Product or New
Products shall be referred to as "New Product Development Project" and "New
------------------------------- ---
Product Development Projects," as appropriate. [*****]
- ----------------------------
9.2. Within thirty (30) days after the Addn-3 Effective Date and
thereafter from time to time, Multex will provide ML with information regarding
pending New Product Development Projects including, without limitation, a
description of the intended New Product, a summary of the development work to
date, and the anticipated dates when beta testing and when release, roll-out,
implementation or live launch ("Release") will occur. During the Term hereof,
-------
Multex shall provide the same types of information as each New Product
Development Project is planned, designed or initiated. ML, at its option, shall
have the right to participate in beta testing of New Products [*****]. The date
when beta testing, if applicable, and other research and development (excluding
minor corrections or improvements) is completed shall be referred to as an "R&D
---
Completion Date." [*****]
- ---------------
9.3. [*****]
9.4. Within thirty (30) days of the Addn-3 Effective Date, the Multex
management will establish a technical and research and development committee
(the "R&D Committee") to review, establish goals and schedules and direct
-------------
Multex's research and development efforts, including, without limitation, with
respect to New Products. The R&D Committee will meet at least once during each
fiscal quarter, and ML has the right to have one of its employees serve as a
full R&D Committee member. Multex has the right to approve ML's designated
Committee member, which right it will exercise reasonably.
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9.5. The rights granted ML in Sections 9.1-9.5 inclusive shall be
----------------
referred to as the "Output Right." As consideration for the Output Right, and
------------
subject to the terms, conditions and limitations herein, ML shall pay Multex a
license fee (the "Output License") at the rate of [*****] per year in each of
--------------
Years 1, 2, and 3, and at the rate of [*****] in each remaining Year in the Term
on a pro- rata basis.
10. API License
10.1. The Software License includes ML Institutional's right to Use the
published interface, documentation and sample code for application program
interfaces or their equivalent in the Licensed Software and all upgrades and
other modifications thereto (each an "API" and one or more the "APIs") for the
--- ----
purpose of modifying, incorporating in and using the Licensed Software in
conjunction with ML's software and the ML Interactive Services during the Term
and Transition Services Period. At the end of each fiscal quarter during the
Term and Transition Services Period, Multex shall deliver all then existing APIs
to the Licensed Software to ML. Multex will deliver, and if requested by ML,
create APIs at other times at ML's request and in exchange for ML's payment at
the Standard Project Rate. Subject to Multex's rights and any limitations
thereto, including, without limitation, any restriction against selling or
licensing such the APIs to Third Parties, ML Institutional has the right to Use
the APIs for and in the course of its businesses (including, without limitation,
ML Interactive Services) and for and in connection with its provision of
services and products to ML Institutional Users and Third Parties, including,
without limitation, businesses, services and products of ML that may be created
or offered in the future.
10.2. The Parties agree to enter into a mutually satisfactory software
source code escrow agreement promptly after the Addn-3 Effective Date.
11. Data, Third Party Software, Equipment and Other Payments
11.1. As payment for Third Party data feeds, content products, or content
services (the "Data Feeds") provided to ML by Multex at ML's request as part of
----------
the Services, ML will pay Multex the actual cost paid by Multex to the vendor
for such Data Feeds and, with respect only to Data Feeds for which use began
after the Addn-3 Effective Date, an additional amount equal to [*****] (the
"Data Fees"). ML will pay its pro-rata share of associated Employee expenses for
- ----------
the maintenance and support of the product or service at the Standard Project
Rate.
11.2. As payment for each unit of Third Party Software (including
maintenance fees therefor, if any) provided to ML by Multex at ML's request as
part of the Services, ML will pay Multex the actual cost paid by Multex to the
vendor for such Third Party Software and, with respect only to Third Party
Software for which use began after the Addn-3 Effective Date, an additional
amount equal to [*****] (the "Third Party Software Fees").
-------------------------
11.3. For each unit of Equipment that is acquired by Multex on ML's
behalf during the Term as part of the Services, ML shall pay Multex the actual
cost paid by Multex to the vendor for such unit of Equipment and the direct
service and maintenance therefor and, with only with respect to Equipment
acquired after the Addn-3 Effective Date, an additional amount equal to [*****]
(the
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"Equipment Fees"). If such Equipment, if any, has a book value in excess of zero
--------------
dollars at expiration or termination of Addn-3 for any reason, ML shall have the
right to purchase such Equipment at book value.
11.4. ML shall pay Multex's actual costs incurred in connection with
performing its obligations under the 1999 Master Agreement, including Project
Plans, not otherwise covered in the Master Agreement and this Addn-3 plus a
mark-up to be mutually agreed upon by the Parties, provided, however, that in
the absence of handling or maintenance costs for such items, the minimum mark-up
shall be [*****].
11.5. The Services provided pursuant to Sections 11.1-11.4 inclusive
------------------
shall be referred to as the "Data and Equipment Services" and the payments
---------------------------
therefor as the "Data and Equipment Fees."
-----------------------
11.6. ML will reimburse Multex for all reasonable out-of-pocket expenses
(without mark-up) (e.g., out-of-pocket expenses for travel, meals and lodging)
incurred in connection with the provision of the Services pursuant to ML's
standard reimbursement policy.
12. Monthly Retainer and Monthly Reports
12.1. ML shall make monthly payments and Multex shall issue monthly
reports pursuant to the provisions of Schedule 12.
-----------
13. Revenues
13.1. ML will pay Multex "Revenues" (as such term is defined herein) of
--------
at least [*****] in each Year of the Term. "Revenues" means all payments, fees,
--------
expenses, reimbursements (excluding any reimbursements that do not include a
mark-up under the 1999 Master Agreement (e.g., reimbursements for out-of-pocket
costs and expenses)) and each and every payment of any type made by ML,
including, without limitation, payments of any type made to Multex in connection
with the Pre-Existing Agreements and all renewals and extensions thereof (if
any) and the Global Retail Agreement, if entered into, payments made by ML to
Multex as payments for fees on behalf of or that would be otherwise owed by an
ML Customer, all of which will be counted on an accrued basis, and provided that
--------
Year 1 shall be deemed the first year of the Term, and provided, further that
-------- -------
for the purposes of this Section, Revenues and all other costs, including,
without limitation, for Services completed but not invoiced to ML for Services
performed prior to the Addn-3 Effective Date (and including without limitation
equipment acquired on behalf of ML by Multex and the costs of associated
maintenance, services and setup fees). [*****]
14. Sponsorship and Marketing
14.1. During the Addn-3 Initial Term hereof, Multex will maintain
sponsorship link-back In-Context Hyperlinks from the MultexNet.com site and any
successor institutional Interactive Service and equivalent international sites
(together with Multex's co-mingled products for institutional investors, the
"MultexNet.com Sites") to ML Institutional Interactive Services, and ML shall
- --------------------
place an In-Context HyperLink from ML Institutional Interactive Services to
MultexNet.com Sites (so long as ML's link-back is active and in place). To the
extent ML Customers linking to
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have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
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MultexNet.com Sites from ML Institutional Interactive Services are Multex
subscribers, they shall have available to them (without additional
authentication) In-Context Hyperlinks and navigation feature sets displayed
around Research or content from one or more financial institutions in such
manner as to enable a ML User to return to a page and content level in the ML
Institutional Interactive Service designated by ML from time to time hereunder.
ML shall have the option to tier the commingled research seen by ML Customers
but not to alter or affect Multex's entitlement process in any way. If the ML
User is not a current Multex subscriber, then Multex, subject to ML's approval,
may display an up-sell message for the Multex subscription service to such ML
User. A ML Institutional User accessing one of the MultexNet.com Sites where ML
Research or content is displayed (on a delayed basis) shall have available to
him or her an In-Context Hyperlink labeled with a mutually agreed upon ML
hyperlink that enables that ML User to link directly in- context to the
applicable ML Institutional Interactive Service. If that active link is
unavailable, then an up-sell message for the ML Interactive Service shall be
displayed. [*****]
14.2. ML Customers who link from a ML Interactive Service to the
MultexNet.com Sites shall receive a thirty (30) day free subscription (provided
that Multex is offering subscriptions at such time) to Research and content on
those Multex Interactive Services. Each such ML Customer shall have the right to
view Multex's premium services accessible over the MultexNet.com Sites at
Multex's standard pay-per-view, or rates, at ML's option, ML shall pay Multex
for the ML Customers' access to the premium services. [*****]
14.3. [*****]
15. Customer Data
15.1. For purposes hereof, "Customer Data" means all data and information
-------------
that is captured or recorded with respect to or during any person's or entity's
use of or access to an Interactive Service. Each Party will own Customer Data
collected on its own Interactive Services.
15.2. Each Party may make limited use or take limited action with respect
to Customer Data of the other Party only as is necessary to fulfill its
obligations hereunder and for no other purpose, including, without limitation,
using such information for marketing purposes for such party.
15.3. Subject to contractual or legal obligations, Multex shall provide
ML with monthly reports, in such form and manner as agreed to by the Parties,
and shall provide the software, Internet and other Interactive Services tools
required for viewing and analyzing the same at ML's cost including without
limitation reports equivalent to the reports customarily generated and/or
provided to Other Multex Customers and reports agreed to by the Parties pursuant
to a Project Plan. The Customer Data from ML Interactive Services shall include,
without limitation, reports of visitor usage and patterns, pages and Research
reports read or accessed by ML Users.
16. Change of Control
16.1. Not less than thirty (30) days (the "Notice Period") before Multex
-------------
enters into a written agreement in connection with a "Change of Control" (as
-----------------
defined below) of Multex, Multex shall provide notice of such proposed Change of
Control to ML and ML shall be required to give
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have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
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notice to Multex during the Notice Period indicating whether it will remain a
party to the 1999 Master Agreement or whether it will terminate the 1999 Master
Agreement upon the effective date of the Change of Control. In the event Multex
fails to provide notice as required herein, ML shall have the right to terminate
the 1999 Master Agreement at any time during the thirty (30) day period
commencing on the date ML receives knowledge of (a) the occurrence of the Change
of Control or (b) the execution of the written agreement bringing about or
causing a Change of Control. If ML exercises its right pursuant to this section
to terminate the 1999 Master Agreement, Multex shall provide the Transition
Services, [*****].
16.2. As used herein, "Change of Control" means the occurrence of any of
----------------
the following: (a) the sale, lease, transfer, conveyance or other disposition,
in one or a series of related transactions, of all or substantially all of the
assets of Multex other than to a wholly owned subsidiary; (b) the consolidation
of Multex with another person or entity or the merger of Multex into another
person or entity or of another person or entity into Multex, or any such similar
event pursuant to a transaction in which 50% of the voting shares of Multex are
changed into or exchanged for cash, securities, or other property (other than
any such transaction where the holders of the voting shares of Multex
immediately prior to such transaction own, directly or indirectly, not less than
a majority of the voting shares of the surviving or resulting person or entity
immediately after such transaction); (c) the adoption of a resolution or plan by
the shareholders of Multex concerning the liquidation, dissolution or winding up
of Multex; (d) the consummation of any transaction or series of related
transactions (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as such term is used in Section 13(d)(3)
------ ----------------
of the Securities Exchange Act of 1934 (the "Exchange Act")) (other than Multex,
-----------------
any trustee or other fiduciary holding securities under an employee benefit plan
of Multex, or any corporation owned, directly or indirectly, by the shareowners
of Multex in substantially the same proportion as their ownership of stock of
Multex) is or becomes the "beneficial owner" (as such term is defined in Rule
----------------
13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more
than 30% of the voting shares of Multex; or (e) during any two consecutive
years, individuals who at the beginning of such period constitute the Board of
Directors, and any new director whose election by the Board of Directors or
nomination for election by Multex's shareowners was approved by a vote of at
least a majority of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
thereof. For purposes of this definition, any transfer of an equity interest of
an entity that was formed for the purpose of acquiring voting shares of Multex
will be deemed to be a transfer of such portion of such voting shares as
corresponds to the portion of the equity of such entity that has been so
transferred.
17. Trademark Restriction
17.1. ML hereby grants to Multex a non-exclusive, royalty-free, worldwide
license to use logos, trade names, trademarks, designs, trade dresses, slogans
and service marks, in word, stylized and design formats (the "Marks")
-----
proprietary to ML for the purpose of identifying content as part of the
provision of the Services as contemplated by the 1999 Master Agreement and as
otherwise required pursuant to the 1999 Master Agreement solely in connection
with the marketing, advertising and operation of the Service as it relates to ML
and only to the extent authorized by the
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1999 Master Agreement. Multex hereby grants to ML a non-exclusive, royalty-free,
worldwide license to use the Marks proprietary to Multex in any marketing,
advertising, website links or other promotional materials solely in connection
with the marketing and advertising of the Services provided by Multex to ML.
17.2. Each Party ("Licensee") shall use and display the other Party's
--------
("Licensor") Marks licensed hereunder in accordance with the Licensor's rules
--------
governing usage of its Marks as may be prescribed by the Licensor from time to
time. Licensee agrees that it shall modify, or cause to be modified, to
Licensor's sole satisfaction, the use of any Licensor Marks hereunder that
Licensor, in its sole discretion, may object. Any intended use by Licensee of
any Licensor Marks in any regional or national advertising campaign or any press
release shall be submitted to Licensor for approval. Licensee shall not do or
suffer to be done any act or thing that would impair Licensor's rights in the
Licensor Marks or damage the reputation for quality inherent in the Licensor
Marks. Each Party acknowledges and agrees that: (a) the Licensor and its vendors
and suppliers, if any, are the exclusive owners of the Licensor's Marks; (b) the
use of the Licensor's Marks by the Licensee does not convey to the Licensee any
right, title or interest in or to the Licensor's Marks; (c) the Licensee may not
contest the Licensor's Marks, or register or attempt to register in any
jurisdiction any Licensor Mark or any confusingly similar trademark or trade
name; (d) the Licensee may not use the Licensor's Marks with respect to any
products, services or materials not provided by the Licensor, or in any way
which might result in confusion as to ML, Multex, or any Third Party being
separate and distinct entities; and (e) the Licensee's use of the Licensor's
Marks, including all goodwill associated with such use, shall inure solely to
the benefit of the Licensor. Each Party warrants to and for the benefit of the
other Party that its marks do not infringe upon the rights of any Third Party
including, without limitation, any rights under trademark or unfair competition
law.
17.3. The Licensee will amend its usage of any trademark of Licensor at
the direction of the Licensor. Failure to modify trademark usage as per
Licensor's instructions shall result in termination of Licensee's right to use
any trademark of Licensor.
18. Transfer of URL
18.1. Multex hereby assigns and transfers all of its right, title and
interest in the Internet domain name www.themarkets.com, and all trademark and
other Intellectual Property Rights associated therewith to ML pursuant to the
Domain Agreement attached hereto as Schedule 18. ML agrees to transfer the same
-----------
back to Multex if ML does not make use of such domain name during Year 1.
19. Intellectual Property Rights
19.1. The Look and Feel Project Plan shall include, without limitation,
the Intellectual Property Rights and other rights owned by ML in the "look and
--------
feel" (i.e., the overall design, assignment of elements, organization color
- ----
scheme, and navigation when viewed as a whole (excluding programming code and
technology and Intellectual Property Rights relating thereto) (the "ML Look and
-----------
Feel IP") (a) of the existing ML Interactive Services developed under the Master
- -------
Agreement, and (b) in the Master Template and Interactive Services to be
developed under the Look
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and Feel Project Plans (the "ML Look and Feel"). Multex acknowledges and agrees
----------------
that ML shall be the owner of all right, title and interest in and to the ML
Look and Feel IP, including, but not limited to, all Intellectual Property
Rights therein.
19.2. Unless the Parties otherwise expressly agree in the governing
Project Plan, each Party shall own an undivided one-half interest in the work
product and Intellectual Property Rights therein resulting from a Joint
Development Project. Such work product and Intellectual Property Rights shall be
referred to as "Joint Development Work Product" and ML's rights in the same as
------------------------------
"ML's Joint Development Work Product."
-----------------------------------
19.3. Except as provided in Section 19.2 and in the Master Agreement, and
------------
with respect to ML's rights in the ML Look and Feel IP as provided in Section
-------
20.1, unless the Parties otherwise expressly agree in the governing Project
- ----
Plan, and subject to the licenses and rights granted in the 1999 Master
Agreement and the other terms and conditions thereof, Multex shall own all
right, title and interest in the Licensed Software and all Intellectual Property
Rights therein, and if and to the extent that or ML or its Employees or agents
acquire any rights in or to such Licensed Software or Intellectual Property
Rights, ML shall, or shall cause its Employees or agents to, promptly assign
such rights to Multex. To the extent, if any, Multex obtains ownership of any
inventions or any Letters Patent in the United States or any other country in
any Joint Development Work Product or in any other deliverable or other work
product created under the 1999 Master Agreement for which an ML Employee is an
inventor or in which ML has ownership rights, Multex agrees to grant to ML, for
no additional consideration, a perpetual (or the longest period otherwise
permitted by law), irrevocable, royalty-free, worldwide, non-exclusive license
with the right to grant sublicenses under such patents and any other U.S. or
foreign patent issuing from applications that rely on any such patent for
priority to make, use, sell, offer for sale, and import inventions covered
thereby.
19.4. Multex shall take reasonable steps to prevent premature publication
or disclosure of patentable subject matter by its Employees, Outside Contractors
or others that would interfere with the ability to seek and obtain patent and
other intellectual property protection. Multex will adopt procedures
satisfactory to ML to prevent unauthorized access to or Dissemination of source
code and technology.
19.5. Multex agrees to and hereby does irrevocably assign, sell,
transfer, grant and convey all of its worldwide and universal right, title and
interest in and to the ML Look and Feel IP under the 1999 Master Agreement from
the moment of creation to ML, its successors and assigns (without the necessity
of any further consideration or action on the part of ML or Multex), including,
but not limited to, all Intellectual Property Rights therein, for perpetuity (or
for the longest period of time otherwise permitted by law) (and insofar as
ownership of the same or the Intellectual Property Rights therein are not deemed
to vest in or be owned by ML by operation of law), the same to be held and
enjoyed by ML, its successors and assigns to the same extent that such right,
title and interest would have been held and enjoyed by Multex if this assignment
had not been made. If and to the extent necessary to ensure that each Party has
an undivided one-half interest in the work product and Intellectual Property
Rights therein resulting from a Joint Development Project (or such other
interest as the Party's may otherwise expressly agree in the governing Project
Plan) as set forth in Section 19.2, the Parties shall make such assignments, if
------------
any, as may be necessary so that each Party
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have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
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has an undivided one-half interest (or such other interest as the Party's may
otherwise expressly agree in the governing Project Plan) to the other Party, as
applicable and appropriate.
19.6. ML agrees to and hereby grants Multex a non-exclusive, fully
paid-up license throughout the universe (without the right to sublicense) during
the Term and the Transition Services Period under all of ML's Intellectual
Property Rights in the ML Look and Feel IP to use the ML Look and Feel IP only
to the extent necessary for Multex to perform its obligations to ML under the
1999 Master Agreement.
19.7. The Parties acknowledge and agree that Web 2.0 is deemed part of
the Licensed Software and shall be subject to the Standard Institutional License
Fee Rate; provided, that, for the avoidance of doubt, and notwithstanding
-------- ----
anything contained in the 1999 Master Agreement, in no event shall Multex be
obligated to provide any services or perform any projects or any other
activities with respect to Web 2.0 unless Multex agrees to do so pursuant to a
Project Plan.
19.8. Each of Multex and ML without reservation hereby covenants and
binds itself and its successors, assigns and legal representatives to cooperate
fully and promptly with the other Party and to do acts necessary or requested to
be done by the other Party in order to evidence, establish, apply for, perfect,
procure, register, record, maintain, enforce and/or defend the other Party's
Intellectual Property Rights under the 1999 Master Agreement and in connection
with all proceedings before the United States Patent and Trademark Office (the
"PTO"), the United States Copyright Office (the "Copyright Office") and all
- ---- ----------------
equivalent offices and government agencies in foreign countries ("Foreign
-------
Offices") (singularly or collectively, the "protection of Intellectual Property
- ------- -----------------------------------
Rights") including, without limitation, to execute and deliver to the other
- ------
Party any and all lawful application documents including petitions,
specifications, oaths and assignments. Each of Multex and ML (their
successors, assigns and legal representatives) shall discharge its obligations
under this Section 18.9 promptly but in any event within such time as is
------------
required to enable the other Party to timely preserve or assert its rights in
connection with the protection of Multex's or ML's Intellectual Property
Rights, as the case may be. The rights provided to each of the Parties in this
Section 18.9 are cumulative of any rights provided in the 1999 Master Agreement.
- ------------
20. Term, Termination, Transition Services and Effect of Termination
20.1. The initial term of Addn-3 begins on the Addn-3 Effective Date and
ends on December 31, 2004 (the "Addn-3 Initial Term"). ML has the right to
-------------------
extend the term of this Addn-3 from the end of the Addn-3 Initial Term to and
including December 31, 2009 (the "Addn-3 Renewal Term") by providing notice
-------------------
during Year 4. As used herein, the Term of the 1999 Master Agreement means the
----
Addn-3 Initial Term and, if entered into, the Addn-3 Renewal Term.
20.2. Each Party shall have the right to terminate the 1999 Master
Agreement for cause if the other Party commits a material breach and, if such
breach is curable, it remains uncured at the end of a thirty (30) day cure
period.
20.3. ML shall have the right to immediately terminate the 1999 Master
Agreement for cause upon written notice to Multex if: (a) a Change of Control of
Multex occurs; (b) Multex shall
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have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
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cease to do business, enter into liquidation, or become subject to any
bankruptcy law; (c) an interruption or outage in the Dissemination of Services
continues for more than a period of more than twenty- four (24) consecutive
hours; (d) repeated interruptions or outages aggregating more than twelve (12)
hours occur in a fifteen (15) day period; or (e) Multex causes or permits the
unauthorized Dissemination of Research, and if after notice from ML, such
unauthorized Dissemination remains uncured, and such Dissemination is material.
20.4. It is the intent of ML and Multex that at the expiration or
termination of the 1999 Master Agreement Multex will cooperate in good faith
with ML to provide ML and/or its designees with reasonable assistance to permit
an orderly transition of the Services provided hereunder to ML and/or its
designees (as further described in this Section 20, the "Transition Services").
---------- -------------------
The Transition Services include, without limitation: (a) continuing to provide
Services; (b) developing a plan for the transition of Services to ML and/or its
designees; (c) training personnel of ML (but not ML's designees) in the
performance of the Services and the operation, maintenance and support of
Licensed Software; (d) creating documentation and other explanatory and
instructional material, if and to the extent reasonably requested by ML,
provided that in no event shall Multex be obligated to provide or shall ML be
- -------- ----
allowed to disclose such documentation and/or material to any designee of ML
unless Multex so agrees or gives its prior consent; and (e) performing such
other functions or tasks as may be reasonably requested by ML that relate to the
transition of the Services to ML (and/or its designees).
20.5. Subject to ML's complying with its payment obligations as set forth
in this Section 20, a transition services period shall commence immediately,
----------
upon the expiration or termination of the 1999 Master Agreement for any reason,
which shall be an eighteen (18) month period (unless before or during that
period ML provides notice to Multex that it wishes to terminate the Transition
Services Period prior to the end of that period, and if ML provides notice of an
earlier termination date, the transition services period shall terminate at the
date specified by ML, provided that ML has provided at least sixty (60) days
notice to Multex (the "Transition Services Period"). If ML fails to provide
--------------------------
sixty (60) days notice, the Transition Services Period shall terminate sixty
(60) days after the date on which ML provided notice.
20.6. Subject to ML's complying with its payment obligations hereunder,
if the 1999 Master Agreement expires or terminates, then immediately upon such
expiration or termination, as applicable, Multex shall provide Transition
Services, and the Software License shall continue for the duration of the
Transition Services Period. As payment for the Software License during the
Transition Services Period, ML shall pay the Standard Institutional License Fee
Rate. As payment for Transition Services, ML shall pay Multex the Standard
Project Payment Rate and Data and Equipment Fees.
20.7. For the avoidance of doubt if Multex terminates the 1999 Master
Agreement for cause, Multex shall provide Transition Services to Multex provided
that ML pays all fees and makes all other payments owed to Multex in
consideration for such Transition Services under the terms and conditions of the
1999 Master Agreement, including, without limitation, those set forth in this
Section 20, and provided further that ML is current (and not in arrears) in its
- ---------- -------- ------- ----
payments owed to Multex hereunder, whether prior to or after such termination;
except for any amounts which ML is
- ------
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have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
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disputing in good faith (provided that the portion of any payment not in dispute
is paid to Multex in a timely manner as required hereunder). In addition,
notwithstanding anything contained herein, after termination or expiration of
the 1999 Master Agreement, ML shall have no right to the Output Right
(including, but not limited to, the right to receive New Product and the right
for ML to have one of its employees serve as a full R&D Committee), and ML shall
therefore, have no obligation to pay the Output License Fee accruing after the
termination or expiration of the 1999 Master Agreement.
20.8. Each Party agrees that if the 1999 Master Agreement terminates or
is not renewed, whether in whole or in part, or if any Project hereunder is
terminated, neither Party shall disclose to any Third Party any reason for not
continuing under the 1999 Master Agreement (or any intent or plan of not
continuing) without the express written consent of the other Party, and the
Parties shall agree on statements for public disclosure.
20.9. Upon the expiration or termination of the 1999 Master Agreement, or
if there is a Transition Services Period, after the end of the Transition
Services Period, all licenses and all rights and interests granted thereunder to
ML (exclusive of all rights and interests expressly assigned to ML under the
1999 Master Agreement including, without limitation, the Look and Feel IP and
ML's Joint Development Work Product) under the 1999 Master Agreement shall
immediately terminate (including, without limitation, those under the Software
License) and shall immediately revert to and become fully vested in Multex.
Termination or expiration of the 1999 Master Agreement for any reason shall be
without prejudice to any obligations which shall have accrued to the benefit of
either Party prior to such termination or expiration. Upon termination or
expiration of the 1999 Master Agreement, any payments owed to the other Party on
or before the effective date of such termination or expiration would remain due
and payable in the ordinary course in accordance with the terms and conditions
of the 1999 Master Agreement. The termination or expiration of the 1999 Master
Agreement shall not affect any rights or obligations of the Parties under the
1999 Master Agreement which are intended by the Parties to survive such
termination or expiration, including, without limitation, those which are
intended by the Parties to survive during the Transition Services Period. For
the avoidance of doubt, during the Transition Period, all terms and conditions
of the 1999 Master Agreement shall survive except for those set forth in Section
-------
9.
- -
20.10. Without limiting the foregoing, and notwithstanding anything
contained herein, upon the termination or expiration of the 1999 Master
Agreement, the Parties hereby agree that the Master Agreement (as in effect
immediately prior to the Addn-3 Effective Date) as expressly amended by this
Addn-3 or as otherwise expressly amended by the Parties in writing after the
Addn-3 Effective Date, shall have and shall remain in full force and effect in
accordance with its then existing terms and conditions (as such terms and
conditions may have been expressly amended by the Parties).
21. Indemnification; Limitations of Liability
21.1. Multex shall defend, and indemnify ML and its officers, directors,
employees and other agents against, and hold ML, and its officers, directors,
employees and other agents from any and all liability, damages, costs and
expenses (including without limitation reasonable attorney's fees and costs)
resulting from and to the extent of any claim or action in law or equity
resulting from,
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have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
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based on or arising out of any cause of action or any other claim of any nature
(a "Claim") that any of the Licensed Software or other software (including,
-----
without limitation, software developed pursuant to a Software Project and
programming code or features of any Interactive Service), deliverables under any
Plan Project, products, Services and other material, in each case provided to ML
by Multex pursuant to the 1999 Master Agreement (the "Covered Material")
----------------
infringes or otherwise violates any of the Intellectual Property Rights other
proprietary right of any Third Party provided that ML provides Multex with
prompt notice of the Claim and cooperate at Multex's expense in any litigation
resulting therefrom; that ML has the right to approve any proposed settlement of
the Claim, and that Multex shall have the right to control the defense of the
Claim. Notwithstanding anything contained herein, in no event shall Multex's
indemnity obligation covered by this Section 21.1 include, and shall
------------
specifically exclude, any and all liability arising from the willful misconduct
or gross negligence of ML or its affiliates or their agent, or from any
infringement or other claim to the extent that it relates to ML's Intellectual
Property Rights or the Research or Content.
21.2. In the event that ML's Use of any Covered Materials be or
reasonably appear likely to be restricted, encumbered or enjoined by reason of
any actual or alleged infringement or otherwise violation of any of the
Intellectual Property Rights or other proprietary right of any Third Party: (a)
Multex shall have the right upon ML written notice to immediately terminate the
portion of the infringing Services that are or reasonably may be infringing or
otherwise violating the Intellectual Property Rights of any person or entity;
and (b) Multex will promptly at (i) obtain for ML the right to continue to Use
the Covered Materials, (ii) modify the Covered Materials so as to remove the
cause of the Claim (provided that any such modifications will not affect ML's
intended use of the Covered Materials) and/or (iii) if possible, replace the
Covered Materials with an equally suitable, non-infringing substitution, which
will be subject to the provisions of the 1999 Master Agreement. The remedies in
this Section are in addition to and not in place of and shall not limit any of
ML's other rights or remedies or limit or affect Multex's obligations otherwise
set forth in this Section 21.
----------
(b) ML shall defend and/or handle at its own cost and expense any
claim or action brought by a Third Party against ML arising from or relating to
the Research or Content as provided by ML provided, however, that ML shall have
-------- -------
the sole right to control the defense and settlement of such action and all
rights of appeal, and shall not be liable to Multex for any costs, settlements,
compromises or legal fees of any kind incurred or entered into by Multex without
ML's prior written approval. ML shall indemnify and hold harmless Multex and its
affiliates from and against all liabilities, losses, damages, costs and expenses
(including but not limited to, attorneys' fees, costs and disbursements)
resulting from or arising out of any such claim or action. ML's obligations
hereunder shall be contingent upon Multex promptly notifying ML of any such
claim and cooperating, at ML's expense, in the litigation.
21.3. Multex will use its reasonable commercial efforts to provide the
Services to ML and its affiliates as described herein. However, ML understands
that Multex cannot and does not guarantee the content, accuracy, timeliness or
availability of the Services or Research as displayed or provided by Multex.
ACCORDINGLY, ML AGREES THAT UNLESS THE FOLLOWING ARE CAUSED BY THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF MULTEX, MULTEX SHALL NOT HAVE ANY LIABILITY
OR OBLIGATION TO ML OR ITS
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have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
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AFFILIATES (WHETHER CAUSED DIRECTLY OR INDIRECTLY) RELATING TO (A) INTERRUPTION,
DELAY OR FAILURE IN THE TRANSMISSION, PROCESSING, DELIVERY OR DISTRIBUTION OF
THE SERVICES OR THE RESEARCH; OR (B) THE UNAVAILABILITY OF THE MULTEX SERVICES;
MOREOVER, MULTEX SHALL NOT HAVE ANY LIABILITY TO ML OR ITS AFFILIATES RELATING
TO ACTS OR OMISSIONS OF ML. MULTEX AGREES TO MAKE BEST EFFORTS, AT ML'S EXPENSE,
TO REMEDY ANY MATERIAL DEFECTS IN THE ACCURACY, TIMELINESS OR AVAILABILITY OF
THE SERVICES OR RESEARCH AS DISPLAYED OR PROVIDED BY MULTEX.
21.4. Each Party shall be strictly liable for the actions of its
Employees, affiliates, partners and representatives.
21.5. Multex's maximum aggregate liability under the 1999 Master
Agreement arising after the Addn-3 Effective Date arising out of or relating to
the Covered Materials (excluding liability covered under the M.A. prior to the
Addn- 3 Effective Date), including, without limitation, liability arising under
Section 21.1 and liability arising from the gross negligence or willful
- ------------
misconduct of Multex shall not exceed [*****].
21.6. NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL,
INCIDENTAL OR SPECIAL DAMAGES EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES, OR FOR ANY CAUSES OF ACTION BEYOND ITS REASONABLE CONTROL. FOR THE
PURPOSES OF THIS SECTION, DAMAGES PAYABLE TO A THIRD PARTY IN AN ACTION FOR
WHICH A PARTY IS INDEMNIFIED UNDER SECTION 21 OF THIS ADDN-3 SHALL NOT BE DEEMED
----------
CONSEQUENTIAL, INDIRECT OR SPECIAL DAMAGES.
21.7. The Parties acknowledge and agree that the limitations of liability
set forth in this Section are a condition of the 1999 Master Agreement, and that
the fees reflect the allocations of risk set forth in this Section.
22. Further Amendments
22.1. Section 13 of the M.A. is amended as to add the following provision
----------
as the last sentence of subsection (a): "ML shall have the right to control the
defense or settlement of any claim under this Section 13."
----------
22.2. Section 16 is amended as follows:
----------
22.2.1. The following provision is added as subsection (v): "All
Multex interconnectivity to ML Interactive Services, computing systems and/or
networks and all attempts at the same shall be only through ML authorized
security gateways/firewalls; Multex will not access, and will not permit
unauthorized persons or entities to access, ML computing systems and/or networks
without ML's express written authorization and any such actual or attempted
access shall be consistent with any such authorization; and Multex will use the
latest available, most comprehensive computer virus detection/scanning program
reasonably commercially available prior to any attempt to access any of ML's
computing systems and/or networks and upon detecting a
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have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
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computer virus, all attempts to access ML's computing systems and/or networks
shall immediately cease and shall not resume until any such computer virus has
been eliminated to the satisfaction of ML."
22.2.2. The following provision is added as subsection (vi): "All
Licensed Software, other software and Services licensed or provided to ML
hereunder are Year 2000 Compliant, and Multex will reasonably cooperate with and
assist ML in ML's independent verification that the software, programs,
Equipment, Services and/or other materials furnished to ML are Year 2000
Compliant. Multex further agrees, upon ML's request, to promptly provide all
information about procedures that Multex has followed to make the software,
programs, Equipment, Services and/or other materials furnished to ML Year 2000
Compliant. For purposes hereof, "Year 2000 Compliant" means that: (A) the
-------------------
materials, deliverables and products provided to ML will accurately record,
store, process, calculate, transmit, display and present calendar dates on or
after (and, if applicable, spans of time including) January 1, 2000; (B) the
occurrence in or use by the materials, deliverables and products provided to ML
of dates before, on or after January 1, 2000 will not materially adversely
affect the performance of the materials, deliverables and products provided to
ML with respect to date- dependent data, computations, output, or other
functions (including, without limitation, calculating, comparing and
sequencing); (C) the materials, deliverables and products provided to ML will
not abnormally end or provide invalid or incorrect results as a result of
date-dependent data; and (D) the materials, deliverables and products provided
to ML can accurately recognize, manage, accommodate and manipulate
date-dependent data, including, without limitation, single and multi-century
formulas and leap years."
22.2.3. The following provision is added as subsection (vii): "All
Licensed Software, programs, Equipment, Services and/or other materials
furnished to ML hereunder that receive, recognize, use, or process financial
information pertaining to any of the countries with currency affected by its
participation in the European Economic and Monetary Union, such software,
programs, Equipment, Services and/or other materials furnished to ML will (A)
operate without errors, problems, delays, or the need for any further
modification as a result of the introduction of a new currency (the "Euro"), in
----
whole or in part as the European currency or currency unit; and (B) continue to
receive, recognize, use and process both national currency units and Euro units
and all data related thereto (and permit conversions from national currency
units to Euro units and vice versa) without errors, problems, delays, loss of
functionality, degradation in performance, or the need for any further
modifications."
22.2.4. The following provisions are added as subsection (viii):
"In the event that ML's use of the Licensed Software, other software equipment,
Services and/or other materials furnished to ML hereunder be or reasonably
appear likely to be restricted, encumbered or enjoined by reason of any such
actual or alleged infringement of Third Party Intellectual Property Rights or
other proprietary rights or confidentiality or nondisclosure restrictions (the
"Accused Material"), Multex will promptly and at no cost to ML, (A) Multex shall
------- --------
have the right upon written notice to ML to immediately terminate the portion of
the infringing Services that are or reasonably may be infringing or otherwise
violating the Intellectual Property Rights of any person or entity, (B) obtain
for ML the right to continue to use the Accused Material, (C) work diligently
and continuously through qualified Employees to modify the Accused Material so
as to remove the cause of the claim,
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have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
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action or suit (provided that Multex modification will not affect ML's intended
use of the subject material or the performance of any ML operations dependent
upon the subject material), and/or (D) replace the Accused Material with an
equally suitable, non-infringing substitution, which will be subject to the
provisions of the 1999 Master Agreement. The remedies in this Section are in
addition and not in place of and shall not limit any of ML's other rights or
remedies or limit or affect Multex's obligations at law or as otherwise set
forth in this Section."
22.2.5. The following provisions are added as subsection (ix) "The
warranties set forth in this Section 16(a) shall not apply: (A) if the Multex
-------------
Software or Service is not used in accordance with this 1999 Master Agreement;
or (B) if the defect is caused by ML or its agent other than Multex."
23. General Provisions
23.1. Any notices or other communications required or permitted to be
given or delivered under the 1999 Master Agreement shall be provided by e-mail
(provided that the sender's computer system is capable of and does retain a
message establishing that the e-mail message was actually delivered to the
recipient's e-mail server) or in writing, which shall be sufficiently given if
delivered personally, mailed by first-class mail, postage prepaid, or sent via
overnight delivery courier or any other means for which a proof of delivery is
provided. All written notices will be addressed to Merrill Lynch, Pierce, Fenner
& Smith Incorporated, Merrill Lynch World Headquarters, World Financial Center,
South Tower, New York, NY 10080-6105, Attention: Mr. Laurence A. Tosi, Director,
Business Development, CICG, and to Multex.com, Inc. 100 William Street, 7th
floor, New York, NY 10038, Attention: President or to such other address or
addressee as either Party may from time to time designate to the other by
written notice pursuant to this Section 23.1. All e-mail messages to ML shall be
------------
sent to laurence@[email protected], and all e-mail messages to Multex shall be sent to
[email protected] with a copy to [email protected] or to such other address
or addressee as either Party may from time to time designate to the other by
written notice pursuant to this Section 23.1.
------------
23.2. Multex agrees to notify ML of any change to Multex's legal name
within ten (10) business days of the effective date of such name change.
23.3. The Parties shall initially attempt in good faith to resolve any
significant controversy, claim, or dispute arising out of or relating to this
1999 Master Agreement or any significant breach thereof, (except for any action
------ ---
to compel arbitration hereunder or any action concerning the unauthorized
disclosure of any proprietary information or content of a Party or any action
concerning the interruption or outage in the Dissemination of Services to ML by
Multex or any action concerning the ownership, enforceability, validity,
infringement or misappropriation of the Intellectual Property Rights of either
Party) (hereinafter collectively referred to as a "Dispute") through face-to-
-------
face negotiations between senior executives of each Party. If the Dispute is
not resolved within five (5) business days (or such other period of time
mutually agreed upon by the Parties) of commencing such face-to-face
negotiations, or if the Party against which a claim has been asserted refuses to
attend such negotiations or does not otherwise participate in such negotiations
within thirty (30) days (or such other period of time mutually agreed upon by
the Parties) from the
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have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
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date of notice of a Dispute, then the Parties agree to submit the Dispute to
arbitration as provided herein. Except as provided in this Section, all Disputes
relating in any way to the 1999 Master Agreement shall be resolved exclusively
through arbitration conducted under the auspices of the Center for Public
Resources (the "CPR") pursuant to CPR's Model ADR Procedure: Non-Administered
---
Arbitration Rules and Commentary. The arbitration shall be conducted before
three (3) arbitrators, one selected by each Party and the third to be selected
by the other two, provided, however, that in the event the Dispute is relating
-------- ------- ----
to whether Multex has discharged its obligations under a Project Plan or any
other Dispute under the 1999 Master Agreement that is of a technical nature
(including whether certain technical specifications have been met or concerning
the operation of certain software) at least two (2) of the arbitrators shall
have some technical and/or business expertise and background in the software
and/or Internet industry. Unless otherwise mutually agreed by the Parties, any
arbitration brought hereunder shall be brought only and exclusively in New York,
New York. The arbitrators shall hear evidence by each Party and resolve each of
the issues identified by the Parties. The arbitrators shall render a formal,
non-binding appealable resolution and award on each issue as expeditiously as
- ----------- ----------
possible, but not more than fifteen (15) business days after the hearing. In any
arbitration, the prevailing Party shall be entitled to reimbursement of its
reasonable attorneys' fees and the Parties shall use all reasonable efforts to
keep arbitration costs to a minimum. Notwithstanding anything in this Section
-------
12.6 or the other provisions of the 1999 Master Agreement, if either party shall
- ----
reasonably determine the need to seek injunctive or other expedited relief in
connection with the 1999 Master Agreement, such party may do so in a court of
competent jurisdiction in accordance with Section 23.4.
------------
23.4. Subject to Section 23.3, the Parties hereto agree that the state
------------
and federal courts of New York shall be the proper forums for any legal
controversy arising in connection with the 1999 Master Agreement, and the
Parties hereby irrevocably and unconditionally consent to the exclusive
jurisdiction of such courts for such purposes. So far as is permitted under
applicable law, this consent to personal jurisdiction shall be self operative
and no further instrument or action, other than service of process as is
permitted by New York Law, shall be necessary in order to confer jurisdiction
upon Multex in any such court. The convention on the International Sale of Goods
shall not apply to the 1999 Master Agreement and is hereby disclaimed.
23.5. Each Party shall comply with all applicable laws, rules and
regulations, including all applicable laws, rules and regulations of the United
States of America, including, without limitation, the export controls imposed by
the Department of Commerce, the antiboycott regulations administered by the
Departments of Commerce and the Treasury (which among other matters prohibit
participating in any boycott of Israel) and the Foreign Corrupt Practices Act as
they apply to the products and services and other activities under the 1999
Master Agreement.
23.6. In the event any one or more of the provisions of the 1999 Master
Agreement shall for any reason be held to be invalid, illegal or unenforceable,
the remaining provisions of the 1999 Master Agreement shall be unimpaired, and
the invalid, illegal or unenforceable provision shall be replaced by a mutually
acceptable provision, which being valid, legal and enforceable, comes closest to
the economic effect and intent of the Parties underlying the invalid, illegal or
unenforceable provision.
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have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
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23.7. Any press releases, public announcements or similar publicity with
respect to the 1999 Master Agreement or the transactions contemplated hereby
must be approved by the Parties in advance, provided that such approval may not
be unreasonably withheld or delayed, and further provided that nothing herein
will prevent the Parties or their respective Affiliates, upon reasonable notice
to the others, from making public announcements to comply with the requirements
of law or any listing agreement with any securities exchange or to inform their
respective employees of the transactions contemplated by the 1999 Master
Agreement.
23.8. All references herein to Sections, Exhibits and Schedules are to
the Sections in the Addn-3 and to Exhibits and Schedules attached hereto as if
fully set forth in.
23.9. Addn-3 may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
* * * * *
30
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have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
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IN WITNESS WHEREOF, the Parties hereto, each acting under due and
proper authority, have executed this Addn-3 as of the day, month and year first
above written.
MULTEX.COM, INC. MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED
/s/ /s/
By:_____________________________ By:_____________________________
Name:___________________________ Name:___________________________
(type or print) (type or print)
Title:__________________________ Title:__________________________
(type or print) (type or print)
Date:___________________________ Date:___________________________
31
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have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
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Exhibit A
---------
All of the Schedules and Attachments, prior amendments and service requests
(together with the M.A., the "Master Agreement") constituting part of the Master
----------------
Agreement are set out on this Exhibit A or attached hereto.
---------
Schedules
---------
A. ML Online/Multex Service Request dated as of February 28, 1997
B. Contribution and Distribution Services Agreement
C. Multex Publisher - For Internal ML Research Distribution Services
Agreement
D. ML Online Trial Program Addendum
Attachments
-----------
A. Form of Service Request
B. Multex or ML Provided Equipment
C. Third Party Software/License Requirements for End Users
D. Multex Subscriber Agreement
Amendments
----------
1. Addendum No. 1 dated July 1, 1999 amends the M.A. and the ML Online
Trial Program Addendum dated October 29, 1998
2. Second Addendum, effective April 1, 1999 amends the ML Online/Multex
Service Request dated February 28, 1997 and supplements the ML Online Trial
Program Addendum dated October 29, 1998
Service Requests
----------------
SPDR Service Request dated as of August 5, 1999
A-1
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have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
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Exhibit B
---------
Project Plan Form
The Project Plan Form shall be attached by the Parties after the Addn-3
Effective Date.
B-1
Confidential treatment has been requested for portions of this document, which
have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
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Schedule 1.20
MULTEX EMPLOYEE CONFIDENTIALITY
AND NON-DISCLOSURE FORM AGREEMENT
---------------------------------
Attached hereto.
1.20-1
Confidential treatment has been requested for portions of this document, which
have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
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Schedule 1.80
MULTEX CONSULTANT CONFIDENTIALITY
AND NON-DISCLOSURE FORM AGREEMENT
---------------------------------
Attached hereto.
1.80-1
Confidential treatment has been requested for portions of this document, which
have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
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Schedule 18
DOMAIN NAME AGREEMENT AND ASSIGNMENT
------------------------------------
This Agreement and Assignment is made between Multex.com, Inc., a
Delaware corporation having a principal place of business at 33 Maiden Lane, 5th
Floor, New York, NY 10038 ("Assignor"), and Merrill Lynch, Pierce, Fenner &
--------
Smith Incorporated, a Delaware corporation having a principal place of business
at Merrill Lynch World Headquarters, North Tower World Financial Center, 250
Vesey Street, New York, NY 10281 ("Assignee").
--------
WHEREAS, pursuant to Section 18 of Addendum No. 3 to Master Agreement
for Electronic Distribution Services between Assignor and Assignee dated as of
December 21, 1999, Assignor agreed to assign to Assignee and Assignee agreed to
accept the assignment of all rights in the domain name "themarkets.com" and all
--------------
registrations pertaining to domain names including the term "themarkets" or
----------
variation thereof, and all goodwill associated with the domain names
(collectively, the "Domain Names").
------------
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Assignor agrees to and hereby assigns, sells and transfers to
Assignee, its successors and assigns, all right, title and interest in and to:
(i) the Domain Names and all registrations for such Domain Names and all
goodwill pertaining to such Domain Names; (ii) all income, royalties, damages
and payments now due or which hereafter become due or payable in respect to such
Domain Names; (iii) all causes of action (in law or equity) and rights to sue,
counterclaim and/or recover for past, present or future infringement of such
Domain Names; and (iv) all rights corresponding to the foregoing throughout the
world.
2. Assignor agrees to cooperate with Assignee and follow Assignee's
instructions in order to transfer the Domain Names to Assignee in a timely
manner. Assignor will prepare and transmit the necessary documentation and/or
correspond with the appropriate domain name registration authority, Internet
service provider and/or governmental entities to authorize transfer of the
domain name.
3. This Assignment is effective as of the date set forth below. Assignor
agrees to execute additional assignments and other appropriate documentation
necessary to effectuate and validate this Assignment as soon as is practicable
after the date of this Assignment.
18-1
Confidential treatment has been requested for portions of this document, which
have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
<PAGE>
EXECUTION COPY
4. Assignor warrants and represents to Assignee that: (i) Assignor has
unencumbered rights in the Domain Names; (ii) Assignor properly registered the
Domain Names without committing fraud or misrepresentation; (iii) Assignor has
the authority to transfer the Domain Names; (iv) Assignor has not received any
claim from a third party that the use of the Domain Names violates the
intellectual property or other rights of such third party; (v) Assignor has not
used the Domain Names for any illegal purpose; and (vi) to the best of
Assignor's knowledge, the use of the Domain Names does not infringe the rights
of any third party in any jurisdiction.
MULTEX.COM, INC. MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED
By:_____________________________ By:_____________________________
Name:___________________________ Name:___________________________
(type or print) (type or print)
Title:__________________________ Title:__________________________
(type or print) (type or print)
Date:___________________________ Date:___________________________
18-2
Confidential treatment has been requested for portions of this document, which
have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
<PAGE>
EXECUTION COPY
Schedule 12
MONTHLY RETAINER AND MONTHLY REPORTS
------------------------------------
22.10. No later than the tenth (10th) business day of each month during
the Term hereof, ML shall pay Multex a monthly retainer payment for Services to
be performed by Multex in such month. The initial monthly retainer payment shall
be [*****]. The Parties may increase or decrease the monthly retainer payment in
amounts mutually agreed upon one or more times during the Term hereof, and the
initial monthly retainer payment, or if applicable, the then-current adjusted
monthly retainer payment shall be referred to as the "Monthly Retainer Payment."
------------------------
22.11. Multex shall deliver a report (the "Monthly Report" and "Monthly
-------------- -------
Reports") to ML within ten (10) business days after the end of the preceding
- -------
month indicating (in itemized form) with respect to such month: the name of each
Employee and Outside Consultant who worked on one or more Projects then underway
and the Projects for which he or she provided Services, the number of hours he
or she spent on each Project, the payments to be made to Multex by ML for such
work, and the Data and Equipment Fees paid or owed by ML to Multex during such
month (on an itemized basis). The total amount of payments made and owed by ML
to Multex for such month shall be referred to as the "Monthly Payment Amount."
----------------------
The Monthly Report shall indicate the amount by which the Monthly Retainer
Payment constituted an overpayment or underpayment of the Monthly Payment Amount
for that month. ML shall pay Multex to compensate for any such underpayment
within forty-five (45) days of receiving an invoice for the same from Multex. To
the extent the Monthly Retainer Payment constituted an overpayment of the
Monthly Payment Amount, the excess amount will be applied as a credit against
payments owed by ML to Multex in the next and succeeding months until such
credit has been fully applied. Multex shall indicate the amount of such credit,
if any, in successive Monthly Reports.
12-3
Confidential treatment has been requested for portions of this document, which
have been redacted, pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 89411) pertaining to the Multex.com, Inc. 1999 Stock Option Plan, the
Market Guide Inc. 1995 Key Employee Incentive Plan and the 1995 Independent
Director's Stock incentive Plan Special Option Grants to Messrs. Byramji and
Case of our report dated February 4, 2000, except for the seventh paragraph of
Note 17, as to which the date is March 21, 2000, with respect to the
consolidated financial statements and schedule of Multex.com, Inc. included in
the Annual Report (Form 10K) for the year ended December 31, 1999.
/S/ Ernst & Young LLP
New York, New York
March 29, 2000
<PAGE>
Exhibit 23.2
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 89411) pertaining to the Multex.com, Inc. 1999 Stock Option Plan, the
Market Guide Inc. 1995 Key Employee Incentive Plan and 1995 Independent
Director's Stock incentive Plan Special Option Grants to Messrs. Byramji and
Case of our report dated May 18, 1998, except for Notes C and J, as which the
date is April 27, 1999, with respect to the consolidated financial statements
and schedule of Market Guide Inc. for the year ended December 31, 1997 included
in the Annual Report (Form 10K) of Multex.com, Inc. for the year ended December
31, 1999.
/S/ Zerbo, McKiernan & Zambito, LLC
Fairfield, New Jersey
March 29, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998 DEC-31-1999
<PERIOD-END> DEC-31-1997 DEC-31-1998 DEC-31-1999
<CASH> 3,343 4,156 6,090
<SECURITIES> 7,664 20,015 33,028
<RECEIVABLES> 2,905 3,840 11,377
<ALLOWANCES> 264 172 423
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 14,179 28,523 53,264
<PP&E> 7,761 9,935 19,693
<DEPRECIATION> 4,264 5,465 8,830
<TOTAL-ASSETS> 18,542 33,183 65,600
<CURRENT-LIABILITIES> 5,297 6,565 15,745
<BONDS> 0 0 0
37,234 59,859 0
0 0 0
<COMMON> 72 80 272
<OTHER-SE> 25,183 (34,203) 46,929
<TOTAL-LIABILITY-AND-EQUITY> 18,542 33,183 65,600
<SALES> 12,616 22,021 40,850
<TOTAL-REVENUES> 12,616 22,021 40,850
<CGS> 2,720 5,083 10,569
<TOTAL-COSTS> 2,720 5,083 10,569
<OTHER-EXPENSES> 0 716 5,713
<LOSS-PROVISION> 168 148 901
<INTEREST-EXPENSE> 396 575 114
<INCOME-PRETAX> (7,911) (8,348) (24,280)
<INCOME-TAX> 7 276 1,030
<INCOME-CONTINUING> (7,918) (8,624) (25,310)
<DISCONTINUED> (1,087) (214) 331
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (11,186) (11,518) (26,167)
<EPS-BASIC> (1.62) (1.51) (1.15)
<EPS-DILUTED> (1.62) (1.51) (1.15)
</TABLE>
